Young Firm Benefits in Top Gun Pact
Cubic Corp.’s loss of its 16-year lock on the “Top Gun” computerized pilot-training market last month was good news for an upstart San Diego company that happens to be the major subcontractor to Cubic’s victorious competitor.
The company, Applied Data Technology, was founded here just one year ago by longtime defense consultants James Flora and William Gordon. Their company will supply systems software and integration to Kollsman of Merrimack, N. H., which last month received the $26.7-million contract to supply air combat maneuvering instrumentation ranges for Air National Guard bases in Alaska and Wisconsin.
Kollsman beat out not only Cubic but Science Applications International of San Diego and Metric, a company based near Orlando, Fla. The air combat training systems enable pilots to conduct simulated dogfights without using live ammunition and are integral parts of the Navy’s Top Gun fighter pilot-training program. After the flights, the systems let pilots review their performances in electronic “debriefing” rooms.
60 Hires Planned
Applied Data Technology’s piece of the Kollsman contract will be worth $10 million to the new company over a two-year period, said Flora, who is Applied Data Technology’s president. Although the company has just 15 employees now, it will hire 60 or more additional workers over the next three months, said Gordon, vice president of development. Last month, the company moved into a new 48,000-square-foot plant in Sorrento Valley.
Until last month, all air combat training systems had been exclusively supplied to the military by Cubic as prime contractor. Cubic has built 21 of the systems, costing up to $25 million each, for Air Force and Navy bases, as well as for foreign armed forces friendly to the United States.
But last year, Cubic became enmeshed in the so-called “Ill Wind” defense procurement scandal when its offices were searched by federal investigators. Cubic has acknowledged that former executive C. C. Wellborn, who retired last month after 32 years with the company, is a target of the fraud probe. The U. S. attorney’s office in Virginia recently said that Cubic is a target, but declined to say when and if charges will be brought.
Last September, the Pentagon banned Cubic from receiving classified contracts for 30 days, charging it with failing to adequately secure classified information at its Defense Systems subsidiary.
In addition to the continuing fraud probe, Cubic may have been at a disadvantage in the recent bidding because of the military’s desire over the past two or three years to unfetter itself from as many dependencies on sole-source suppliers as possible, Flora said.
Technology Top Criterion
To promote more competition for the Top Gun contracts, the Air Force specified in its request for proposals that the lowest bid for the contract to supply the system for the Air National Guard bases near Anchorage, Alaska, and Madison, Wis., would not necessarily win the award. Technology was listed as the prime criterion, Gordon said.
That “is the only way the government can control who is best suited for the job,” he said.
Other companies had begun chipping away at Cubic’s domination of Top Gun systems even before the defense procurement scandal broke. In late 1986, Ford Aerospace won a contract to run operations and maintenance at range systems in Virginia and Arizona. In the same year, Kollsman had won the contract to supply “pods,” or airborne hardware, for aircraft used in the training systems.
It was Kollsman’s success at wresting a manufacturing contract away from Cubic that led Flora and Gordon to the division of Sequa Corp. of New York, and to suggest they link forces. The combination of Kollsman’s manufacturing prowess and capacity with Applied Data Technology’s systems design and engineering won over the Air Force last month, despite the fact that the team has never built an entire range system.
Cubic did not take the reversal lying down. Apparently apprised that it was about to lose the Alaska-Wisconsin contract, Cubic made an unsuccessful court bid shortly before the contract was announced asking a Washington judge to delay the award to Kollsman. Documents supporting Cubic’s court challenge remain sealed and Cubic has declined to comment on the basis for it.
Flora and Gordon declined to comment on the court challenge, saying only that the contract was awarded, in Flora’s words, after a “fair and open competition.” Cubic spokesman Jerry Reeves said that Cubic was aware of Applied Data Technology, but had no comment on the company.
Teaming up with Kollsman, Applied Data Systems will be submitting bids on other Top Gun range systems as well, including a system to be installed in the Philippines beginning later this year and a contract to upgrade an existing system at the Oceana naval air base in Virginia Beach, Va.
Both Flora and Gordon have been in the defense contracting business for the better part of two decades, and have worked with Cubic in some capacity to produce air combat simulation systems.
Flora, 43, began his career as a civil servant providing engineering support for naval weapons systems. After leaving the government to work for Triga, a Ventura-based weapons maker, Flora started his own San Diego-based company, JAF Associates, in 1982. There, he did work for manufacturers of various military training, weapons and communications systems, including Cubic.
Gordon, 46, was a longtime employee of Ford Aerospace before starting his own consulting firm, Entertech, and linking up with Flora. Applied Data Technology was capitalized with $1 million last year, all of which was contributed by eight employee-stockholders of the company.
The company is determined not to become a one-trick pony in the defense business. Aside from range systems, Applied Data Technology expects to start production later this year on test instruments for auxiliary power units used in military and commercial aircraft. The potential market for the testers, which will sell for between $10,000 and $15,000 each, is in the “tens of thousands of units,” Flora said.
