Raytheon to FAA: Not So Fast

Company Protests Planned Air Traffic Control Redesign Award to Lockheed Martin

Steven Zaidman

Frank Marchilena

Raytheon Co. is crying foul over the Federal Aviation Administration's stated intent to award a sole-source contract to Lockheed Martin Corp. without first conducting an open competition.

The Lexington, Mass., company filed a protest Feb. 28 with FAA after the agency said it plans to award the En Route Automation Modernization contract to Lockheed Martin of Bethesda, Md. The 10-year contract is worth several hundred million dollars.

"The fact that Raytheon has extensive experience that includes designing national systems for Canada, Germany and Norway is an example of what would make us competitive. These are probably the three most modern en route systems in the world," said Raytheon spokeswoman Blanche Necessary. Raytheon also maintains the current en route backup system for the United States, she said.

The FAA's plan also has raised eyebrows on Capitol Hill, where Sen. John McCain, R-Ariz., has requested that Administrator Jane Garvey justify the agency's decision.

The FAA announced Feb. 6 it intends to award the en route modernization contract to Lockheed Martin some time in fiscal 2002, but it left a small window open for competitors by allowing them to file a capabilities statement by March 21.

Only if the competitors could meet the FAA's qualifications requirements would the agency consider putting the contract out for competitive bid, said Steven Zaidman, the FAA's associate administrator for research and acquisitions.

The FAA project is to upgrade the software and hardware used to control high-altitude airline traffic at the agency's 20 en route air traffic control centers, Zaidman said.

Giving the contract to Lockheed Martin was justified, Zaidman said, because of the company's status as incumbent contractor on major elements of the en route system. A Lockheed spokeswoman said the company has completed several projects for the FAA that came in on or ahead of schedule and within or under budget.

Raytheon notified the FAA of its intent to submit its capabilities statement Feb. 22. The protest was lodged six days later.

"Raytheon is confident that the FAA, before committing to a single, sole-source contract, will examine all available solutions for the U.S. en route modernization, take into account prior investments and determine a final approach that ensures best value to the U.S. taxpayers and flying public," Frank Marchilena, Raytheon executive vice president, said in a statement. Marchilena also is president of the company's command, control, communication and information systems division.

McCain, the chairman of the Senate Commerce, Science and Transportation Committee, sent a letter March 7 to Garvey asking for "a clear and thorough explanation of the agency's rationale for not bidding out" the contract. He also questioned whether the agency followed its own acquisition management system, and whether it might face legal or administrative challenges over the decision that could delay completion of the project.

The FAA's decision raises the same kinds of questions regarding competition often directed at the Defense Department: Does the agency intend to hold open competitions in order to encourage diversity of sources or will it favor incumbents with proven track records and day-to-day familiarity with the issues?

This also has important ramifications in the international market, said Richard Aboulafia, director of aviation studies for the Teal Group Corp., a consulting and analysis firm in Fairfax, Va.

"It raises a bunch of questions about export issues," Aboulafia said. "No doubt, these players will be competing for similar systems abroad. To what extent will the FAA promote [its choice] in order to achieve lower costs and system commonality? Is this a winner-take-all process? I'm afraid it's still possible."

The Boeing Co. of Seattle, which established an air traffic control division in November 2000 and plans to propose a wholesale restructuring of the national air traffic control system in May, was supportive of the FAA's plans, provided it was only for ongoing maintenance of the existing system, said Boeing spokesman Tim Neale.

Boeing would have a problem if a noncompetitive award is being made for a "contract to fundamentally change the architecture," Neale said. Boeing is not filing for consideration on the en route air traffic control contract.

The proposed contract "does not necessarily" pre-empt Boeing's planned proposal, Zaidman said.

"If we go with a single source, then it will be up to Lockheed Martin and us to put together a team," he said, "whether it includes Boeing or anybody else."

For the proposed contract, Lockheed Martin has so far named only one partner, Computer Sciences Corp. of El Segundo, Calif.

Zaidman said he would make a recommendation about whether the contract would go to Lockheed Martin or be put out for competitive bid after he reviews the Raytheon statement of capabilities.

Garvey will review the recommendation and weigh in with her decision, which will then be reviewed and approved by the Air Traffic Control Subcommittee of the Aviation Management Advisory Committee, the Senate-appointed "board of directors" for the agency.

Zaidman said he did not know when the decision whether to remain with Lockheed Martin or to move to a competitive bidding process would be made.

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