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Army freezes contract with iRobot rival

The Army has frozen a $280 million contract with a Chicago-area robot maker that is being sued by iRobot Corp. of Burlington.

Robotic FX Inc. of Alsip, Ill., last month won the contract to supply up to 3,000 robots for use by bomb-disposal soldiers in Iraq and Afghanistan. At the same time, iRobot was suing Robotic FX in federal courts in Massachusetts and Alabama, alleging theft of trade secrets and patent infringement.

Robotic FX was founded by former iRobot employee Jameel Ahed. iRobot officials claim that Ahed carried off company secrets when he resigned in 2002, and used this information to design the Negotiator, the robot that beat out iRobot's PackBot machine for the military contract.

iRobot has asked US District Judge Nancy Gertner to issue an injunction that would stop Robotic FX from building Negotiator robots. But US Attorney Michael Sullivan argued that Gertner lacks the jurisdiction to halt execution of a military procurement contract.

On Tuesday, however, Joanne Byrd, the US Army administrator overseeing the contract, informed Army attorneys that she was setting aside the contract. Her decision was based on information provided by iRobot in a protest of the contract filed with the US General Accounting Office.

"I have determined that the protests, though not clearly meritorious, raise questions regarding the award" of the contract, Byrd wrote in a letter that was filed with the federal court in Boston by iRobot attorneys.

Byrd's letter did not mention the alleged theft of intellectual property. Instead, she said that new information led her to question Robotic FX's ability to fulfill the contract. iRobot officials have argued that Robotic FX, a new business with fewer than 10 employees, won't be able to produce thousands of sophisticated robots. Robotic FX has sold a number of its Negotiator robots to law enforcement agencies, such as the Illinois State Police, since it began making them in 2004.

iRobot, founded in 1990, has around 375 workers, and has already made over 1,000 PackBot machines, mostly for the military. The company recently landed an $8.8 million Army order for 40 robots and a $19 million order for 128 machines for the Navy.

Byrd said that she will reconsider whether Robotic FX can carry out the contract. If she remains skeptical, Byrd will call in experts from the GAO. If that agency declines to certify that Robotic FX is competent, Byrd wrote, "then I will award a contract to the next lowest bidder, iRobot."

Robotic FX officials did not return calls seeking comment.

Meanwhile, iRobot released third-quarter earnings that were in line with the preliminary warning the company issued earlier this month. Production problems at a contract manufacturer slowed the introduction of the company's new Roomba robotic vacuum cleaner, leading to lower-than-expected revenues. Still, third quarter revenues of $63.8 million were up 16 percent from the previous year. The company took a $1.4 million loss in the quarter, but predicted it would generate a 2007 profit of between $3 million and $5 million.

iRobot stock closed at $15.46, down 34 cents, on the Nasdaq stock exchange.

Hiawatha Bray can be reached at bray@globe.com.

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