Monday, February 23, 2009

Feds cut AS&E bomb-finding truck deal to $39M

By Mass High Tech staff

Billerica-based security technology company American Science and Engineering Inc. says it has had its most recent contract for bomb-detecting ZBV Military Trailers cut nearly in half by the U.S. government.

Officials at AS&E (Nasdaq: ASEI) said the company received a Partial Termination for Convenience that cuts a $67.1 million contract procurement of ZBV Military Trailers to $39.3 million. AS&E announced the contract on Jan. 15 for the ZBV Military Trailers — a ruggedized trailer version of its Z Backscatter Van, which, like the conventional van-based version, is intended for screening vehicles for car and truck bombs and can be driven easily to mission-critical areas.

Research notes from analyst Steve Levenson, of Stifel Nicolaus & Co., point to protests from a contract competitor, Rapiscan Systems, a division of AS&E competitor OSI Systems Inc. of California as reason for the U.S. Department of Defense cutting the 68 planned ZBV units to 34 units. The analysis indicates that an agreement between the U.S. Marines and OSI allowed for 34 units to begin being built by AS&E; the two companies will re-compete for the remaining 34 units. OSI’s products, however, did not meet earlier Marine specifications, while AS&E’s units did meet requirements, according to Levenson.

Levenson’s analysis notes, “The Marines would like to have all the ZBMTs yesterday.” The ZBV Military Trailers should likely become standard Marine equipment, the notes indicate.

Also in January, AS&E landed $2.2 million from an unnamed Middle Eastern law enforcement agency to provide multiple Z Backscatter Vans, along with AS&E-provided operator training, service and warranty.

AS&E reported a 2008 net income of $17.5 million on revenue of $166.7 million.