UPDATE 3-Lockheed protests U.S. Navy's radar contract award to Raytheon

Tue Oct 22, 2013 10:59pm EDT

* Rival's bid more expensive, Lockheed says

* New Jersey lawmakers urge Navy review

* Government agency ruling expected by Jan. 30

By Andrea Shalal-Esa

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

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

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

Lockheed's protest came as lawmakers from New Jersey, where Lockheed builds the Aegis system and related radars, raised concerns about the Raytheon contract award, arguing that it would be more expensive than the Lockheed proposal.

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

Raytheon earlier this month beat out Lockheed and Northrop Grumman Corp to win the contract to design a next-generation air and missile defense radar for use on the Navy's Aegis destroyers starting in 2016.

Under the contract, Raytheon will build and test the new air and missile defense radar that will replace the existing SPY-1 radar built by Lockheed.

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

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

LAWMAKERS' CONCERNS

Lockheed Chief Executive Marillyn Hewson told analysts earlier on Tuesday, before the company filed its formal GAO protest, that the company was evaluating a briefing it received last week from the Navy about its decision.

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

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

The lawmakers, from both the Democratic and Republican parties, asked Mabus to have the Navy reexamine its decision and brief the New Jersey delegation on why and how it was made. A copy of the letter was obtained by Reuters.

They said Lockheed offered "the lowest cost AMDR solution," one that was low-risk, affordable, and technologically mature.

Lockheed's proposal also represented the best value for the new radar given its record of investment in radar technology, according to the letter, which was signed by Senators Robert Menendez and Jeff Chiesa, and seven members of the House of Representatives.

As well as past investment in SPY-1 radar technology, Lockheed also offered $135 million in direct investment in the new program and $70 million capital improvements at the Moorestown site in New Jersey, which first opened in 1954, according to the letter.

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

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article