Northrop Grumman Corp., just weeks away from the expected approval of its $5.1 billion acquisition of Litton Industries Inc., is aggressively moving to retake its position as a premier defense contractor.
Poised to almost double in size, it is suddenly empowered to compete for contracts for which it was not formerly in the running.
"(With the Litton acquisition), they now have the in-house resources to compete for much larger contracts," said Thomas Meagher, an analyst with BB & T; Capital Markets. "Regardless of whether you're looking at manufacturing or services, size matters. This acquisition really bolsters their competitive position in both of those areas."
While the merger will bolster Northrop's prowess overseas, it is here in the U.S. that its newfound clout will bear the sweetest fruit, industry observers said.
"The Pentagon wants one-stop shopping," Meagher said. "They don't want to award three different contracts for procurement of hardware, systems integration and maintenance. By default, only the folks with the most capabilities can manage those (contracts.)"
Century City-based Northrop isn't wasting any time launching efforts to land several gorilla contracts. Among them are:
>A thick slice of President Bush's proposed $60 billion missile defense shield, which would consist of intelligence-gathering systems and lasers or small missiles to intercept and destroy enemy missiles launched at American and allied targets.
>A design contract to be awarded in April for the Navy's next-generation DD-21 Zumwalt land attack destroyer. Thirty-two of the ships are to be delivered between 2005 and 2020, at an estimated total cost of $25 billion. Construction contracts for 16 of those ships are expected to be awarded to defense teams headed by Litton, which is the largest producer of non-nuclear ships for the Navy, and General Dynamics Corp. Northrop previously had only a meager role as a systems integrator on the Litton team.
>A contract for a yet-to-be-determined number of unmanned Global Hawk high-altitude reconnaissance planes, which the Air Force is looking to buy for $16 million each beginning in 2005. Northrop has already been awarded an $84 million development contract for the plane.
But the latest metaphor of Northrop's aggressive strategy can be seen in the $35 million that the company invested in the Pegasus unmanned demonstrator surveillance aircraft, a model of which was rolled out of an El Segundo hangar last week to great fanfare.Demonstration project
The aircraft, now being tested at the China Lake Naval Weapons Test Center, will not be mass produced. Its sole purpose is to showcase the aerodynamic prowess of Northrop as evidence of the company's commitment to remaining a prime contractor in systems integration.
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