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Comtech announces modification of BFT-1 sustainment contract from US Army; awarded initial order for Year 2 of sustainment services.

M2 EQUITYBITES-April 9, 2013-Comtech announces modification of BFT-1 sustainment contract from US Army; awarded initial order for Year 2 of sustainment services(C)2013 M2 COMMUNICATIONS

Provider of advanced communication solutions Comtech Telecommunications Corp (Nasdaq:CMTL) announced on Monday that its subsidiary, Comtech Mobile Datacom Corporation, has modified its Blue Force Tracking (BFT-1) sustainment contract and has received an initial order for Year 2 of BFT-1 sustainment services.

Reportedly, as a result of budget pressures and administrative issues placed on the US Army by the Continuing Resolution and Sequester, the US government requested, and Comtech agreed to, a two year USD43.6m BFT-1 sustainment contract which modified the terms of Comtech's previously announced three year BFT-1 sustainment contract, which had a not-to-exceed value of USD80.7m.

The contract value for Year 2 was definitized at USD20.8m and has a performance period of 1 April 2013 to 31 March 2014, while the contract value for Year 1 was definitized at USD22.8m.

The modified two year BFT-1 sustainment contract provides the US government with the ability to fund orders in stages.

Also, in connection with these modifications, Comtech has received an initial USD5.0m funded order for Year 2, which includes USD2.5m for the first three months of the annual IP license fee, with the remaining funds allocated to network operations centre services and telehousing.

In addition, based on indications from the US Army, Comtech said that it expects to receive additional orders aggregating USD15.8m for the remaining nine months of Year 2, including USD7.5m of the USD10.0m annual IP license fee. Comtech also received an additional USD1.1m of funding related to the definitization of Year 1 of the BFT-1 sustainment contract.

Furthermore, the US Army has also informed the company that it intends to award and fund a separate contract to Comtech to procure future BFT-1 sustainment services, which includes the USD10.0m annual IP license fee for periods beyond 31 March 2014.

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Publication:M2 EquityBites (EQB)
Date:Apr 9, 2013
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