Lockheed protests U.S. Navy's radar contract award to Raytheon

Reuters

By Andrea Shalal-Esa

WASHINGTON, Oct 22 (Reuters) - Lockheed Martin Corp,the Pentagon's top supplier and maker of the Aegis combatsystem, on Tuesday said it had filed a formal protest againstthe U.S. Navy's decision to award a next-generation radarcontract to Raytheon Co.

Lockheed spokesman Keith Little said the company decided tofile a protest with the U.S. Government Accountability Office(GAO) because it did not believe the merits of its bid wereproperly considered during the Navy's evaluation process.

"After careful consideration, Lockheed Martin has protestedthe Navy's award of the Air and Missile Defense Radar (AMDR)contract," Little said. "We submitted a technically compliantsolution at a very affordable price."

Lockheed's protest came as lawmakers from New Jersey, whereLockheed builds the Aegis system and related radars, raisedconcerns about the Raytheon contract award, arguing that itwould be more expensive than the Lockheed proposal.

Lockheed filed the protest late on Tuesday with the GAO, anarm of Congress that oversees disputes about federal contractawards, Little said. The agency now has 100 days to review theprotest, with its ruling expected by Jan. 30.

Raytheon earlier this month beat out Lockheed and NorthropGrumman Corp to win the contract to design anext-generation air and missile defense radar for use on theNavy's Aegis destroyers starting in 2016.

Under the contract, Raytheon will build and test the new airand missile defense radar (AMDR) that will replace the existingSPY-1 radar built by Lockheed.

A Northrop spokesman declined comment when asked whether thecompany had protested the contract award by Tuesday's deadline.

Officials at Raytheon and at the Navy could not be reachedfor immediate comment on Lockheed's protest, which is expectedto trigger a stop-work notice from the Navy.

Lockheed Chief Executive Marillyn Hewson told analystsearlier on Tuesday, before the company filed its formal GAOprotest, that the company was evaluating a briefing it receivedlast week from the Navy about its decision.

"We've been engaged on it, the Aegis system, for the past 42years," she said. "We had deep understanding of that program andof the mission, so we were certainly disappointed."

New Jersey lawmakers sent a letter to Navy Secretary RayMabus dated Oct. 16 in which they expressed concern about theNavy's decision to begin working with a new company given whatthey called the "unprecedented success" of the Aegis system.

In the letter, the lawmakers said Lockheed offered "thelowest cost AMDR solution, which is low-risk and meets the keyDepartment of the Navy leadership areas of affordability, shipfit, scalability and technological maturity." A copy of theletter was obtained by Reuters.

They said Lockheed offered the best value for the new radargiven its past investment in the program, and had pledged toinvest $135 million in the project as well as $70 million ofcapital improvements at the Morristown site.

"We are most concerned that the Navy's AMDR contract awarddecision, if implemented, would incur significant costs at thistime of severe defense budget restrictions," they wrote, saying the decision could result in $400 million of extra costs.

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