Raytheon Details Dispute Over $2B Deal

WASHINGTON (AP) – Raytheon Co. on Wednesday sought to explain its rationale for protesting the Army’s recent decision to award rival bidder L-3 Communication Holdings Inc. a $2 billion cargo plane contract.

The Waltham, Mass-based company said it does not want the Army to re-compete the contract, but to explain why it selected a more expensive plane and did not give more weight to maintenance and other long-term costs in its appraisal of bids.

‘We really didn’t get a good explanation as to those decisions,’ Jim Hvizd, a Raytheon vice president said. ‘We felt there were errors in the way that some of the various sub-factors were evaluated related to our proposal.’

Raytheon filed a protest with the Government Accountability Office on June 22, more than a week after the Army awarded the contract to New York-based L-3’s team to build up to 78 cargo planes.

Raytheon said the Army’s own evaluation found its C-295J aircraft to be 15 percent cheaper than L-3’s C-27J. Moreover, had the government considered fuel efficiency and other long-term factors, the price difference would have been even greater, Hvizd said.

Hvizd said Raytheon raised other issues in the protest, but declined to provide additional details.

While both companies make twin-engine turboprop planes, L-3’s C-27J is considered larger, heavier and more technologically advanced than the C-295.

The L-3 plane costs slightly more than the cargo plane Raytheon offered, but it has performed better on short runways, flying longer distances without refueling and is bale to hold more weight.

Analysts had been expecting L-3’s team, which includes Italian partner Finmeccanica SpA’s subsidiary Alenia North America Inc., Boeing Co. and Global Military Aircraft Systems to beat Raytheon. For its part, Raytheon teamed up with CASA, a subsidiary of European Aeronautic Defense & Space Co. NV.

The new planes will replace the C-23 Sherpa, a 23-year old cargo plan built by Short Brothers Plc, the C-36 and some of the C-12s, as well as other transport aircraft, such as Boeing’s CH-47 Chinook, which the Army has been using for battlefield support operations.

The C-23 has several drawbacks to meet the needs of U.S. soldiers in the field, including the inability to fly at high altitudes, limited cargo space and a lack of defensive systems.

The Army plans to purchase up to 145 planes that support tactical missions, such as delivering supplies and deploying soldiers in combat.

Shares of Raytheon fell 26 cents to $53.88 in midday trading, as shares of L-3 rose 40 cents to $97.68.

Raytheon details dispute over $2B deal