August 31, 2007The Army this month launched a broad procurement for Radio Frequency Identification hardware, tags and services, but potential bidders expressed disappointment at its value and said it could require development of Defense-specific noncommercial hardware.
The contract asks vendors to provide passive RFID hardware, tags and services for the Defense Department, other federal agencies, NATO countries and Japan and Korea. In its solicitation, the Army's Information Technology, E-Commerce and Commercial Contracting Center (ITEC4), describes the RFID technology it seeks as "state-of-the-art" and asks for vendors to include fixed, portal and hand-held readers, as well as RFID label printers.
The draft specifications for the indefinite delivery, indefinite quantity contract also call for vendors to provide tags and a variety of services including engineering and program management. And the Army has asked vendors to provide hand-held readers that can work with passive and active RFID tags. RFID tags consist of an integrated circuit that stores data and an antenna to communicate with readers. Passive tags have no power supply, but the radio signal transmitted from a reader provides enough power for the tag to transmit a response. Active tags have an internal battery that provides the power to broadcast a signal to the reader. The battery power boosts the range of active tags to around 30 yards, while the range of passive tags is far less, from a few inches to a few feet, depending on the frequency range.
The new contract is part of Defense's ambitious effort to enmesh RFID into its supply chain to accurately track the tens of billions of dollars worth of goods consumed by its forces worldwide. In July 2004, Defense logistics officials required that passive RFID tags be placed on shipping containers, pallets and unit packs "when the appropriate contract clause is included," according to the Defense Department's Suppliers' Passive RFID Information Guide. Defense "has many contracts with its suppliers that are renewed and re-competed regularly," the guide states. "As these new contracts become effective, the requirement for RFID will be included, according to the supplier implementation plan."
Given the contract's broad scope, its estimated $75 million value seems low, said Larry Huseby, director of the government services group at Intermec, which makes RFID hardware and holds an existing Army RFID and barcode contract due to expire in 2009.
Huseby said he expected a higher value for the IDIQ contract because of what he called the "marginal success" of Army broad purchase agreement RFID contracts, which expired earlier this summer. Because of that success, Huseby expected the demand for RFID technology to have built up.
But the new passive RFID contract is not the only vehicle the department has available to acquire RFID hardware, tags and services, said Defense spokeswoman Cheryl Irwin. However, Huseby said he does not know of any other Defense RFID contract with the scope of the new ITEC4 deal to provide hardware and services across Defense and other federal agencies.
Huseby said he hopes the contract value will increase during its three- to five-year lifespan. For example, he said the contract could provide "great value" with competitive prices and an integrated suite of hardware and services to the Defense Logistics Agency, which he described as the "first stop" for shipments to Defense end users.
Vendors also are concerned that Defense has not addressed interoperability issues with its multiple RFID projects. Bill Hartwell, vice president for business and channel development for Motorola's government markets division, said the government should decide if it needs compatibility and interoperability between passive and active RFID programs, as well as interoperability with a project that requires suppliers to tag products shipped to Defense with Unique Item Identifier codes.
"Many in the military logistics field are users of all these technologies," Hartwell said. "Should there be a movement to consolidate all the requirements into one procurement vehicle and have multiple awardees to meet the government requirements?"
Motorola is considering bidding on the ITEC4 procurement. Symbol Technologies, which Motorola acquired last year, has supplied the Defense Logistics Agency with more than 300 readers under a contract held by Odin Technologies.
Hartwell has other concerns with the ITEC4 contract. The Army has asked vendors for a dual active/passive hand-held reader that is nothing like Motorola has seen in the commercial marketplace, where there is no demand for dual readers, Hartwell said. "The government acquisition community needs to decide if they want commercially available products or if they are willing to pay to modify commercial items to meet their demanding requirements," Hartwell said. "IDIQ-type contracts do not guarantee industry the right to recoup engineering, testing, certification costs. This has a direct and material effect on bid-no bid decisions."
Intermec's Huseby said his company adapted one of its passive hand-held readers for Savi Technology, which holds the Defense active RFID contract, to work with active tags. He said the same techniques can be used to develop a hybrid active/passive reader to meet the requirements of the ITEC4 procurement.
Another contract requirement that could prove problematic is the Army's requirement for vendors to provide RFID hardware that operates worldwide, because the frequencies used to read passive tags vary from country to country, Hartwell said. Passive RFID operates in the 900 megahertz range in the United States, while in Europe, it operates in the 860 MHz range. Hartwell said the change in frequency directly effects performance of tags, readers, power levels and how far the reader can pick up the signal from the tag. If Japan and Korea are added to the contract, then vendors would have to deal with another set of frequency, power and performance issues, he said.
Huseby said Intermec provides reader hardware to federal -- but not commercial -- customers, which allows the company to easily change frequencies depending on where they operate in the world. Paul Mathans, RFID manager for BearingPoint, said he did not believe that the difference between U.S. and European frequencies would have much of an effect on performance. Mathans said BearingPoint is interested in the ITEC4 procurement as an integrator and can apply its experience with RFID contracts it manages for the Army, Navy and Air Force to the ITEC4 contract.
Government Executive submitted a detailed list of questions to Defense on the ITEC4 procurement, asking for the value of the contract, how it fits into overall department RFID plans and details on items covered by the procurement. Defense spokeswoman Irwin declined to provide detailed information about the procurement except for the fact that it will not be the sole RFID contract and that Army Product Manager-Automatic Identification Technology manages the contract.
August 31, 2007