Multiple choice
If the mission-critical project is big and complicated, they are the companies you want on your side.
As regular contractors for the U.S. Department of Defense, firms like Raytheon, Northrop Grumman, Lockheed Martin and General Dynamics have overseen the development of military systems featuring the highest levels of complexity, security, reliability — and compensation.
Historically, these primarily federal contractors have not participated much in the public-safety communications market characterized by local government entities that frequently are forced to wrestle with budgetary limitations. As a result, the public-safety land-mobile-radio industry has been dominated by names such as Motorola and M/A-COM, which have reputations for delivering reliable voice systems that are within the financial reach of local public-safety agencies.
These traditional public-safety vendors also have reputations for delivering solutions that primarily feature their own products. These include proprietary technologies that do little to enhance multiagency interoperability and provide users with little vendor choice for upgrades and replacement parts.
Interest on the part of public safety for greater interoperability, wireless data capabilities and standards-based technologies — not to mention billions of dollars in new federal funding to the sector since the 9/11 terrorist attacks, according to some — has caused the traditional military contractors to reconsider the pursuit of public-safety projects, as systems integrators for increasingly complex systems.
“If you look at the capabilities we have as a company … [public safety is] a natural extension of what we already do real well,” said Bill Iannacci, Raytheon’s director of civil communications solutions.
FOR SOME, SIZE MATTERS
Indeed, the ability of traditional defense contractors to manage large projects while integrating technologies from multiple vendors has long been acknowledged. That’s why there was little surprise in the industry when these companies pursued the much-ballyhooed Integrated Wireless Network (IWN) contract — potentially a multibillion-dollar deal to deliver a next-generation network to federal law-enforcement personnel.
Ultimately, a General Dynamics-led team emerged as the winner of the bid process over a Lockheed Martin team — a victory that is of questionable value amid increasing speculation that the entire IWN project could be scrapped.
And the IWN bids have proved to be the extent of the interest in law-enforcement communications for the two finalists. A General Dynamics spokesman said his company does not have any public-safety contract. The same is true for Lockheed Martin, although the company has done work on security-related communications systems for New York-area transit systems and port authorities and would not dismiss the possibility of providing solutions to public-safety customers.
“It’s one of those you-don’t-want-to-kill-a-mosquito-with-a-hammer sort of thing,” said Craig Quigley, a spokesman for Lockheed Martin. “If it’s a relatively small requirement by a small municipality somewhere, their needs probably just don’t appear to be a good fit with the capabilities we bring to the table.”
But some traditional defense contractors foresee a future in public-safety communications. Northrop Grumman is serving as the systems integrator for a broadband wireless network for the city of New York using TD-CDMA technology on 10 MHz of licensed spectrum in the 2.5 GHz band.
Northrop Grumman is no stranger to the public-safety arena, having bought TRW a decade ago and having spearheaded the Ohio MARCS network buildout. But the New York broadband project — as well as the pursuit of a broadband wireless network that would be designed to support the wireless data needs of first responders in the Silicon Valley region — represents a new chapter of system integration for public safety that relies heavily on IP-based technologies.
Many public-safety officials have expressed reservations about using IP systems for mission-critical communications, but Northrop Grumman designs its private IP networks to meet such lofty standards, said Robert Brammer, vice president and chief technology officer for Northrop Grumman’s information technology sector.
“For most consumer applications, if you have a dropped cell-phone call, it’s an annoyance, but it’s not going to kill you,” Brammer said. “On the other hand, if you have a dropped call in an emergency-response situation, it could do exactly that.
“So the standards of reliability, security and robustness for public safety are much closer to what we’ve been used to with our national-security stuff, so it’s a very natural extension for us to do that sort of business.”
While technically a municipal effort, the New York City broadband wireless network is unquestionably a large endeavor — a $500 million project in one of the most challenging environments for wireless communications. But Brammer said Northrop Grumman remains open to pursuing public-safety business in smaller-scale projects, as well.
“Obviously, we’re more interested in the larger ones, because we think that’s where we would have correspondingly more to offer,” he said. “But there could be other considerations. … It would depend on what else we were doing in the area — for instance, if we have other opportunities with that city or that state.”
Raytheon plans to make its mark as a public-safety communications systems integrator in markets of all sizes — an approach that may be unique among the defense-contracting companies, said Iannacci.
“We’re typically only running into our typical competition when it’s something like a California,” he said. “We haven’t seen anyone else interested in the Quad Cities or Mississippi River area. So I think they are still driving from a dollar-and-cents point of view.”
This philosophy is reinforced by Raytheon’s project in the Quad Cities region of Illinois and Iowa, where the company is providing IP-based voice, video and data services in a pilot project that has been extended another six months through at least the end of the year. In addition, Raytheon also has an unannounced small county in Illinois that’s an even smaller customer, Iannacci said.
“The initial award’s probably going to be about $200,000 — and, on the scale of Raytheon, that’s very, very insignificant, but it’s significant [to the customer],” Iannacci said. “Although it won’t turn into some rich, lucrative opportunity, it will turn into a long-term, profitable relationship. Also, by word of mouth, it will spread. So at the same time that we’re going after that, we’re also going after some several-hundred-million-dollar opportunities that make sense.
“We’re not restricting [potential customers by size, and we’re not snubbing our noses up just because somebody only has $100K or $200K right now. If it fits our model, we will definitely engage.”
VALUE OF INTEGRATION
Like Northrop Grumman, Raytheon is familiar with the public-safety market through its purchase of interoperability solutions vendor JPS a few years ago. Although Raytheon has learned a great deal about the public-safety market via JPS, Iannacci said the company’s success as a systems integrator requires it not to play favorites when recommending products for public-safety customers.
“When you’re talking about a Motorola and those type of companies, they’re really focused on pushing their product, and we’re really focused on pushing and selling a solution, and the product will follow from that,” Iannacci said. “We want to take an overall solution point of view, not a specific product.
“If I’m in a case where it doesn’t make sense to use an ACU-1000 because [the public-safety customer] already has some of the competing company’s equipment and they need more, I’m going to buy the competing equipment, because they already made that decision. If it’s a clean-stock position and I think the JPS product is the best fit, I’ll recommend JPS. But I need [the customer] to feel at ease that they’ve got an agnostic partner in terms of product.”
Iannacci also said Raytheon believes it is important for public-safety entities to separate themselves from the stovepipe systems that traditionally have dominated the market.
“If they know what they’re doing, and they really want to buy something that’s not standards-based, we’ll do it,” he said. “But at least we let them know, ‘Hey, you’re putting yourself on a proprietary path again, where you’re going to lock yourself out. Because, as you evolve down the line in the future, you’ll want to add to and replace stuff in your system very easily.’ That’s what we’re trying to get across.”
In addition to open standards, using a systems integrator can give public-safety agencies access to new and innovative technologies. In New York City, Northrop Grumman will use TD-CDMA technology from partner IPWireless, which had no previous public-safety experience.
Most familiar with the situation believe relatively conservative public-safety officials would not have agreed to having a market newcomer like IPWireless deploy such a large network. However, having a proven name like Northrop Grumman vouch for IPWireless — the companies had partnered on commercial UMTS networks in Europe — removed much of the perceived risk from the city’s perspective.
“We’ve actually been working with Northrop for about three years, so it’s not like they’re putting out a new, untested technology,” said Jon Hambidge, vice president of marketing for IPWireless. “We think Northrop has done a really nice job of putting all the services on top of the network. I know that a lot of other cities are looking at doing similar projects, so it’s a nice beachhead for us.”
MARKET FORCES
Exactly what impact former defense contractors will have on the public-safety market is uncertain, but their presence should increase as public safety moves toward larger broadband systems focused on achieving greater interoperability, said Ron Haraseth, director of automated frequency coordination for APCO.
“It has the potential of looking outside the old standard box that public-safety communications used to come in,” Haraseth said. “When you’re looking at these large systems, you’re also looking at integrating with everything from federal entities to commercial entities supporting critical infrastructure. You can get significant economies of scale and multiple funding resources when you do that.”
Quantifying those economies promises to be a critical element in the success of system integrators in the public-safety market. For example, using a systems integrator typically means additional upfront cost for the customer, but an integrator’s relationships with vendors — particularly those vendors to which the integrator directs significant business — can generate price breaks on products that small and medium-sized agencies may not be able to secure on their own.
“With our size and our buying power, if you will, we will be able to get good prices,” Iannacci said. “If you take a small county that’s just dealing with Motorola on its own versus if Raytheon is buying a larger quantity — because of multiple places — from Motorola, we’re going to get a better price for them.”
If the proposition becomes compelling for public safety, the impact could be notable on many existing market players that have relied on establishing relationships and forging deals with public-safety entities on an individual basis. Much will be learned during the upcoming year as $1 billion in interoperability grant money is distributed and the fate of a proposed nationwide wireless broadband network for public safety is determined, said Rick Burke, managing partner of Televate, a public-safety systems integrator that is much smaller than the defense giants.
“We’ve been evaluating whether to change our business strategy based on how this market shakes out,” Burke said. “If it’s predominantly just a nationwide carrier and it isn’t individual jurisdictions/entities building networks, then our business model changes.”
But Burke quickly emphasized that the need for Televate’s wireless experience — the company spearheaded the 700 MHz EV-DO network built for public safety in the National Capital Region — will be valuable in the market under any circumstances, as a primary contractor or as a member of another systems integrator’s team.
Haraseth echoed this sentiment. “It’s going to impact [existing public-safety vendors],” he said. “However, they have an excellent opportunity to subcontract with the same entities. It may actually open up more business for them.”
HERE TO STAY
Business models and market share aside, there seems to be little doubt that Northrop Grumman and Raytheon plan to serve as public-safety systems integrators for some time.
“We think public safety is a good market for us,” Northrop Grumman’s Brammer said. “Obviously, it is a market in which cost is a significant factor — you have to be very efficient on this, and you’re not going to get contracts of the size we could get from the Defense Department to build next-generation fighters.
“On the other hand, this can be a growing and profitable business. This is not some sort of duty call on our part — we’re in this as businessmen … and we’re not in the charity business. We like those areas of business where we think it’s a good business proposition, but it’s also important to the country that you do this work. We’re not just out to make a buck on this stuff.”
Raytheon’s Iannacci said his company is committed to the public-safety communications sector for the long term, which helps explain its strategy of pursuing business even in smaller markets.
“Sometimes, a small initial effort and a willingness of people to work grows a relationship over five years or a decade, and you help get more funding,” Iannacci said. “So, it’s not just a what-have-you-got-for-me-now thing. It’s not so much size, it’s whether it fits the [Raytheon business] model and the strategy going forward.”
