October 21, 2014

Defense Contractors

Contractor Profiles

Mike Vogel | 12/1/2010

Risk and Reward

Harris Corp radios
Harris Corp., in concert with the military, was able to produce its military radios faster and cheaper using a private-sector business model. [Photo: Harris Corp.]
Companies big and small have benefited from increased defense spending. Melbourne-based communications company Harris, No. 15 on the Florida Trend Top 150 Public Companies list and the largest Florida-based government contractor, has had one stock split and increased its dividend 10-fold, to 25 cents a share, since 2001.

Unlike some suppliers, Harris applauded when the military announced reforms in buying goods and services to get more bang for the military buck. The company advocates the "commercial business model" under which it developed the Falcon radio, a device allowing soldiers to exchange voice, data and video with each other, aircraft and rear echelon commanders.

Typically, a contractor develops and comes out with a finished product for the military only after it wins a bid. Instead, Harris developed the radios, though in consultation with the military on its needs, with no guarantee of a sale.

Wes Covell, Harris vice president of strategy and chief growth officer, says the company delivered the product faster because, by using its own dime, it didn't have to go through as many bureaucratic hoops. Competitors taking the traditional procurement route have yet to produce a finished good. Harris, meanwhile, has sold more than 125,000 radios to the military. In return for its risk-taking, Harris gets higher margins. Particularly in areas such as IT and communications, the approach "is something the government should take more advantage of in their quest to become more efficient," says Covell.

Harris Corp. radio

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