Cogent Systems [COGT] says that Lockheed Martin [LMT], the prime contractor for the FBI’s next-generation biometric database, did not select if for the fingerprint matching portion of the program.
Industry analysts had already begun reporting that Lockheed Martin had selected Sagem Morpho, a unit of France’s SAFRAN Group, for the first increment of the Next Generation Identification (NGI) program. NGI is an upgrade to the FBI’s Integrated Automated Fingerprint Identification Systems (IAFIS). However, plans call for NGI to eventually do be able to store and match multiple biometrics, not just fingerprints (TR2, Feb. 18).
For its part, Lockheed Martin tells TR2 that its evaluation of NGI fingerprint matching software providers is ongoing. Sagem did not respond to a request to confirm it had been selected for the program. The
Morgan Keegan analyst Brian Ruttenbur, one of the analysts who previously reported that Cogent lost out on the fingerprint portion of NGI, says the increment is worth potentially hundreds of millions of dollars over a number of years.
Ming Hsieh, Cogent’s president and CEO, says on the company’s first quarter earnings call this month that the NGI competition had been “an uphill battle” and that the best technology wasn’t selected. Cogent was awaiting a debrief on the selection before deciding whether to protest, he says.
For the NGI fingerprint matching competition Lockheed Martin had been hosting a “bake-off” between several vendors. James Jasinski, executive vice president of Federal and State Systems for Cogent, told TR2 in mid-April that Cogent has challenging Lockheed Martin’s procedures for months over the fingerprint matching competition.
Typically customer requirements call for processing a certain amount of data in a specified amount of time, Jasinski said. But Lockheed Martin was specifying what equipment Cogent could use, model numbers and how much, he said.
“This isn’t typical for comparison purposes,” Jasinski said.
First Quarter Financials
Despite the NGI loss, Cogent is off to a strong start in its fiscal year. First quarter net income tumbled 38 percent to $9 million, 10 cents earnings per share (EPS), from $14.4 million (16 cents EPS) a year ago, although the decline was due solely to a $10 million gain a year ago related to a settlement agreement with Northrop Grumman [NOC].
Sales increased 26 percent to $31 million from $24.6 million a year ago, driven by strong order flow on the Department of Homeland Security’s U.S. VISIT biometric database program and work in several states and Romania. DHS accounted for over 50 percent of the growth, says Paul Kim, Cogent’s chief financial officer.
For the year Cogent expects its sales to be between $130 million and $135 million and EPS in the range of 33 to 40 cents. There is upside to these numbers depending on when revenues can be recognized from recent wins, including the United Kingdom Post Office contract and the Army’s Biometrics Operations and Support Services-Unrestricted (BOSS-U) program.
To better control its destiny, Cogent is looking to bid more frequently as a prime contractor while also continuing to work in partnerships with systems integrators, Hsieh says. Cogent’s capabilities in providing multi-modal biometric software matching, its ability to integrate end-to-end solutions like it has for voter identification in Venezuela, demonstrates that it can go after prime contracts as a systems integrator, Jasinski told TR2.
For Venezuela Cogent installed 12,000 lap top computers and fingerprint scanners in 3,000 locations linked via satellite communications for backend matching in Caracas, Jasinski said. The project was operational in 42 days. “We are capable and responsive,” he said. “It’s not an expertise that a lot of people have.”
Cogent expects to have opportunities as a systems integrator on BOSS-U, Jasinski said.