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US Army Signs $75M Contract for Passive RFID

ODIN technologies this week announced its selection as a prime contractor for a new $75.5 million contract for passive RFID solutions from the US Army's Product Manager Joint-Automatic Identification Technology (PM J-AIT) Office. The selection is a nice win for ODIN and also a positive signal of ramping adoption by the US military.
Tags: Defense
Oct 08, 2008This article was originally published by RFID Update.

October 8, 2008—ODIN technologies this week announced its selection as a prime contractor for a new $75.5 million contract for passive RFID solutions from the US Army. The selection is a nice win for ODIN, which has carved out a strong niche for itself serving the Department of Defense's RFID needs, but also a positive signal of ramping adoption by the US military.

The contract comes from the US Army's Product Manager Joint-Automatic Identification Technology (PM J-AIT) Office. In essence the contract is a new RFID purchase "vehicle"; it facilitates the procurement of passive RFID solutions by the organizations and agencies to which it applies. The "joint" designation is an important one, signifying that the contract spans the US armed forces and therefore applies to the Army, Navy, Air Force, Coast Guard, and Marines, as well as federal agencies, NATO, and multinational forces.

Previously, the process of purchasing passive RFID for those organizations was an inefficient and beaurocratic one. "In order for them to buy [RFID] before, they had to have access to an existing purchase vehicle -- like something in their agency, or a GSA schedule, or a government-wide contract -- or they had to do a formal solicitation to the market," explained ODIN's Bret Kinsella. "The latter in particular is a very cumbersome process.

"With this new vehicle, a purchase of passive RFID software, hardware, or services can happen very quickly without a lot of administrative backlog. Putting this in place is going to unlock a lot of that latent demand so they can get the RFID capabilities they've been looking for, but which have been difficult to access," he said. "It is the equivalent in the commercial world of a blanket purchase agreement."

As one of the prime contractors, ODIN is the point of contact for the contract. When an order is placed by the Army, for example, ODIN fills the order with its offerings and/or the products and services of those technology partners that are also named in the contract award: SRA International, Unisys, KTS Solutions, Intermec, Sirit, Zebra, OATSystems, and IBM.

Five other companies were also selected as "primes" on the contract, reports WashingtonTechnology: Northrop Grumman IT, CDO Technologies, Lowry Computer Products, CODEplus, and SYS-TEC Corporation.

The contract is "indefinite delivery, indefinite quantity" (IDIQ), which means that it is not a commitment to actually buy anything. In theory, therefore, it might not result in any RFID purchases. That is highly unlikely, however. "Typically if the government goes through the rather involved process of putting one of these IDIQs in place, it's because they foresee a need from within the agencies. They are in effect saying, 'We could foresee spending this amount of money.'"

The contract is for six years, but the latter three years are just for maintenance and service. "In effect it's three years," Kinsella explained, "because all the procurement and installation is only for the first three years."

The bottom line is that the contract represents a willingness by the US military to spend up to an average of $25 million per year for the next three years on passive RFID. That is a significant amount for the still-small passive RFID market. (The purchase of active RFID is totally unrelated to this contract.)

Kinsella emphasized that ODIN's excitement about the contract extends beyond its own selection. "The other thing that I immediately saw was that it looks like a strong commitment from the Department of Defense. There's clearly a lot of seriousness behind this, so we're pretty excited about the signal that it's sending."
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