ViaSat bags $350 million defense contract

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WASHINGTON — Satellite operator and hardware provider ViaSat of Carlsbad, California received a $350 million contract from U.S. Special Operations Command for a mix of tactical radio and satellite equipment.

The Department of Defense announced the contract Dec. 21, having previously stated in October 2016 an intent “to solicit and negotiate solely with ViaSat” for a meaningful amount of telecommunications gear because ViaSat “is the original equipment manufacturer (OEM) and sole provider of these systems.”

ViaSat has been able to grow its government business during a time of more stringent spending, reporting a 7 percent year over year increase in revenues to $189.2 million during the company’s most recent three-month quarter, which ended Sept. 30.

Ric Prentiss, global head of telecommunications services research at Raymond James for wireless, towers and satellites, wrote that the $350 million contract “represents a 57% increase to ViaSat’s F2Q18 funded backlog of $616 [million],” in a Dec. 22 research note.

ViaSat’s exclusive ability to provide certain military equipment positions the company “to be the sole source for additional hardware and software going forward,” he wrote.

Mark Dankberg, ViaSat’s chairman and CEO, made a similar point during a Nov. 8 earnings call describing ViaSat’s approach to the government market.

“A significant portion of our growth has come from identifying and developing new products and services that fill end user needs that are not served by existing or planned programs of record,” he said. “We’ve also been successful at transitioning products and services to new platforms, new organizations and missions within the government. We believe these overall trends have good  prospects of continuing over the next several years.”

In the Defense Department’s 2016 presolicitation, the government said the ViaSat equipment and services are for “operationally relevant communications” with and within aircraft for threat avoidance and identifying nearby allies and enemy forces. ViaSat received $316,800 at the time of the award from fiscal 2017 research and development funds. The total contract stretches to December 2022.