December 12, 2007 / 11:35 PM / in 10 years

Northrop Grumman wants bigger missile-defense role

WASHINGTON, Dec 12 (Reuters) - Northrop Grumman Corp (NOC.N) said on Wednesday it wanted a bigger role at the hub the U.S. missile defense shield, a job that has earned Boeing Co (BA.N) nearly $16 billion over the past 10 years.

The Pentagon’s Missile Defense Agency, or MDA, asked for ideas last month on how to enhance the ground-based system’s interceptors, radars and controls. It said it was starting a process that could lead to new competition for development and maintenance deals.

AT issue is a system designed to shoot down enemy ballistic missiles in the middle of their flight paths while they cruise through space. Known as ground-based midcourse defense, or GMD, it is the Pentagon’s biggest missile defense program, accounting for about $2.3 billion in fiscal 2008, which began Oct. 1.

The U.S. spends about $10 billion a year overall on missile defense, the costliest annual Pentagon outlay under President George Bush.

Boeing, which began integrating the system nearly 10 years ago, “has done an outstanding job throughout the development and deployment effort in a very challenging technical environment,” said Richard Lehner, an MDA spokesman.

Northrop Grumman, the Pentagon’s third-biggest supplier by sales, said it would respond to the MDA’s request for industry feedback, posted Nov. 19 on the Federal Business Opportunities Web site.

“As a major prime contractor on numerous large, complex weapons systems for the U.S. government, we are excited about this opportunity,” Jerry Agee, Northrop Grumman’s top executive for missile defense, said in a statement.

“The success of our military weapon systems acquisition process is founded in competition; harnessing the most innovative ideas from the top engineering talent in the industry to tackle our nation’s most pressing challenges, at the best price to taxpayers,” he said.

“Northrop Grumman intends to bring its strong portfolio to bear on this critical missile defense program and demonstrate that the seamless delivery of an integrated missile defense system -- optimized for performance and ready when needed -- is within MDA’s grasp.”

Los Angeles-based Northrop Grumman already supplies several U.S. antimissile technologies, including for space tracking and surveillance and “kinetic energy interceptors” designed to destroy enemy ballistic missiles.

Scott Lusk, a spokesman for Lockheed Martin, the Pentagon’s No. 1 supplier, said: “It is our long-standing policy not to announce our competitive intentions, but the GMD follow-on effort would provide a natural application of our talents and capabilities.”

Raytheon Co (RTN.N), another potential competitor, is also responding to the MDA request to industry, said David Albritton, a company spokesman.

    Boeing, the Pentagon’s No. 2 supplier, said it was developing a response as well.

    It was awarded a contract in 1998 to put together the ground-based system, core of an emerging layered shield against missiles that could be tipped with chemical, nuclear, or biological warheads.

    The system-development portion of Boeing’s contract is scheduled to expire at the end of 2008. Work under the deal has totaled almost $16 billion, most of it going to subcontractors and suppliers, Lehner said.

    Boeing said its work in developing and maintaining the system had been rated “exceptional” by MDA in an annual evaluation completed after the request to industry.

    “... and we look forward to the opportunity to continue to lead this vital component of our nation’s defense,” Scott Fancher, general manager of Boeing’s missile defense business unit, said in a statement.

    MDA said it had not yet decided how it might restructure its acquisition strategy.

    Among the points at issue was whether breaking the overall requirement into pieces might backfire, causing an “unacceptable risk to program execution,” Lehner said in an e-mailed reply to questions from Reuters. (Reporting by Jim Wolf; Editing by Andre Grenon)

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