FAA award makes ITT a more competitive integrator

ITT Corp. scored a major coup when it won a contract to replace the Federal Aviation Administration's antiquated radar-based air traffic control system with a state-of-the-art satellite communications system.

The three-year, $207 million contract for FAA's Automatic Dependent Surveillance ? Broadcast project "is clearly an enormous win for ITT," said Warren Suss, president of Suss Consulting Inc. "It speaks very well of the way the company did their homework and their long-term relationship with the FAA."

ITT's relationship with FAA goes back to at least 1999, when ITT bought the space and defense communications business of Stanford Telecommunications Inc., which had been providing telecom engineering support to the agency.

"ITT is moving up the value chain," said Philip Finnegan, director of corporate analysis at Teal Group Corp., a business intelligence company in Fairfax, Va. "It's doing increasingly complex tasks and that's the sort of thing that [contractors] are aspiring to now. This is a key win for ITT."

ITT "did a brilliant job of building good client relationships and learning the [agency's] technical requirements and environment," Suss said. "It also allowed them to put together a strong team with the kind of boutique companies that understand issues like the radar interfaces and other very unique technical requirements from the FAA."

Suss said FAA is risk-averse, very sophisticated from a technical point of view, and not prone to introduce change easily or quickly. "The trick to winning in an environment like this is to just nail every risk area and show how you deal with it," he said, "and also take a very strong technical position on how you're going to fix and resolve the problems. Obviously, ITT did it."

Asked to speculate on why ITT was chosen over competitors Raytheon Co. and Lockheed Martin Corp., Suss said he believes in a specialized niche such as the ADS-B project, boutique companies may work better because they are more agile and able to tailor a solution than a larger company. "Sometimes in larger companies, they get a little process-heavy in the way they approach these deals," he said. "They check all the boxes but they miss the soul, the heart of what it takes to win. And so I think in this particular case, it speaks very well of at least this part of ITT."

The contract is really important to ITT because there's a lot of upside in terms of future work, Finnegan said. ITT has substantial technological strengths, for example in night-vision technology, it will be able to leverage that expertise going forward.

"It makes them a much more competitive player against heavyweights like Lockheed Martin and Raytheon," he said, but declined to offer any assessment as to why they were not chosen for the contract.

For ITT, the win broadens work it has been doing under a seven-year, $206 million contract it won in 2004 to support FAA's telecommunications services management office, Finnegan said. "What they've done is build on that capability and their presence within the FAA."

Finnegan added that the contract increases ITT's systems integration capabilities and boosts FAA as a customer.

The new contract is the cornerstone of FAA's Next Generation Air Transportation System, said Glen Dyer, deputy director and program manager at ITT.

ITT must have the ground tracking infrastructure operable nationwide by 2013 and all aircraft must be equipped with the new technology by 2020. Many planes already have compatible GPS devises that transmit air-to-air data for pilots in the area, Dyer said.

ITT will be responsible for the overall systems integration and engineering of ADS-B, through September 2025, giving the overall contract a potential value of $1.86 billion to the ITT team.

"What we're building on the ground is a network of ground radios tied in through a telecommunications network being provisioned by AT&T to central data collection facilities where we process the data for delivery to the FAA at the FAA facilities for air traffic control," Dyer said. "As you can see, there are no requirements to launch satellites."

According to FAA, ADS-B will be nearly 10 times more accurate than radar. It will let controllers and pilots know the precise location of aircraft, which should result in more direct flight routes, better use of airspace, fewer delays and improved safety.

The other two facets of the NextGen program are DataCom, which will allow pilots to more easily communicate with one another, and Systemwide Information Management, to facilitate information-sharing and collaboration within the aviation industry are the other NextGen components.

Dyer said ITT will bid on those contracts too when they are announced. "We're excited about the modernization. We think it's absolutely required."

Spokespersons for Lockheed Martin and Raytheon gave indications that both contractors will seriously consider competing for future NextGen contracts.

"While we're disappointed that our solution was not accepted, we remain committed to help the FAA modernize the national airspace system through current and future NextGen programs," said Anna DiPaola, spokeswoman for Transportation and Security Solutions at Lockheed Martin.

Raytheon spokesman Lynford Morton said, "We will continue to be a trusted partner to the FAA on air traffic control and continue to look forward to opportunities and help our nation address its goal for safer and more secure travel into the next generation."

ITT of White Plains, N.Y., ranks No. 16 on Washington Technology's 2007 Top 100 list of the largest federal government prime contractors.