U.S. DoD Awards Second GTMO Contract to Xtera

Xtera Inc., Allen, Texas, has been awarded a non-competitive, firm fixed price contract for the Guantánamo Bay to Puerto Rico Submarine Fiber Optic Cable System.

GTMO-Puerto Rico Cable Map

The face value of this action is $36,540,732 over the two-year base period and is funded by fiscal 2016 procurement funds. The total cumulative face value of the contract is $43,139,763. Performance will be between Guantanamo Bay, Cuba, and a government-operated landing site in Puerto Rico. The solicitation was issued on the basis of other than full and open competition pursuant to 10 U.S. Code 2304(c)(1), only one responsible source and no other type of supplies or services would satisfy agency requirements. The base period of performance is Aug. 22, 2017 through Aug., 21 2019, with five one-year options. The Defense Information Technology Contracting Organization, Scott Air Force Base, Illinois, is the contracting activity (HC1013-17-C-0002).

Source: Defense Information Systems Agency

ANALYSIS: Xtera’s Management has succeeded in pulling a rabbit out of the hat.

It is pure speculation but perhaps this contract was always going to be awarded to Xtera because the Company, and essentially many of the same staff, had already implemented the first submarine fibre optic connection to the U.S. military base at Guantanamo Bay, Cuba from Florida in January 2016.

Xtera also led the “GOKI” (Guam-Okinawa-Kyushu-Incheon) submarine cable re-use project in 2013 contracted by AT&T but known to be for U.S. military use. Having obtained security clearance from the U.S. Military, this would have put Xtera in a strong position to win any other similar work from the U.S. Department of Defense (DoD).

This strong track record with the U.S. DoD and perhaps the promise of a second contract at GTMO must have given new investors, H.I.G., comfort when they rescued Xtera from Chapter 11 Bankruptcy Protection.

This second cable provides a physically diverse redundant segment for the original point-to-point cable. Reaching another U.S. Military facility in Puerto Rico provides an interconnection point with other submarine cables in which AT&T has an interest and thereby completes a redundant ring back to the U.S.A.

At just over US$34,000 per km, the cost of this repeatered project is perhaps a little above the market but there are probably some special circumstances that need to be addressed in the cable system design which have elevated the cost.

​Naturally, it is good to see Xtera back in the game but the real proof of the re-financed company will only be made when Xtera wins a commercial contract on a competitive basis where it does not have “preferred supplier” status.