Navy’s Sonar Choice Hits Bendix Hard : Technology: The Sylmar company is canceling expansion and may lay off workers after a French company won the contract.
Bendix Oceanics Inc. in Sylmar, a division of technology conglomerate Allied-Signal Inc., said it has scuttled expansion plans and may have to lay off workers after the U.S. Navy rejected a Bendix sonar system in favor of one made by a French company.
The Navy in December selected Thomson Sintra ASM, a unit of Paris-based Thomson-CSF, to develop its airborne low frequency sonar (ALFS), an advanced sonar system capable of detecting newer-generation submarines that are quieter than their predecessors.
In doing so the Navy departed from a 35-year practice of buying its sonar systems almost exclusively from Bendix Oceanics, which depends on sonar contracts for nearly 80% of its business, said the company’s president, Robert Scrofano.
The latest sonar contract makes up a major portion of a five-year, $31-million Navy contract awarded to Hughes Aircraft Co.’s Ground Systems Group. A Hughes spokesman declined to say how much of the contract will go to Thomson.
As a result, Bendix Oceanics has killed plans to hire 60 workers who were to have helped develop the latest sonar system. And the company may have to lay off employees in the next four to five years as its existing Navy sonar contracts run out and are not replaced, Scrofano said.
Bendix Oceanics, which now has 800 employees, last year had sales of about $115 million, Scrofano said. “What we are losing is a major product line that would have allowed this company to expand and would have created many more U.S. jobs over the next 10 years,” he said.
As a result of the Navy’s decision, Bendix Oceanics said its survival is threatened and three weeks ago it filed a protest with the U.S. Government Accounting Office, saying the Thomson sonars are actually less cost-effective than those proposed by Bendix Oceanics. The GAO is expected to rule on the protest in May after hearing from all parties involved in the dispute, Scrofano said.
A spokesman for the Navy did not return phone calls seeking comment.
Like the Bendix sonars, Thomson’s system, called folding light acoustic sonar for helicopters, or FLASH, is deployed from a helicopter into the water and sends out an acoustic blip that bounces off submarines, alerting nearby ships to an enemy’s presence.
The Navy told Bendix Oceanics that it chose the Thomson sonars because of their cost-effectiveness, Scrofano said. Besides Bendix Oceanics, bids were submitted by Lockheed Sanders Inc. (a subsidiary of Calabasas-based Lockheed Corp.), Martin Marietta Corp. and GEC Marconi Underwater Systems Ltd., a British company.
Thomson will develop the systems under a subcontract from Hughes Aircraft Co. The $31-million contract, which goes beyond just sonar devices and includes computer software programs, is for research and development and the production of 20 sonar systems. The Navy expects to order 200 to 400 of the systems, costing up to $1 billion, over a 15- to 20-year period beginning at the end of the decade, according to a report in Jane’s Defence Weekly.
Scrofano said Bendix Oceanics proposed two systems, one that would have cost about 2% more than the Hughes-Thomson proposal and one that cost 2% less. The company also told the Navy that it could develop the system for less than $10 million by upgrading the existing sonars rather than replacing them with more advanced devices, according to Scrofano.
“We proposed a number of options, some that have tremendous capability,” said Daniel W. Painter, a Bendix Oceanics consultant who recently retired from the company after 25 years of service. “But they went out of their way to throw us out. We didn’t feel it was a fair competition.”
The decision means Bendix Oceanics may be cut out of the international sonar market altogether because foreign navies typically follow the lead of the U.S. Navy, which has a reputation for thoroughness in evaluating systems bid for contract.
In addition to possible layoffs at Bendix Oceanics, the company’s 400 suppliers would also be hurt by the cutoff, Scrofano said.
“If the French get this job, we will have an almost impossible battle to sell our systems,” Painter said. “We are now dominant. In one fell swoop they will become dominant. We are not too happy about that.”
Scrofano said the Navy’s decision came less than four years after it urged Allied-Signal in 1988 to reject an offer from Thomson to buy Bendix Oceanics for an undisclosed sum. The Navy said it didn’t want Bendix Oceanics’ technology to fall into the hands of a foreign company that had business ties with terrorist nations such as Libya and Iraq, according to Scrofano and an Allied-Signal spokesman, Vern Alexander. As a result, Allied-Signal pulled out of the buyout negotiations, Alexander said.
“It is ridiculous that the Navy did not support that sale, yet three years later turns essentially the worldwide marketplace back over to Thomson,” Scrofano said.
