Bloomberg News

Raytheon’s Sole Role on $7 Billion Jammer Challenged by Senators

August 08, 2013

A Senate panel is calling for the U.S. Navy to maintain at least two competitors for a $7 billion radar-jamming system in a move that may force rebidding of an initial contract won by Raytheon Co. (RTN:US)

Raytheon beat Northrop Grumman Corp. (NOC:US) and BAE (BA/) Systems Plc last month for the initial contract, valued at $279 million, to demonstrate the technology behind the Next Generation Jammer. The Naval Air Systems Command has said Raytheon also is in line for as much as $3.1 billion for advanced development and $4.3 billion for production provided that it meets the initial contract’s conditions.

The Senate Appropriations Committee’s defense panel said in the report on its fiscal 2014 spending bill that the Navy should extend competition through the current technology demonstration phase and possibly into procurement.

While the panel didn’t explicitly demand rebidding of the contract won by Waltham, Massachusetts-based Raytheon, it cited the 2009 Weapon System Acquisition Reform Act “that encourages competition throughout the acquisition” cycle of a program. The panel expressed concern that the Navy’s decision to have only one contractor now was “inconsistent with some of the basic tenets” of the acquisition law.

The Navy also should collect technical data “that would facilitate continued competition” for the remainder of the system’s acquisition, the panel said.

‘Big Bucks’

The Senate panel’s House counterpart didn’t include a similar directive in its fiscal 2014 appropriations measure. The two versions would have be reconciled later this year in a compromise measure and signed into law, so it’s not clear if the order for rebidding will become binding.

The committee’s language “sounds like a potential threat to Raytheon’s award,” said Loren Thompson, vice president of the Arlington, Virginia-based Lexington Institute, a defense research organization. The panel’s approach would require paying multiple contractors to work on the jammer and “that could add up to big bucks,” he said.

The contract is on hold because London-based BAE filed a protest of the award July 19 with the U.S. Government Accountability Office, which may not make a decision on the case until early October.

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, which would equip 135 Boeing Co. (BA:US) EA-18G Growler aircraft, in operation by 2020.

‘Raytheon Confident’

The Senate panel also said the GAO has almost completed a report on the Navy’s jammer and comparable Air Force systems to assess whether there’s unnecessary duplication.

Captain Cate Mueller, a Navy spokeswoman, said in an e-mailed statement that “should any law be passed affecting the nature” of the jammer acquisition strategy, “the Navy will assess its effect on the program and work with” Pentagon officials and Congress to move forward.

“Raytheon is confident in the superior technical and programmatic design” of its jammer offering, Jon Kasle, a spokesman for the contractor, said in an e-mailed statement. “The company remains ready to partner with the Navy to deliver this critical national security capability in a timely and cost efficient manner.”

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)
    • $102.31 USD
    • 0.03
    • 0.03%
  • NOC
    (Northrop Grumman Corp)
    • $132.27 USD
    • -0.30
    • -0.23%
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