By Calvin Biesecker
A review initiated this month by antitrust regulators into Northrop Grumman’s compliance with terms of the government’s approval last year of the acquisition of Orbital ATK isn’t expected to impact the Air Force’s acquisition plans for a new strategic nuclear missile system, the company’s top executive said Thursday.
Northrop Grumman, in its third-quarter earnings filing with the government, disclosed that the Federal Trade Commission is conducting a civil investigative inquiry “requesting certain information relating to a potential issue of the company’s compliance” with terms of the agency’s order, which requires Northrop Grumman to make Orbital ATK’s solid rocket motors available to other companies.
The issue relates to the Air Force Ground-Based Strategic Deterrent (GBSD) program, for which Northrop Grumman will apparently be the sole bidder after Boeing said over the summer it would drop out of the competition. The aerospace giant said its competitor has an unfair advantage given its ownership of a solid rocket motor business.
Boeing says it would have to subcontract for the solid rocket motors for the contract to build the missile, which is among the reasons it says it can’t compete on cost. Boeing’s choices for a solid rocket motor subcontractor include Northrop Grumman and Aerojet Rocketdyne, the only other supplier of these rockets in the U.S. Boeing is also concerned that if Northrop Grumman’s solid rocket motor unit would be part of its team, there is the potential for leakage of some of the intellectual property in its GBSD design.
“We do not currently expect any change to the Air Force acquisition strategy as a result of this inquiry,” Kathy Warden, chairman, president, and CEO of Northrop Grumman, said in response to an analyst’s question during the company’s third-quarter earnings call. “They do plan to award next August, so there is some time. Our proposal is due in December. So obviously we will continue to monitor that but right now we do not see any impact.”
In its 10-Q filing Thursday with the U.S. Securities and Exchange Commission, Northrop Grumman said it is “working to respond” to the FTC’s request.
“We believe the company has been and continues to be in full compliance with the Order, but we cannot predict any potential impact on the pending competition,” Northrop Grumman said.
Boeing has asked the Air Force to include the company and Northrop Grumman together in a so-called “national team” for GBSD.
Warden told analysts her company hasn’t received any pressure from the government to “engage in a national team.” She added that Northrop Grumman’s GBSD team has a national footprint.
The GBSD system will replace aging silo-based Minuteman III intercontinental ballistic missiles, built by Boeing. The life-cycle cost estimate of the GBSD program is around $100 billion.
This story first appeared in Nuclear Security & Deterrence Monitor affiliate publication Defense Daily.
