Raytheon to keep next-generation jammer contract -U.S. Navy

By Andrea Shalal-Esa

WASHINGTON, Jan 24 (Reuters) - The U.S. Navy on Friday said it was sticking with Raytheon Co (NYSE: RTN - news) as prime contractor for next-generation radar-jamming technology seen valued at billions of dollars in coming years, despite a November ruling by the U.S. Government Accountability Office (GAO) that upheld a protest against the award.

Raytheon in July beat out BAE Systems (LSE: BA.L - news) and a team comprised of Northrop Grumman Corp and Exelis Inc (NYSE: XLS - news) to win the Navy contract for the jamming system. The GAO in November backed a BAE challenge of the contract, which was initially valued at $279 million but could be worth many multiples of that over coming decades, according to analysts

"The Navy has completed corrective action as recommended by the GAO in the sustained protest filed by BAE Systems on the Next Generation Jammer Technology Development contract," said Navy spokeswoman Commander Thurraya Kent.

She said the Navy decided to stick with the Raytheon offer after carrying out a new cost and technical analysis of all three original bids, but gave no additional details.

The new jammer will replace the Northrop-built ALQ-99 tactical jamming system now used on the EA-18G Growler aircraft built by Boeing Co (NYSE: BA - news) . The jamming pods will enable U.S. aircraft to render enemy radars useless.

"This confirms a huge breakthrough for Raytheon that potentially could generate over $10 billion in additional revenue during the next several decades," said Loren Thompson, chief operating officer of the Lexington Institute think tank.

Thompson said he expected the program to survive the current difficult budget environment given the U.S. military's need in wartime to prevent adversaries from tracking aircraft, communicating with ground forces or remotely detonating bombs.

It was not immediately clear if BAE or Northrop would protest the Navy's decision to keep Raytheon on the contract.

No immediate comment was available from Raytheon.

BAE spokeswoman Kristin Gossel said her company was weighing its options.

"We protested the award based on concerns with the Navy's evaluation of our offering and our protest was sustained by the GAO. We are disappointed with today's decision and are currently considering all of our options," Gossel said.

Northrop, which had not protested the Navy's award to Raytheon, said it was also disappointed by the decision.

"While we are disappointed, we remain committed to continue to provide our warfighters with the lowest risk, most affordable solutions," said Northrop spokesman Randy Belote.

When the GAO, the congressional agency that oversees federal contract protests, ruled in favor of BAE in November, it said the Navy had failed to reasonably evaluate the risk of the proposals, improperly credited Raytheon with outdated performance data, and did not adequately document its decision.