JA_RDC_AEU_Redacted_3.6.26_Redacted.pdf

J&A No: 24-0020

Amendment No: REQTB2500035

As a result of this extension, the overall ordering period on this contract is November 2017 to October 2030, or 13 years. In accordance with Defense Federal Acquisition Regulation Supplement (DFARS) 217.204 (e)(i)(C), the ordering period may not exceed 10 years unless the head of the agency determines in writing that exceptional circumstances require a longer ordering period; and (iii) requires Senior Procurement Executive (SPE) approval before issuing an order that is expected to extend more than one year beyond the 10-year limit. Exceptional circumstances exist here to justify extending the ordering period because of a need to extend the existing contract to allow for the potential transfer of AN/TPY-2 scope to the Army. Further details are contained in section 5 of this J&A. The execution of this J&A by the SPE serves as the written approval to exceed the 10-year ordering limit in accordance with DFARS 217.204(e)(iii).

3. Description of the Supplies and/or Services Required to Meet the Agency’s Needs (including the estimated value) (FAR 6.303-2(b)(3)). The TBSX requires:

Test Antenna Equipment Unit (AEU) with Spares Replenishment: This is a procurement for a dedicated, non-tactical AEU for domestic and FMS element level testing. This Test AEU will enable hardware and software upgrades to be developed and verified without impacting warfighter missions, resulting in a more mature product and reduced risk of operational downtime.

Continuation of AN/TPY-2 Development: The RDC supports ongoing development activities necessary to maintain and enhance the AN/TPY-2 radar’s critical mission of acquiring, tracking, and discriminating threat missiles in the early, midcourse, and terminal flight phases. A key part of maintaining the mission assets is obsolescence mitigation and technology insertion: the AEU refurbishment program provides a planned refurbishment of an operational asset yielding improved performance and increased service life.

Float AEU: An operational AEU spare is required to mitigate downtime when a unit experiences AEU failure. The Float AEU temporarily takes the place of an AEU that will be returned for depot-level refurbishment.

The following table summarizes all previous J&As and their corresponding cumulative dollar values, including this J&A:

J&A Number Date Approved Value Cumulative Value 17-0009 April 25, 2017 $371.200M $371.200M 19-0024 July 31, 2019 $591.010M $962.210M 22-0034 August 7, 2023 $318.909M $1.281B 24-0020 May 29, 2024 $191.143M $1.472B 24-0020 Amendment No: REQTB2500035

Pending

4. Statutory Authority Permitting Other than Full and Open Competition (FAR 6.303- 2(b)(4)). The statutory authority permitting other than full and open competition is 10 U.S.C.

3204(a)(1) as implemented by Federal Acquisition Regulation (FAR) 6.302-1(a)(2)(ii)(B), “Supplies may be deemed to be available only from the original source in the case of a follow-on contract for the continued development or production of a major system or highly specialized equipment, including major components thereof, when it is likely that award to any other source would result in unacceptable delays in fulfilling the agency’s requirements.”

5. Demonstration of Contractor’s Unique Qualifications or the Nature of the Acquisition Requires use of the Authority Cited (FAR 6.303-2(b)(5)).

Raytheon possesses a deep understanding of the AEU’s intricate design, extensive expertise in performance and interface requirements, and robust system test and integration facilities essential for rapidly designing and successfully testing the non-tactical test antenna. A key factor in mitigating schedule risk is the direct inclusion of OEM-produced components and software, such as GaN TRIMMs, AC/DC Converters, and Common X-Band Software.

Raytheon is actively developing these new and emerging requirements and will integrate the Test AEU into the Hardware-in-the-Loop architecture established at their OEM facility and other test facilities. As the original product developer for the X-Band Radar for MDA for over 25 years, Raytheon possesses the highly specialized technical expertise and infrastructure required to meet the Agency’s requirements within the required timeline.

An aging fleet, high operational tempo, and long lead procurement factors contribute to the necessity to process AEU refurbishments in a timely manner. Without an AEU refurbishment program, operational units would incur unacceptable downtime. Delays in starting an AEU refurbishment program induces increased risk of unacceptable downtime due to lack of an AEU replacement when the operational unit fails.

For the Test AEU, Float AEU and AEU refurbishment requirement sets, a new contractor would face a significant learning curve, including performing design analyses, verifying technical data packages, creating prototypes, and developing rigorous testing regimen to ensure compatibility and performance.

Furthermore, due to ongoing development and obsolescence efforts, a complete Technical Data Package incorporating the current system configuration, including a logistic support package, is currently unavailable.

For the development requirements set, the software is built using a concurrent development approach, with successive increments dependent on existing capabilities. Hardware is continually assessed for obsolescence mitigation. The technical data for the current configuration directly informs the development for the subsequent configuration. Software builds are released approximately every two years and continual maintenance activities exist for fielded software. A new contractor would face a significant learning curve and infrastructure investment to establish the necessary processes and facilities to develop, integrate, and maintain the software. Disruption and delays in the build cycle induces increased risk of not achieving performance requirements within the expected cycle update schedule.

In the aggregate, the requirements set has benefitted from the single performer approach.

Raytheon, though currently on separate contracts for Development, Sustainment, and Production, continually provides integration across these domains to yield efficient support for ongoing actions. For the upcoming production oriented Test and Float AEU, the established Production team will implement existing processes and infrastructure to yield products consistent with prior system deliveries. For the refurbishment task, the logistics support, production, and development teams will coordinate to identify repair/replace, spares, production, and development non-recurring engineering necessary for the refurbishment. For the development task, especially hardware obsolescence tasks, the development and production teams will collaborate to design, build, and source replacement solutions. The teams’ crosstalk, expertise, established infrastructure, and processes are vital to achieving the outcomes in the expected timeframe and budget.

Raytheon and its supply chain have production lines and processes that meet MDA Quality, Safety and Mission Assurance (QSMA) requirements. If a source other than the incumbent is awarded a contract to build this hardware, that source would need approximately 18 months to complete the MDA QSMA Directorate’s Production Readiness Validation Program before commencing production. The Test and Float AEUs will be designed to host the most applicable builds of software and will be based on the most recent hardware configuration. A new contractor’s build using released data and vetted production processes would result in an older configuration and later delivery than required. Factors such as verifying/certifying quality inspection processes and ensuring capability to comply with regulations introduce schedule risk.

An additional schedule risk is introduced by the time needed to integrate a third-party radar into the AN/TPY-2 test program executed by Raytheon. A series of acceptance and verification events would require four to six months after providing the radar to Raytheon.

In conclusion, Raytheon’s existing expertise, established production and development capabilities, and proven track record assures the Government that the delivered products will be available within the schedules required. Award to any other source would result in unacceptable delays in fulfilling the agency’s requirements.

6. Efforts to Obtain Competition (FAR 6.303-2(b)(6)). To ensure compliance with FAR 6.303-2(b)(6), the Agency continues to assess opportunities for future competition in support of

AN/TPY-2, by conducting market research which is used to determine if sources capable of satisfying the agency’s requirements exist. The CO will use market research conducted within 18 months before the award, if the information is still current, accurate, and relevant.

As required by FAR 5.201, the proposed contract action notice will be published, and any bids or proposals received will be considered. Upon approval of this J&A, a redacted version will be posted to Sam.gov for 15 days along with a notice of Intent to Sole Source.

a. Effective competition. There is no effective competition anticipated for this acquisition.

b. Subcontracting competition. The RDC includes FAR Clause 52.244-5, Competition in Subcontracting, which requires Raytheon to select subcontractors on a competitive basis to the maximum practical extent with objectives and requirements of the contract. MDA will also take steps to promote competition by increasing small business participation to grow and train small businesses for future opportunities. This includes challenging the contractor to achieve goals above historical performance with contract requirements for small business participation and commitment plans for first and second tier subcontractors.

7. Determination of Fair and Reasonable Cost (FAR 6.303-2(b)(7)). In accordance with FAR 15.403, the CO has determined that certified cost or pricing data will be required. This determination is based on the fact that the anticipated contract value exceeds the Certified Cost or Pricing Data threshold , and a preliminary assessment indicates that none of the exceptions outlined in FAR 15.403-1(b) are applicable. Specifically, adequate price competition is not anticipated, and the highly specialized nature of the required supplies and services precludes classification as commercial items.

To proactively prepare for potential negotiations and ensure a fair and reasonable price, the CO will engage the Defense Contract Audit Agency (DCAA) to conduct a comprehensive review of Raytheon’s accounting practices and cost allowability. This DCAA review will provide a detailed understanding of Raytheon’s cost structure and identify any potential areas of concern that may warrant further scrutiny. Simultaneously, the CO will consult with the Defense Contract Management Agency (DCMA) to assess Raytheon’s estimating system and cost realism, gathering valuable insights into the contractor’s pricing methodologies and ensuring that proposed costs are supported by sound estimating practices. These early interactions with DCAA and DCMA are deemed essential for establishing a well-informed and defensible government negotiation position.

Further bolstering the government’s ability to assess price reasonableness, the program office has requested an Independent Government Cost Estimate (IGCE). The IGCE is developed by a dedicated team comprised of government experts with specialized knowledge of the AN/TPY-2 system, its technical requirements, and relevant market factors. The team will leverage historical cost data, market research, and engineering analyses to create a detailed and objective estimate of the anticipated contract costs. The IGCE, along with insights gained from the DCAA and DCMA reviews, will serve as a critical benchmark against which any future proposal from Raytheon will be rigorously analyzed.

These proactive steps are designed to ensure that the CO is fully equipped to assess the fairness and reasonableness of Raytheon’s proposed price and to negotiate effectively to obtain the best possible value for the government. The entire process will be conducted with strict adherence to the applicable regulations and policies, including ensuring compliance with FAR 6.303-2(b)(7).

8. Description of Market Research Conducted (FAR 6.303-2(b)(8)). A comprehensive market research effort was undertaken, using Procurement Number 24-MDA-11952, to identify potential sources capable of fulfilling the MDA’s critical requirements for the AN/TPY-2 radar system. To ensure a thorough assessment, an MDA Radar Program Request for Information (RFI) was posted to Sam.gov between November 2024 and January 2025, inviting interested parties to demonstrate their qualifications and experience. These requirements, encompassing a broad spectrum of activities including hardware and software development, component production, spares, fleet refurbishment, capability upgrades and comprehensive Operations and Sustainment (O&S) fall under NAICS code 334511 and Product Service Code AC25.

Twelve companies, representing a diverse mix of large and small businesses, responded to the RFI. Each response was rigorously evaluated against pre-defined criteria, focusing on demonstrable capabilities within the Development, Production, and O&S domains. The evaluation process prioritized verified expertise, relevant experience with similar weapon systems, availability of historical data to substantiate claims of capability, and the ability to meet the government’s schedule requirements. The AN/TPY-2 Next Market Research Report was approved on March 5, 2025.

The market research process culminated in a definitive conclusion: Raytheon stands as the only responsible source capable of fulfilling the agency’s multifaceted and technically demanding requirements for the AN/TPY-2 radar system. While other respondents expressed interest and demonstrated limited capabilities in specific areas, their responses revealed significant limitations and inherent risks that preclude their ability to deliver the required level of quality and reliability. These critical shortcomings encompassed a reliance on unproven teaming agreements to bridge capability gaps, a lack of documented experience in integrating complex software updates into operational environments, and an overall lack of demonstrated capacity to scale operations to meet the Government’s full range of requirements within the required timeframe. These deficiencies present unacceptable risks of cost overruns, schedule delays, and most critically, the potential degradation of the AN/TPY-2’s operational effectiveness as a vital component of the nation’s missile defense architecture.

9. Any Other Facts Supporting the Use of Other Than Full and Open Competition (FAR 6.303-2(b)(9)).

a. Procurement History.

Contract # Award Date POP End Type Total Value

Sole Source/Competitive

HQ014718D0002 –

Radar Development

11/1/17 10/31/27 D Sole Source to Raytheon

Modularization and Open Systems Architecture: Modular Open Systems Architecture (OSA) was partially implemented beginning with Common Software Build 3.0, fielded in 2019, in order to accept 3rd party discrimination algorithms (government owned, Small Business Incentive Research, etc.) The Government will continue to advocate for modular design of the AN/TPY-2 system, enabling easier component upgrades or replacement by different vendors. The adoption of an OSA, utilizing open standards and interfaces, will be promoted to enhance interoperability and foster competition. Where feasible, the Government will control the definition and documentation of key interfaces, enabling multiple vendors to develop compatible components.

It is acknowledged that the feasibility of these actions will depend on specific technical requirements, budget constraints, and the cooperation of the incumbent contractor. All efforts to promote competition will be carefully balanced against the need to maintain system reliability and performance, with thorough testing and verification ensuring that any new sources meet stringent quality requirements. These actions represent a sustained commitment to fostering a more competitive environment for AN/TPY-2 procurements in the long term.