Q: Can you talk about the logistics tail? In the competition between vendors, how are maintenance and repair competed?
Mr. Bauman: With everything there are pluses and minuses. When you compete in production, you save a considerable amount of money in purchasing product, but in most cases you need to sustain two different baseline hardware devices. In the case of the single-channel handhelds, we need to sustain both the Falcon III and the JEM radio. That will cost some more money.
In our world, we think we get a much bigger payoff from the savings in the acquisition compared to the logistics tail. Single-channel handhelds now cost less than $3,000. Many times it isn't economically viable to fix them. If we were talking about the Joint Strike Fighter, we would not want to sustain two different aircraft models, but in our radio world, we believe the business case is there to consume them.
Mr. Pace: We also worked with our customer and did a rough business analysis of what the logistics tail would be, and we had a good understanding of that prior to going into the contract. It came out to more of a wash than we ever anticipated.
Mr. Bauman: We are not requiring the customer to compete on our contracts. If the Army decides they do not want to pay for the logistics tail for Falcon III and JEM, they can sole source to either one they want.
The JTRS JPEO is not responsible for procurement dollars. I don't control any procurement dollars. All we do is R&D. Our business model is that we will develop the capability, and then we will put contracts in place for the services to buy from. We will take their money and aggregate orders for quantity discounts, but they have authority over those dollars. Even though we have two competitors, if their business case says that they don't want two different devices, they can sole source.
Mr. Pace: The important thing we need to stress is that we have a single tactical radio purchasing organization for the Department of Defense for the first time. You get economy of scale buys, and you have a single voice to unify industry toward your goals. This is an extraordinary thing. It is the first time it has been done.
Q: You have two radios currently that have single primes. Are there other vendors that will bid?
Mr. Bauman: We have in the model what we call rolling admission capability. Every year we are going to see if there are any other vendors that want to come to the table with a single-channel, JTRS-approved handheld radio. Every year we give an opportunity to industry. We are about to come out with an RFI (Request for Information) on this model. There are two vendors now, but other vendors may want to get into that competition.
Mr. Pace: It is a success not only for radio systems, but there are other capabilities that use our products. Without this kind of approach, you would never be able to synchronize over such large efforts. An example is NLOS (NLOS-LS, Non-Line of Sight – Launch System), being developed by Raytheon through an Army PEO Aviation contract, which is completely separate and distinct from JTRS.
It uses the Soldier Radio Waveform that was pulled from our repository. We also share waveforms with all other kinds of entities. By having this open systems architecture approach that can be shared across multiple industry partners, it has taken away many of the stumbling blocks to software reuse.
Mr. Bauman: It saves money, it promotes interoperability, and gives us flexibility to change vendors for software modules. It helps us sustain a wider vendor base because it allows vendors who might lose in a competition to compete. You don't have to win an SDD contract to compete.
Q: Are there any small businesses involved?
Mr. Bauman: We have an active, vigorous SBIR (Small Business Innovation Research) program. The Department and each of the services siphon off a percentage of every R&D dollar to go into the SBIR program. We get to decide how that money is awarded. Since we have $800 million or so a year in R&D, we get a significant amount from the SBIR program. We have a robust SBIR program, between $10 million and $20 million.
Mr. Pace: There are a lot of small software companies making contributions to these bigger providers, which they could not do if we did not have this open systems model. We want to fuel the competitive environment. We want competition to be the No. 1 ace card for the government when it comes to purchasing tactical radios.
Q: Are any other programs looking to you to help them build a business model for their programs?
Mr. Bauman: A couple of years ago, we worked with the NCES (Net-Centric Enterprise Services) program but mainly in the governance structure. They were trying to set up a joint program under a joint PEO with the Defense Information Systems Agency. They involved us in the early formulation of their strategy.
We are promoting the business model. We are not saying that this is the right model for all DoD in all functional areas. This is not the right model for F-22s or for shipbuilding, but in our size of product and in the industry base that we enjoy, we think it is a win-win enterprise business model for our functional area. It also fills capability gaps. Right now the Joint Staff and Joint Requirements Oversight Council are prioritizing about 18 capability gaps for POM-10, program objective memorandum 2010.
Mr. Pace: JTRS not only provides capabilities — it saves lives — that's why it is so important to DoD and to Congress.
Postscript: A system design and development (SSD) contract for the AMF segment of the JTRS program was awarded to Lockheed Martin March 28, 2008.