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(Or maybe he is doing it on purpose that that Ted will fail brilliantly and he can argue for a better DC.)
the only 2 logical answers to this performance issue is A)he won't fix it (letting Ted fail as you suggest) or B)he can't fix it (doesn't know what to do). These things are root causes of any performance problem. however, I highly doubt a coach following a 3 win season will cut off his nose to spite his face. In other words, he is not standing back with a 'hands off' attitude letting CTR fail intentionally. He doesn't need to do that to replace him as he is the boss. He could fire him after lunch if he wanted. IMO, he doesn't know what to do. most logical conclusion.