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Raytheon’s U.S. Jammer Deal Clears Way for $7.4 Billion Program

July 12, 2013

Raytheon’s U.S. Jammer Deal Clears Way for $7.4 Billion Program

The U.S. Navy’s announcement this week of the $279 million contract didn’t disclose the scope of the work that Raytheon Co. is in line to get. Photographer: Matthew Staver/Bloomberg

Raytheon Co. (RTN:US)’s win this week of a $279 million contract to continue developing the U.S. Navy’s new radar-jamming system holds promise for more: It clears the way for as much as $7.4 billion in future work, according to Navy officials.

Raytheon beat a bid from Northrop Grumman Corp. (NOC:US) in tandem with Exelis Inc. (XLS:US) and another led by BAE Systems Plc (BA/) to advance into a “technology demonstration” phase for the Next Generation Jammer.

The equipment will be carried on all 135 Boeing Co. (BA:US) EA-18G Growler aircraft the Navy plans to buy this decade, and that may make the contract announced July 9 a winner-take-all opportunity for Waltham, Massachusetts-based Raytheon.

“Provided they meet the conditions of the current contract, the program’s acquisition strategy is to award follow-on” engineering, manufacturing and development and production contracts “sole-source to Raytheon,” Naval Air Systems Command spokesman Rob Koon said in an e-mail statement.

The jammer is designed to defeat the radar of integrated air-defense systems such as those fielded by Iran, China, North Korea and Syria that detect aircraft and direct surface-to-air missiles. It’s also intended to jam ground communications. The Navy wants the jammer in operation by 2020.

“Raytheon provided the U.S. Navy with an innovative and efficient design capable of jamming current and future threats,” Rick Yuse, president of the company’s space and airborne systems business, said in a statement this week. Raytheon also is the world’s largest maker of missiles.

Northrop’s Bid

Northrop Grumman is the maker of the current jammer for Navy electronic-warfare aircraft, the ALQ-99. In making its bid for the new system, the Falls Church, Virginia-based company said in November that it would be “leveraging four decades of expertise in designing, developing and delivering advanced weapons systems that support the customer’s electronic warfare and airborne electronic attack missions.”

The Navy’s announcement this week of the $279 million contract didn’t disclose the scope of the work that Raytheon is in line to get. The Navy’s current rough estimate is that the service will spend as much as $7.4 billion on the initial phase of the jammer program.

Dollar Breakdown

That includes $3.1 billion through 2018 for four and half years of additional development, testing and evaluation that Raytheon will perform, according to Navy budget documents. An additional $4.3 billion is projected to produce the first 114 jammer pod sets, spare parts, logistics and support for the Navy’s initial requirement.

“Procurement costs are expected to increase in future years,” said Koon, as an additional 21 Growlers are bought, bringing the total to 135.

While the Navy’s current five-year budget plan includes the jammer funding, that doesn’t take into account the budget cuts called sequestration that Defense Secretary Chuck Hagel said this week could trim 15 percent to 20 percent from some programs in fiscal 2014.

The jammer “may have to compete with other Navy programs for increasingly scarce modernization funds,” according to Kevin Brancato, a defense analyst for Bloomberg Government who follows the program.

The Growler’s on-board systems “detect hostile emitters and generate tailored signals that overwhelm or confuse enemy receivers, precluding successful tracking and targeting of U.S. aircraft,” according to Loren Thompson, a defense analyst with the Arlington, Virginia-based Lexington Institute in a note this week.

Thompson said the award “underscores the growing importance of electronic warfare in U.S. military strategy, and in particular the central role that the carrier-based EA-18G Growler will play in executing that strategy.”

Randy Belote, a spokesman for Northrop Grumman, said in an e-mailed statement, “While we are disappointed that our solution was not selected, we remain confident” its team’s proposal “offers the warfighter the lowest risk and technically superior solution. We look forward to the Navy’s debrief to understand why our offering was not selected.”

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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Companies Mentioned

  • RTN
    (Raytheon Co)
    • $106.67 USD
    • 0.27
    • 0.25%
  • NOC
    (Northrop Grumman Corp)
    • $141.45 USD
    • -0.11
    • -0.08%
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