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| 1999 |
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In June, the U.S. Army awards Comtech Mobile Datacom a $419 million IDIQ contract for Movement Tracking System (MTS),
a satellite-based, logistics-oriented tracking and messaging system.
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| 2000 |
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In January, Comtech Mobile Datacom begins work with the Dominguez Hills division of TRW (later to be
purchased by Northrop-Grumman) to determine a way to provide
satellite service to the U.S. Army Force XXI Brigade and Below (FBCB2) program using
existing MTS L-band transceivers. At this time, the FBCB2 program relied solely on terrestrial,
line-of-sight radios to communicate in a mesh network, however when a vehicle moved out of sight it would
lose connectivity and drop out of the network. Satellite-based networks held the promise of greatly
improved network coverage and connectivity.
In April, MTS passes operational testing with the 180th Transportation
Battalion, 13th Corps Support Command (COSCOM), at Fort Hood, Texas.
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| 2003 |
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In July, Joel Alper retires. Under his leadership, Mobile Datacom grew from a startup to a significant
player in military satellite communications, having developed a new satellite system and won
two major Army contracts (MTS and FBCB2 BFT). Over the subsequent eight years,
these contracts would bring in $1.5 billion of revenue to the company. His contemporaneous
analysis of Comtech Mobile Datacom's future would prove prescient
as he commented in private correspondence on a then-current Army analysis of the BFT system:
[The article] is very
interesting and confirms my view of what the future holds for systems
such as Comtech's.
To our very great credit, the satellite system, and
the operating software and applications worked. Now, the warfighters
have a taste for what is available, and a very clear idea of
shortcomings. That is to say, they see what is being done, and now they
understand how it can work for them, were it to have been designed with
their specific needs in mind. While this always comes down to questions
of time and money, there is going to be a big push to put in place the
systems that work the way the warfighter wants them to work, since now
it's only a matter of, as I indicated, time and money. Time isn't a
factor, since they can use what they've got in the interim, and money,
well, there's a lot going to be spent, so why not on bandwidth and software.
The challenge comes from the possibility that the future system will not
be a derivative of the exisiting system, but the result of a totally new
development, like JTRS [Joint Tactical Radio System].
That could come out of NG [Northrop-Grumman], or GD [General Dynamics],
or any of the large (or small) systems integrators. Comtech will need to get on board, somehow,
or the train will leave them at the station.
[This] article is the first I've seen, and undoubtedly not the
last, reflecting the real needs. And those needs will be met. The Army
isn't going to grow, so it's the systems that will have to maintain the
effectiveness of the small fighting force. Great selling point if you
can make the connection.
J. Preston Windus, Jr., a Comtech corporate financial officer, takes over management of
the Mobile Datacom division.
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| 2004 |
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By May there are about 3,700 MTS-equipped vehicles
operating around the world, including more than
2,000 in Iraq and Kuwait.
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| 2005 |
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In April, Windus retires and is replaced as President of Comtech Mobile
Datacom by Daniel S. Wood, a former Group Director of Finance, Director
of Marketing and Strategic Planning, and Director of Contracts at EDO
Corporation, a supplier of military and commercial products and services,
where he had been for 15 years. The press release issued at the time
explains,
"Dan Wood has the ideal background and skill set to take over the reins
from Pres Windus at Comtech Mobile Datacom. His strong operations and
finance experience is very similar to that of Pres."
Like Mr. Windus, his background is financial rather than technical
and is lacking in any significant mobile satellite industry experience.
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| 2006 |
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In May, the FBCB2 BFT Program Office at Fort Monmouth, New Jersey
issues a "sources sought" notice for
[C]ommercial L-band bandwidth, network management services, engineering
design and development services, and L-band satellite transceivers
for Fiscal Year 2007 (FY-07) and beyond supporting US Army FBCB2 BFT
operations Worldwide.
The notice includes the following request:
Optional - A source of supply for engineering services capable of reverse
engineering the firmware contained within the CMDC MT-2011 and CMDC hub
and packet switch equipment to provide a more secure and more capable
waveform to support FBCB2 BFT operations. NOTE: The Government does not
own the design rights to the CMDC MT-2011 transceiver, CMDC hub equipment,
or CMDC packet switch, nor does it have any drawings or documentation
that describes the design and operation of this equipment. The Government
does own CMDC MT-2011 transceivers and CMDC packet switch equipment that
can be provided for purposes of reverse engineering.
Also in May, Comtech corporate tells the Government that it had not agreed
to allow CMDC to license any proprietary information to the Government
at any price for use in future competitive procurements. At time,
CMDC estimated that the value of their ongoing business operations,
and the potential risks associated with releasing the proprietary data
to competitors in the industry would be valued (if a value were to be
assigned) in excess of $100 million.
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| 2007 |
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In April, FBCB2 Prime Contractor Northrop-Grumman awards an initial $9.3 million contract to
California-based ViaSat, Inc., a Comtech competitor, to develop a faster satellite-based Blue Force Tracking system.
In August, the Federal Communications Commission (FCC) issues a
Letter of Inquiry ("LOI") regarding whether CMDC
violated section 301 of the Communications Act of 1934 and sections 25.102, 25.117, 25.136(d)
and 25.276(a) of the Commission's Rules by modifying and operating its
MET [Mobile Earth Terminal] system without appropriate authorization.
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| 2008 |
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In September, Comtech enters into a consent degree with the Federal Communications Commission (FCC):
The Enforcement Bureau ("Bureau") and Comtech Mobile Datacom Corporation
("CMDC"), by their authorized representatives, hereby enter into this
Consent Decree for the purpose of terminating the Bureau's investigation
into whether CMDC violated section 301 of the Communications Act of 1934,
as amended ("Act") and sections 25.102, 25.117, 25.136(d) and 25.276(a) of
the Commission's Rules by modifying and operating its mobile earth
terminal ("MET") system without appropriate authorization.
As part of the consent decree, CMDC makes a
"voluntary" contribution to the United States Treasury in the amount of $25,000 and
is required to make regular reports regarding technical parameters of system operation.
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| 2009 |
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In February, the MTS Program Office releases a Request for Information (RFI) seeking
alternatives to Comtech. Sixteen (16) companies responded, including Comtech and Northrop-Grumman,
the Prime Contractor for FBCB2. Analysis of the Northrop bid included this:
Respondent proposes the adoption of the Battle Command
Product Line (BCPL) Logistics software variant, Movement Tracking System. Enhanced
Software (MTS-ES), (currently undergoing test), to stand up a new NOC [Network Operations Center]
to host MTS running
MTS-ES software, to ramp up the system as quickly as possible, and to undergo a transition
period from legacy NOC to the new proposed NOC. Separate and apart from this proposal, the
current plan is for MTS to adopt MTS-ES as its future software (assuming successful testing and
user acceptance). However current schedules do not project the availability
of MTS-ES until second quarter FY2011. The current MTS contract ends July 2010 which is 6
plus months before MTS-ES is projected to be available.
[...]
With successful testing, acceptance, and availability of this software, MTS will no
longer need to sole-source CMDC's proprietary components or require a prime contractor to use
CMDC as its sub-contractor. Once the BCPL software is released, it will allow for MTS to have
open standards, and this is expected to significantly increase competition for future contracts.
In April, the FBCB2 BFT Project Manager issues a Market Survey seeking sources for:
L-band bandwidth, network management services, engineering design and
development services, and the procurement of BFT-2 L-band satellite
transceivers, during the years 2010 - 2015 and beyond supporting PM
FBCB2 BFT operations worldwide.
The PM seeks to procure the hardware and acquire the services, using multiple awards
of Indefinite Delivery Indefinite Quantity (IDIQ) contracts.
...
The total dollar value of each contract would be $477M.
Starting in 2010 thru 2015, the Army wants to replace the current BFT-1 CMDC
equipment with improved equipment that provides an order of magnitude improvement in
data throughput.
In September, CMDC repeats to the Government that the value
of its ongoing business operations, the Government-wide application of Government Purpose
License Rights, and the potential risks associated with releasing the proprietary data to unlimited
industry competitors, would necessitate a minimum license price of $125 million with any data,
documentation or other information provided in an "as is" condition with no warranties or
guarantees associated with the license.
The Government immediately determines that these terms and conditions are unacceptable.
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| 2010 |
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In July, the U.S. Army awards a $477 million IDIQ contract for the next generation FBCB2 Blue Force Tracking system (called BFT-2)
to ViaSat, Inc. rather than incumbent Comtech Mobile Datacom. In response to this loss,
Comtech stock (ticker symbol CMTL) drops by nearly a third in a single day, representing the extent to which the market valued
the Army contract and the division's relationship with the military.
Also in July, a Memorandum of Understanding (MOU) is signed that places
the Movement Tracking System (MTS) office under PEO C3T, and thus
under FBCB2.
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| 2011 |
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At the end of June, after multiple rounds of layoffs, Comtech Mobile Datacom ceases providing commercial satellite service over North America.
For the fiscal year ending July 31, revenue from the BFT-1 and MTS contracts accounted for 40 percent of the Comtech's revenue.
Since 1999, Comtech delivered about 139,000 BFT-1 mobile satellite transceivers and 47,000 MTS units.
In August, Comtech corporate offers to sell the rights to CMDC's intellectual property to the Government for $120 million.
The Government declines.
With the Army indicating it would contract for satellite capacity directly rather than through Comtech,
during a September conference call to investors, Comtech officials indicated they would charge the government
a separate fee for the use of the company's intellectual property.
Comtech makes "The GMI Risk List" for October, 2011 with the following
analysis from GMI Ratings:
The defense industry in general poses social concerns for some
investors. At defense contractor Comtech, the average director tenure is
18 years and only one director is under seventy; the board also lacks
diversity with regard to gender. High average tenures and ages, taken
together, suggest entrenchment planning concerns. Remuneration decisions
are only loosely linked to performance, which has lagged peers and the
S&P 500 for the last five years. Finally, a number of accounting
flags suggest that expenses may be understated or possibly capitalized.
Also in October, Dan Wood resigns as President of Comtech Mobile Datacom.
Operation of the division is to be handled by Comtech AeroAstro, a sister
division located in Ashburn, Virginia.
According to a Schedule 14A (Proxy Statement) filed in November 2010 with the
Securities and Exchange Commission (SEC),
in addition to his $314,140 base salary,
Mr. Wood received a 2010 non-equity incentive award of $750,000 which
was primarily based on the level of fiscal 2010 pre-tax profit achieved
for the business operations for which he was responsible and the ECC's
[Executive Compensation Committee] evaluation of his overall performance.
The evaluation includes this:
The ECC considered the fact that the subsidiary Mr. Wood supervises was
not selected as the program manager and vendor for the Blue Force Tracking
2 ("BFT-2") program because a third party vendor bid a price that was 50%
lower than the price submitted by Mr. Wood's subsidiary. Ultimately, as
a result of the expected future decline in sales and profits related to
BFT-2, the Company recorded a goodwill impairment charge in its fiscal
2010 results.
Mr. Wood was also awarded 20,000 shares of CMTL stock in June 2010,
with an estimated value of $216,354. His total reported compensation
for the 2010 fiscal year was $1,451,726.
In addition, at the time of his departure Mr. Wood sold 42,000 shares of
CMTL, netting $1,332,240.
Later in October, Comtech corporate tersely announces his departure and names
his replacement as Paul Lithgow. From the press release,
Fred Kornberg, Chairman and Chief Executive Officer of Comtech
Telecommunications Corp., said:
"As President of both CMDC and AeroAstro, Paul is the perfect candidate
to further reposition our mobile data communications segment. I believe
that Paul's experience in establishing AeroAstro as a leader in the
emerging microsatellites industry will be beneficial as we continue to
adjust our mobile data communication segment's business strategy."
"I believe that the people and technology at CMDC are second to none
and I am confident that Paul and the team will position our mobile data
communications segment for future growth and continued profitability."
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