UPDATE 1-Northrop gets $2.35 bln for US weather satellites

(Adds background on program)

WASHINGTON, July 30 (Reuters) - The U.S. Air Force has awarded Northrop Grumman Corp (NOC.N) a $2.35 billion contract modification as part of a restructuring of a weather satellite project, the Defense Department said on Monday.

The National Polar-Orbiting Operational Environmental Satellite System (NPOESS) is aimed at increasing the accuracy of weather forecasts so that five- to seven-day forecasts are as reliable as three-day forecasts.

A restructuring plan for NPOESS was approved last year, including a reduced number of sensors, after cost overruns and schedule delays threatened the program's cancellation.

The military decided to proceed with NPOESS, most recently estimated to cost a total $11.16 billion, after concluding the system was essential to U.S. national security.

The contract modification includes two manufacturing development satellites with an option for two more, the Pentagon said in a daily listing of military contracts.

A revised fee structure provides incentives for holding down costs, meeting schedules and achieving technical requirements, it said. The work is to be completed in 2016.