Companies seek profits in fee-for-service surveillance aircraft.

• Author: Parsons, Dan

* Airborne surveillance has become so popular that even countries that can't afford their own platforms are scrambling to acquire the capability.

Hearing the call, industry is developing new business models to help militaries and other agencies field intelligence, surveillance and reconnaissance capabilities without the hefty expense of developing their own systems. For nations and agencies with limited means, the fee-for-service model could bring expensive technologies like unmanned aerial vehicles within their price range.

Company officials who have pioneered the fee-for-service model believe it represents a novel way to do business with the military and other government agencies. They also believe it is an ideal opportunity for contractors to thrive while providing high-demand services at a lower cost than traditional procurement programs.

"It would not be too strong it a statement to say that this is a fundamentally different way of doing business with the government," said Steve Reid, senior vice president and general manager of unmanned aircraft systems for AAI Textron Systems, a Maryland-based aerospace and defense company.

Companies like AAI have been offering fee-for-service models to the U.S. military for years now. But the practice is expanding as other manufacturers get in on the trend, new markets open and a greater variety of systems is developed.

For now, it is a model uniquely suited to ISR platforms. In combat situations, fee-for-service models are limited to unmanned systems, given strictures on placing civilian operators in harm's way.

With sensor and platform technologies that have changed rapidly since their introduction, fee-for-service also allows customers--military or otherwise--access to the latest and greatest technologies without repeated capital investment and upgrade costs.

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"That's one advantage that is pushing the trend toward the fee-for-service," said Reid. "Customers can get the very latest technology without being stuck with older technology. Plus, now that it's being done in a competitive environment, it's a really good deal for the government to look at this and be able to have the very latest technology with minimal startup cost."

There are both manned and unmanned airborne ISR systems for rent. Each has its own unique advantages and drawbacks. UAVs, for instance, are not yet able to fly within U.S. or European civil airspace. (See related story on p. 30)

Manned or unmanned, the...