Special ops forces get new focus

Demand for rugged likely to grow despite budget uncertainty

The big unknown overhanging the government rugged IT market is how the inevitable budget cuts will affect demand, particularly from the all-important military sector. But despite uncertainty about where the extra demand will come from, most participants see a recovery from a recession-led contraction in 2009 continuing.

VDC Research, which published a broad survey of the overall rugged market in 2011, is confident at least in the broader trend. It puts the overall government market at $1.5 billion, with growth to continue at 7 percent a year through 2015. Over that time, however, there will be a sizable shift in the mix of rugged systems that are procured.

“So far it’s been heavily weighted to larger devices, which make up around 80 percent of the spend[ing] today,” said David Krebs, director of VDC’s mobile and wireless practice. “But we see a shift towards more portable, smaller form factors to where they could comprise as much as 40 percent of the total market by 2015.”

Panasonic, one of the biggest suppliers of rugged computing systems, sees at least a steady government market for its products. It expects to finish its 2011 fiscal year, to end in March, slightly up on 2010 in all categories, including rugged.

Although the drawdown in forces in both Iraq and Afghanistan is expected to reduce spending by quite a bit, and no one yet has any idea where the election-year budget battles in Congress will lead, what has to be remembered is that both semi-rugged and fully rugged IT products are seen as tactical devices, said Tim Collins, federal sales director for Panasonic Solutions Co.

“Warfighters will still need their tactical devices and computers, and increasingly battles are being fought with wireless technologies, laptops and other devices ” he said. “To the extent that we’ll continue to have powder keg situations and the need for policing in the places we are drawing down from, these tactical devices will still be needed.”

That demand will still be there going into fiscal 2012, he said, so at the worst he expects a flat year “and definitely no downturn.”

Defense Secretary Leon Panetta appeared to buttress this outlook in a January 2012 announcement of overall military budget cuts of around $500 billion over the next decade. Most of those cuts will come through retiring older planes and ships and by reducing ground forces by some 100,000 people.

However, there will be a new emphasis on special operations forces that will be stationed around the world to react to threats as and when they unfold. That will, in the words of President Barack Obama himself, rely on  “intelligence, surveillance, reconnaissance, counterterrorism, countering weapons of mass destruction, and the ability to operate in environments where adversaries try to deny us access.”

All of that “bodes well for rugged,” Collins said.

Confidence in the demand growth for rugged can also be seen in the Army’s latest Common Hardware Systems-4 (CHS-4) contract, which was awarded to General Dynamics C4 Systems in August 2011.

The five-year, $3.7 billion indefinite-delivery, indefinite-quantity contract, which is open to all military services, is for procurement of tactical information technology hardware and services. It defines four versions of systems: non-ruggedized, some ruggedization, fully ruggedized, and “near military specifications” ruggedized with a five-year warranty.

The previous CHS-3 contract offered just three levels of ruggedization: for commercial network hardware to meet military survivability requirements; for computers to meet various military rugged standards and HEMP requirements for tactical environments; and for ruggedized handheld devices.

The previous CHS-3 contract also only had a $2 billion ceiling when it was awarded in May 2003, which was raised to around $2.7 billion in 2010 because of the popularity of its offerings, specifically rugged. Between 60 and 70 percent of the delivered CHS-3 products have been rugged systems.

“We initiated this contract to help us stay at the edge of modern technologies to meet soldiers’ needs for years to come,” said Ashok Jain, product director for the CHS program. He had previously said CHS-4 would also deliver “more nimble, smaller devices.”

Nimble also defines the development cycle that rugged IT manufacturers have increasingly to fit themselves into. The military is looking to commercial-off-the-shelf technology and much faster turnaround times to get battle-ready devices into the hands of combat soldiers.

The Network Integration Evaluation exercises that the Army began in 2011, for example, are designed to have technologies used and critiqued by soldiers in realistic combat conditions in order to quickly work out what does and doesn’t work. The goal is to spiral new technologies down to soldiers no less than every two years.

Not surprisingly, then, the overall goal of CHS-4 is to “improve interoperability, compatibility, [and] sustainability and lower life-cycle costs on the battlefield through standardization and centralized, commercial and nondevelopmental equipment.” Users can purchase equipment directly through the contract, which is also expected to help with the accelerated acquisition process.

That could pose some challenges for rugged IT developers, Krebs said, particularly as rugged IT users push for more of the same kind of functionality they get in commercial devices such as smart phones and tablets.

“I just feel that the technology you are seeing in the rugged space needs to catch up a little bit,” he said.

Historically that’s been the knock on the rugged community, Krebs said, but it had accelerated the development cycles to where there really wasn’t much of a gap between commercial and rugged technologies.

“But I think recently that gap has widened again,” he said. “So I think that’s one of the challenges for the rugged community, to narrow that gap and provide some of the capabilities.”

About this Report

This report was commissioned by the Content Solutions unit, an independent editorial arm of 1105 Government Information Group. Specific topics are chosen in response to interest from the vendor community; however, sponsors are not guaranteed content contribution or review of content before publication. For more information about 1105 Government Information Group Content Solutions, please email us at [email protected]