In 1994, aircraft manufacturer and designer, Northrop Aircraft Corporation, merged with the Grumman Corporation – a military aircraft systems builder and integrator – creating the foundation for today’s Northrop Grumman. Over twenty years of acquisition and integration has turned Northrop Grumman into a highly diversified over $30 billion enterprise with over 85,000 employees.
Currently, the company spreads its offerings across four business segments described below. This blog will focus on the latter two business segments – Technology Services and Innovation Systems.
- Aerospace Systems designs, develops, and integrates manned and unmanned aircraft, spacecraft, high-energy laser systems, and microelectronics to, primarily, the U.S. Department of Defense (DoD).
- Mission Systems provides end-to-end mission solutions and multi-function systems, including C4ISR systems; radar, sensors; electronic warfare, space, and intelligence systems; air and missile defense integration; and shipboard missile and encapsulated payload launch systems.
- Technology Services provides solutions supporting the full life-cycle of platforms and systems delivering technology-driven solutions and services for DoD, global defense and federal-civilian customers. Major products and services include software and system sustainment; modernization of platforms; advanced training solutions; and integrated logistics support.
- Innovation Systems was created after the acquisition of Orbital ATK. It builds and delivers space, defense and aviation systems to its customers, including launch vehicles and related propulsion systems; missile products; precision weapons and armament systems; satellites and associated space components; and advanced aerospace structures.
Customers
Although Northrop Grumman has some commercial business, it remains primarily a U.S. Government contractor. In 2018, 82% ($24.7 billion) of the company’s revenue came from U.S. Government contract work. As shown in Figure 1 (see below), an overwhelming amount of that federal revenue comes from within DoD as a whole. In fact, National Aeronautics and Space Administration (NASA) and the Social Security Administration (SSA) are the only funding agencies in the top ten outside of the DoD.
Figure 1 – Northrop Grumman’s top customers by obligated funding (FY14-FY18). Source: FPDS.gov
A sample of contracts defining Northrop Grumman
Of course, Northrop Grumman’s Aerospace and Mission Systems segments have a number of “organizational-defining” contracts. However, for the sake of blog brevity, we will focus our attention on a sample of wins and losses in the Technology Services and Innovation Systems segments.
Noteworthy wins
- The $850 million Consular Systems Modernization (CSM) contract for provides system modernization services across the U.S. Department of State’s, Bureau of Consular Affairs (CA) 300+ locations. Under this contract, Northrop Grumman designs, develops, and maintains consular systems providing business capabilities for the ConsularOne program and other system modernization efforts. This contract impacts almost every relevant system at Consular Affairs. Northrop Grumman has realized $37 million in contract obligations since the June 2018 award.
- In 2014, Northrop Grumman won the U.S. Department of Homeland Security, U.S. Customs and Border Protection (CBP)’s Software Application Development, Modernization, Enhancements, Operations, and Maintenance (TECS MOD). This $344 million contract supports the modernization of an application suite consisting of half of CBP’s applications; Northrop Grumman provides a full range of operations and maintenance support for these applications. The company provides all phases of software requirements in this major modernization effort to include rewriting older software on legacy systems to enable better sustainability and movement to a cloud computing environment.
- Since 2002, Northrop Grumman has supported U.S. Air Force Weather Agency, managing all three successive iterations of its Systems Engineering, Management and Sustainment (SEMS) contract, including the latest SEMS III. Under this 5-year, $300 million contract, the company provides systems engineering, program management and systems management and sustainment.
- Earlier in August 2019, Northrop Grumman began work on NASA’s Goddard Space Flight Center (GSFC) $274 million Environmental Test, Integration Services (ETIS III) contract at NASA’s Goddard Space Flight Center. The company is expected to provide environmental test and integration services for the development and operation of spaceflight and ground system hardware and software. The Source Selection Statement indicated that Northrop Grumman soundly defeated the competition. Northrop Grumman was evaluated at nearly double the scores compared to most competitors including the incumbent, Sierra Lobo.
Noteworthy losses
- In 2017, Leidos took the 6-year, $684 million DHS SENS3 contract (awarded under GSA Alliant, previously called ENSS) away from incumbent, Northrop Grumman. This contract provides operations and maintenance, security, engineering, architecture, integration, and testing to support DHS mission critical classified networks.
- In 2018, Northrop Grumman was removed from providing support for the Virginia Information Technologies Agency’s (VITA, part of the Commonwealth of Virginia) IT infrastructure services. This was a fairly tense situation between Northrop Grumman and Virginia. SAIC replaced Northrop Grumman midway through the original period of performance.
Our ever so brief take on Northrop Grumman
While we don’t always associate Northrop Grumman with the steady stream of IT and other professional services contract, this interest is not going to change anytime soon. Northrop Grumman can field its development and systems engineering capabilities to handle large-scale, enterprise-wide programs, including massive modernization efforts. What the company hasn’t made so clear is whether or not it can stray from its process-oriented ethos (which may have hindered its SENS3 /ENSS re-compete), to provide the more flexible, Agile approach that customers look for today.
The acquisition of Orbital ATK gives Northrop Grumman a nearly unassailable position in pursuit of the U.S. Air Force’s Ground Based Strategic Deterrent (GBSD) program, the replacement for the current Minuteman III missile. Key competitor Boeing has dropped out of the pursuit of the new GBSD. Further, Orbital ATK will be one of two manufacturers supplying solid rocket motors to the prime contractor. If anything, this serves as an example of Northrop Grumman’s willingness to play the long game with strategic investments in order to win big.
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