Awards could mean $200 million in contracts
By Peter A. Buxbaum
WASHINGTON D.C.—Five vendors won approval to supply the U.S. military with passive tags as part of a larger program that could be worth $200 million in government contracts over the next several years. This is the first of five groups of RFID sales awards.
The U.S. Army Contracting Agency awarded Blanket Purchase Agreements (BPAs) to Lowry Computer Products, Intermec Technologies, CDO Technologies, Alien Technology Corp and Security Printing Division, a subsidiary of Avery Dennison. The awards are for the provision of passive tags to all Department of Defense military branches.
The purchase agreements for the military’s passive RFID program are divided into five groups. The other four groups cover fixed and transportable readers; printers; technical engineering services, software and system integration; and hand-held readers. As we go to press, other group award announcements are expected soon.
The BPAs, which last through July 2007, give the vendors a leg up on their competitors when it comes to receiving orders for tags from Defense agencies. The agreements do not specify quantities or monetary amounts of products to be ordered, but simply signify that the vendors are qualified to supply the military with the passive RFID tags.
There are no exclusive rights to supply the military. Other vendors may still sell through other contracting vehicles. “The [BPA] is a non-exclusive purchase agreement by the Department of the Army that narrows the available vendor selection for the Class 1 EPC tags,” said Mark Brown, vice president for new business development at Lowry Computer Products in Brighton, Mich., one of the BPA awardees. “It essentially means that the vendor is approved to service the military.”
But the awards do provide the winners with potential advantages over their competitors. “It puts us in a preferred position,” said Larry Huseby, director of Intermec’s government services group. “It knocks down barriers in the purchase cycle. Some agencies may have a rule that they must get multiple bids for each purchase.” The award of a blanket purchase agreement will often be considered the equivalent of a multiple-bid solicitation.
The recently awarded agreements include “no cash value,” said Thomas Manzagol, CEO of RFID Global Solution. “It creates a contract vehicle. The government is saying it has a requirement and a demand, but doesn’t know how big that demand will be, so it’s putting these vehicles in place to accommodate that demand.” RFID Global Solution is a bidder in the program to provide integration and engineering services.
Vendors have responded with written and oral presentations and with demonstrations that their products work and meet DoD’s requirements. The Army Contracting Agency evaluated the bids by reviewing their compliance with the solicitation, evaluating the technical acceptability of the offered products, analyzing the vendors past performance and examining quoted prices “for apparent mistakes.”
The technical demonstration required each vendor to write 64 bits of data to each of five separate tags. The vendor then had to demonstrate that the tags could be read from six different angles, half of those from a distance of at least three meters.
“My sense is that price did not play a major role in the decision process,” said Larry Huseby, director of Intermec’s government group. “The award was based on performance and the demonstration criteria.” He added that price will likely play a greater role when agencies place actual orders for products.
Intermec developed its pricing “based on taking a guess on what the [defense] community will buy,” according to Huseby. “We based it on the commercial pricing of our General Services Administration schedule and discounted it slightly but not substantially,” he said. He noted that vendors with schedules could receive RFID orders from government agencies based on those schedules. He added that “as our products become commercially available we transition them onto our GSA contract.”
The DoD’s passive tags will be used for multiple purposes such as supply chain tracking, inventory and warehousing environments, open-area storage facilities, maintenance, repair, and tracking facilities, entry and exit points of military facilities, restricted office and laboratory environments, weapons issue facilities, seaports and air terminals, hazardous materials handling, and the control of military convoys.
Manzagol said the tags will be used on shipments from the military’s 30 main supply depots to the 500 end-user sites scattered throughout the world.
“The military is focusing on using passive RFID technology to augment the active technology it is using on pallets and vehicles,” he said. “Ultimately they want to aggregate data from the EPC tags on cartons with data from the active technology at the pallet level to automate the shipping and receiving processes. They are currently using barcodes for that.”
Lowry’s Mark Brown added that his company does not intend to wait for government orders, but that he intends to meet with DoD officials to “uncover opportunities to bring solutions to DoD and the defense supply chain.”
This article originally appeared in the May 2005 issue of RFID Operations.