Winning government defence business

October 31, 2016

An American SME perspective

US SME Qwaltec has secured its first prime supplier contract with the US Navy, which it hopes will lead to bigger things. Defence writer Mark Lane talked to Qwaltec Chief Executive Shawn Linam about the company’s recent win, and the challenges SMEs face when bidding for US government defence contracts.

Arizona SME Qwaltec has secured a $19 million contract with the US Navy for the operation and maintenance of satellites. The company is teaming up with Maryland-based LJT & Associates for the five-year Satellite Operations and Maintenance Services (SOMS) contract located at the Navy Satellite Operations Center (NAVSOC) in Point Mugu, California.

Qwaltec provides mission readiness, spacecraft operations, technical training, systems engineering and programme management support to a variety of government and commercial customers, primarily within the aerospace and defence industries, working with customers such as Lockheed Martin, Orbital ATK and NASA.

The company, which has 40 employees and also has offices in Maryland, California and New Mexico, has worked for NASA on the Joint Polar Satellite System (JPSS), a joint programme between NASA and NOAA, the National Oceanic and Atmospheric Administration. It is also working on the development of a commercial satellite constellation.

An American SME perspective US SME Qwaltec has secured its first prime supplier contract with the US Navy

The SOMS contract will be centred on Point Mugu but also delivered on other ground stations around the US which communicate with the satellites.

Chief Executive Shawn Linam, who co-founded Qwaltec 15 years ago, commented: “The contract is to operate the satellites and maintain the ground systems that are communicating with them. It’s a one-year contract with four option years. The $19 million is over the five years assuming we perform well – and we intend to.’’

Qwaltec will be working on a number of satellites, including the Mobile User Objective System (MUOS), the US Navy’s latest communication satellite which uses ultra high frequency (UHF) communications.

“It’s the next generation of communication satellite for the Navy for mobile users at high speeds,’’ explained Linam.

Her company also does work as a sub-contractor to General Dynamics on an engineering contract for satellite analysis, also for the US Navy, with a Qwaltec engineering team working alongside a General Dynamics team.

“If there’s a malfunction or a fault or a problem, the operations team will bring it to the attention of the engineering team which goes to resolve the problem or does analytics on the satellite,’’ she said.

In addition the company serves as sub-contractor to General Dynamics in its upgrading of the Tracking and Data Relay Satellite System (TDRSS), a network of communications satellites used by NASA for space communications. The system is being upgraded from analogue to digital with Qwaltec responsible for training on the new system.

The new US Navy contract – the first it has won in its own right – is significant for Qwaltec.

“It’s our first win as a prime contractor,’’ explained Linam. “We are a woman-owned small business and it’s hard to prove to the government when you haven’t had a contract before that you can manage a contract, so it’s really exciting for us.’’

Bidding for government defence contracts can be a lengthy and involved process in the US, as it can be in the UK too. The US Government issues a Request for Proposal (RFP) inviting expressions of interest. In the case of the SOMS contract this was done through SeaPort-e, the US Navy’s electronic platform for procuring support services in 22 areas. The portal provides a standardised means of inviting offers from large and small businesses alike and is designed to encourage small business participation.

Fortunately, Qwaltec had recently applied to be listed as a prime contractor on SeaPort-e shortly before the SOMS contract was issued which allowed it to put forward a bid in partnership with LJT & Associates, which specialises in maintaining ground systems.

“You have discussions with potential team mates, you go through the proposal phase and you write a proposal; it’s a very intensive effort, having done your research and homework to understand the customer and understand their needs for the contract, so it’s a lengthy process,’’ stressed Linam.

That process, from preliminary discussions to contract award, can take two years. This poses a risk for a small business, as subsequent failure to win the contract represents a significant waste of resources in time and money.

“It’s a big decision to decide if you’re even going to attempt going for the contract,’’ she admitted.

In the SOMS case, however, the contract was a small one – in defence terms – and the process was quick. The RFP was issued in July 2016; a proposal had to be submitted in August; Qwaltec was notified that it had been successful in September; and the contract began on 1 October.

“That went really fast – and that’s rare,’’ said Linam.

Learning that its bid had been successful was, of course, terrific news for the company.

“The reaction was one of extreme excitement,’’ recalled Linam. “I was travelling at the time and got a text message. We knew we had a good chance but there was still a bit of disbelief and re-reading of the text message. In fact I texted back, `Are you sure?’ as I didn’t want to get my hopes up if it was a mistake. But we were just thrilled, this is just such a big step for us.’’

Qwaltec, which previously had 40 employees, has had to take on 17 additional staff for the SOMS contract. It is optimistic that this will open the way for more defence work as a prime contractor.

Ms Linam said: “Just having that prime contract will make us more viable for future government contracts. I think it gives us more qualification; though we have done operations for years, it has been on a much smaller scale, so this will increase our skill set and that will enable us to bid on other contracts. We have to execute, of course, and execute well, but as long as we can show that we can execute well it will give us that track record to prove that we can do it.

“We’re pretty excited about this contract and hope we can leverage it for future growth.’’

She sees plenty of opportunities for expansion in the satellite sector, both defence and non-defence related, particularly with the rapid development of unmanned aerial vehicles (UAVs), or drones.

“I think it will be tremendous.’’ she said. “One of our customers is launching 650 satellites – and that’s a conservative number – and that will be the largest satellite constellation put into orbit. There are lots of other satellite programmes – everyone from Facebook to Google are all looking at satellite communications and imaging satellites.’’

Qwaltec has already worked on drones and now plans to exploit the expertise gained by marketing.

Ms Linam concluded: “That could be potentially huge, with Amazon looking at drone delivery, so we hope to be positioned to provide services to that market as well.’’

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