|
By Dianne Claydon
December 27, 2005
Hanscom Air Force Base’s survival was one of the biggest technology-business stories of the year: The base dodged a bullet when the federal Base Realignment and Closure Commission, or BRAC, kept it open. More than 5,900 base staff and thousands of defense contractors — not to mention local political leaders — breathed a collective sigh of relief.
Yet looking ahead, local defense suppliers and contractors that provide engineering and consulting support to Hanscom will face a new challenge in 2006 as the U.S. Air Force Electronic Systems Center, or ESC, revamps its bidding process.
“The truth of the matter is, we expect there will be fewer contractors than we currently have,” said Chuck Paone, spokesman for ESC, which is headquartered at Hanscom and administers contracts to companies nationwide. Further, he said, he doesn’t foresee an increase in contract dollars for 2006.
“I don’t see any trigger for job growth or revenue growth as it stands, at least not for ESC or Hanscom. I don’t see a great triggering mechanism right now,” Paone said.
And if that isn’t enough, Paone also said that companies will now vie for ESC contracts under three new categories — a process that could leave some funded companies in the cold.
“The whole enchilada is being recompeted in ’06. So in dollar terms, supporting companies may not just keep getting individual task orders,” Paone said. “It’s a whole new process with new categories, and it offers up the possibility that existing contractors get more work or less work,” he said.
Leading up to the decision to keep the bases open, defense executives, economists and politicians formed an alliance coordinated by Christopher Anderson, president of the Massachusetts High Technology Council. Known as the Mass Defense Technology Initiative, directed by Al MacDonald and co-chaired by U.S. Sen. Edward Kennedy and Gov. Mitt Romney, the group was formed to lobby for the defense industry and bases after the BRAC process.
Last year, Massachusetts-based companies represented 20 percent to 25 percent of the roughly $3.3 billion in contracts awarded by the ESC, which employs about 1,500 military and civilian staff directly and 1,316 contractors.
Estimates by the University of Massachusetts Donahue Institute show that some 10,000 secondary jobs with a total payroll of $708.9 million are likely created in Massachusetts based on the base’s 2003 procurements of $957 million, and that Hanscom’s vendors generate about $1.1 billion annually.
The total impact could reach about $3 billion if all direct and indirect payroll, vendor output, and spending by those with secondary and base jobs are included. Those expenditures would include purchases of homes, food, clothing, construction, education, financial services, entertainment, cars and other goods and services.
Contractors eye bid options
Jim Regan, chief executive of Dynamics Research Corp., a 50-year-old engineering and information technology company, said he believes his firm expects a smaller contract with ESC in 2006 compared with last year’s approximate $31 million — which was about 10 percent of the firm’s 2005 revenue. At the same time, he said that he expects his company to grow and possibly add new jobs. Regan said the changes to ESC’s bidding process might result in more awards to smaller businesses — and that larger companies such as DRC could become sub-contractors to them. “There is opportunity for growth in our industry,” Regan said.
In the past, ESC applications were under one umbrella, Paone said. Soon applicants will choose from three categories: engineering support, acquisition support and specialized cost services.
Defense contracts, including those from ESC, make up about 80 percent of DRC’s revenue overall, Regan said. DRC has about 150 people working at Hanscom on projects related to the Joint Star program, a long-range surveillance radar system that is being used in Iraq and Afghanistan, and on software for the global command and control system.
Raytheon Integrated Defense Systems division, based in Tewksbury, received an ESC contract for $752 million in June for an early-warning surveillance radar system for Taiwan, and that contract will last for several years.
“We will also provide training and logistics support for that system,” said Guy Shields, a Raytheon spokesman. Shields said Raytheon IDS doesn’t know yet if it will obtain a new contract with Hanscom next year under the new bidding system, but that it plans to apply for contracts related to radar and surveillance.
MIT’s Lincoln Laboratory, on the other hand, expects to continue to receive about the same level of funding from Hanscom, which was about $600 million in 2005, or 5 percent of the lab’s total funds, according to Roger Sudbury, who works for Director Tony Sharon.
Lincoln is conducting research and development for ESC related to “radar on moving platforms,” such as aircraft The lab has traditionally provided prototype technologies and test flights to Hanscom. Most of its 2,500 employees are at the lab’s Hanscom facility.
Billerica’s L-3 Titan has about 300 employees working at Hanscom on ESC projects and another 200 working on ESC projects nationwide. The company deploys engineers, physicists, logisticians and others for Hanscom projects.
“We have a spectrum of people managing the programs and contributing to the technology,” said Bill Flanagan, a Titan senior vice president who manages its ESC projects.
Titan’s work includes support on foreign military sales and case management, he said, including sales of weapons systems to Japan, Turkey, France and Australia. Titan also provides support on international surveillance and reconnaissance projects to Hanscom. Flanagan wouldn’t disclose contract values for 2005.
In 2003, Titan won about $73.9 million in Hanscom contracts, according to Defense Department data compiled by the Donahue Institute. It ranked No. 3 on the list by dollar value, behind MIT, which received about $495.7 million, and the Mitre Corp., which landed about $186.7 million in awards.
U.S. Rep. John Tierney, of Bedford, where Hanscom is located, was part of the campaign to keep the bases open and is a member of MassDTI. He said other challenges lie ahead.
The Democrat said that while Hanscom and the local defense industry are vital to the state’s economy and to national security, impediments to fostering a skilled workforce still exist.
“The benefit to national security is that we have the best highly skilled research and technology and manufacturing people in the area,” he said. “But we need better support and investment in higher education as well as K12 preschool,” to sustain that skilled workforce.
|
