January 20, 2015 / 6:10 PM / 4 years ago

Northrop hires former Pentagon official to head strategy

WASHINGTON, Jan 20 (Reuters) - Northrop Grumman Corp , one of the biggest U.S. weapons makers, said on Tuesday it hired Brett Lambert, a former top U.S. defense official and expert on mergers and acquisitions, to oversee corporate strategy.

Lambert’s hiring, effective Jan. 26, reflects growing pressure on Northrop to boost revenues and could help the company the navigate a future merger, said defense consultant Loren Thompson, chief operating officer of the Virginia-based Lexington Institute.

Analysts say consolidation in the sector is long overdue.

Lambert will spearhead Northrop Grumman’s corporate and business strategies. At the Pentagon, he initiate a drive to better understand the defense industrial base and represented the Pentagon on the interagency Committee on Foreign Investment in the United States, which evaluates proposed acquisitions by foreign companies.

Lambert has worked as a consultant since leaving the Pentagon in August 2013.

“If Northrop wants to keep growing, it will need to change its strategy,” Thompson said, adding that Lambert’s expertise in domestic and international mergers could be important to Northrop’s future.

Among major U.S. weapons makers, Northrop is the least exposed to commercial markets and foreign sales, he said, and its three major divisions all face pressures.

Thompson said high stock prices have delayed a widely expected consolidation in the U.S. defense sector, but trends on demand indicate the need for fewer top defense companies in coming years.

Northrop has lost several key U.S. weapons contracts over the past year, including one worth up to $1 billion to build and design the next-generation air defense for the U.S. Air Force. It was awarded to Raytheon Co.

The Government Accountability Office is due to issue a ruling by Jan. 29 on a protest filed by Northrop over the contract award, and a separate protest filed by the other losing bidder in the competition, Lockheed Martin Corp.

Northrop suffered another setback last month, when the U.S. Navy decided to use the V-22 tiltrotor aircraft built by Boeing Co and Textron Inc’s Bell Helicopter unit instead of upgrading Northrop’s older C-2A turboprop aircraft.

The company is still in a high-stakes competition against a joint Boeing-Lockheed team for a huge contract to design and build the next bomber for the U.S. Air Force. The contract is to be awarded this spring. (Editing by Jeffrey Benkoe)

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