Unidentified Analyst: So the clock is already ticking because you didn’t start just today. When the data contract was arrived, it came in.
Thomas McClelland: Yeah, that’s — we are moving forward very aggressively on all of these.
Unidentified Analyst: And the $9 million one, is that new technology? Or you had did that work before?
Thomas McClelland: No, that’s not new technology for us. That’s based atomic frequency standard, but that is an existing FEI product that has already gone through qualification testing and so forth and so on. And so that is one that we really do not anticipate any major difficulties in the — it’s just a straight manufacturing.
Unidentified Analyst: All right. And who owns the technology for that, you or the customer?
Thomas McClelland: We own the technology.
Unidentified Analyst: Is that on all three contracts?
Thomas McClelland: Yes.
Unidentified Analyst: So they — once you make it for them, they can’t take the work to someone else?
Thomas McClelland: No. No. Definitely not.
Unidentified Analyst: All right. So you get the R&D, which is key. And that one you mentioned it could be $70 million over 6 years. Is that more because they don’t want to give you the whole thing at once they won.
Thomas McClelland: Well, so I have to be careful what I say because we — as part of this contract, there’s a lot of specific information that we’re not able to divulge. But this is a navigation satellite system. And so the idea is, the products that we’re going to deliver on this contract are going to go on a demonstration satellite. And if that demonstration satellite is successful, then there’s a very high probability that those options will be exercised. Now the other thing to keep in mind, if you read about a lot of these satellite systems, there’s all kind of — independent of the FEI’s participation in these programs, there’s — it’s very expensive to launch a satellite system, there are all kind of considerations. And so there are many things other than just the product that we deliver for the satellite that can cause problems for the ultimate success of that satellite system.
Those things are completely out of our control. And so there are a number of other reasons that our customer could decide down the road not to go forward with this system, things that have nothing to do with FEI. We — I think we have reasons which I can’t go into to believe that, that is unlikely but nonetheless, we have to recognize that those are possibilities. But I think, of course, the other side of it is that if we’re not successful in delivering on time or our products don’t work the way you anticipated, then obviously our customer would have the opportunity to try to procure those products from somebody else. We think that’s highly unlikely, and it’s hard to imagine that, that would be cost effective for our customer. So setting aside the part of this that is completely out of our control that the system doesn’t go forward because of financial things or other things that have nothing to do with our products, we set that aside and look at the part that we can control, I think we’re — we feel that we’re in a really good position and I think it is very likely that one way or another, those options will get exercised.
Unidentified Analyst: Just for example, someone may make the part that attaches to your part. And if they can’t make it, that would be an example of something that could go wrong, hypothetically.
Thomas McClelland: Yeah. That’s the kind of thing that could go wrong. We’ve — I’m not going to speak specifically about this program, but we’ve seen where other space programs had — the whole program was put together and plans were to launch satellites in Russia. And then over the last couple of years, all of the things that have gone in geopolitical realm, Russian arrangements with the US are suddenly not very good. And so those launch opportunities disappeared. And so now the customer making that system is scrambling to find the other kind of launch sources someplace else in the world, that delays programs. And then when things are delayed, people are investing money and it goes out in time and things become a lot more challenging.
So that’s just by way of example, of other things that can throw a monkey wrench into these kind of programs. So I probably shouldn’t be sitting here being negative about this kind of thing. But I think those are the kind of things that I could imagine that would potentially be a problem. If you pay attention to the commercial satellite programs that people talk about, somebody mentioned Starlink earlier, and there are many other of these systems, there’s a good number of them that never really end up getting launched.
Unidentified Analyst: Yes, that’s all — that can always happen. But you’re comfortable with these three contracts?
Thomas McClelland: Yes.
Unidentified Analyst: And the third one, is that the three-year one that you said three years before?
Thomas McClelland: That’s correct, yes.
Unidentified Analyst: All right. So all these contracts could go — you could do more work on. But right now, you expect a couple of just smaller contracts over the next couple of months?
