GTE Group Wins Huge Army Award : French Firm Shares $4.3-Billion Combat Phone System Pact

Underbidding its U.S.-British competitor by an astonishing $3.1 billion, a U.S.-French industrial partnership on Tuesday won a $4.3-billion contract to supply the Army with an up-to-date combat telephone system.

The system will be the first in U.S. Army history to tie all active and reserve units together with an encrypted, jam-resistant mobile communications network, the Pentagon said in announcing the contract award.

Most of the equipment is already being used by the French and Belgian armies.

The $4.3-billion bid from GTE Corp. and its French partner, Thomson CSF, was chosen over the $7.4-billion offer made by Rockwell International Corp. and its British partner, Plessey Defense Systems.

It may be the biggest single purchase of foreign military equipment that the Pentagon has ever made.

The winning team includes an El Monte company, Gould Inc.’s NavCom Systems division, which will build the French-designed GR-222 radio for the mobile network.

Local Firms Benefit

The Gould share in the contract exceeds $200 million, said spokesman Steve Milakov, and will likely add 100 to 150 jobs at the El Monte facility, which already employs 1,200. The company will produce 5,000 of the radios over the six-year contract, with initial delivery about two years off, Milakov said.

Other Southland firms among the 20 subcontractors include Genisco Memory Products in Cypress, Litton Systems Inc. in Van Nuys and Magnovox Advanced Products Systems Co. in Torrance.

The Pentagon delayed its long-awaited announcement for two months in part because the difference between the winning and losing bids was “unusually large” and had to be carefully checked out “to make sure that (the bidders) had not misunderstood” what the contract would require, Army Under Secretary James Ambrose said.

The differences were attributed to Rockwell-Plessey’s plan to deploy more, expensive telephone terminals in the field and to its need for greater start-up production costs in the United States.

Another key factor in the announcement delay was a flurry of international lobbying set off when British Prime Minister Margaret Thatcher got wind of the Army’s preference for the French system. She wrote President Reagan on behalf of the Rockwell-Plessey team, stressing that her nation had been a more reliable and loyal ally of the United States than France.

France responded to Thatcher’s appeal with some high-level lobbying of its own through its embassy.

Ambrose discounted the intense lobbying, saying that “the decision was made on a strict procurement basis.”

However, he acknowledged that Defense Secretary Caspar W. Weinberger had sent Thatcher a letter of consolation. He declined to confirm reports that the letter indicated that the British might be compensated with contracts for work on the Reagan Administration’s “Star Wars” missile defense program, officially called the Strategic Defense Initiative.

The Army’s new communications network will consist of traveling telephone exchanges that are capable of handling radio, microwave, satellite and regular land-line telephone calls at the same time. The system could handle everything from voice conversations to computer data to facsimile copies of maps drawn by front-line reconnaissance soldiers.

Equipment in Use

The basic equipment already is being used successfully by the French and Belgian armies, Ambrose said, and comparable equipment offered by Rockwell-Plessey is already in use by the British Army.

Ambrose said the Army had saved billions by taking the unusual step of acquiring proven, off-the-shelf equipment instead of developing a new system from scratch. He estimated savings of $500 million in research and development, $1.5 billion in acquisition of equipment and up to $10 billion in the reduced number of signal corpsmen required to operate the equipment over its 20-year life.

He said U.S. military officials also had enjoyed the unusual benefit of finding out that the communications equipment worked before the contract was awarded. The officials were able to observe both the French and British systems in large-scale field demonstrations.

Times Staff Writer Bruce Keppel contributed to this story from Los Angeles.