MARCUS WEISGERBER, DEFENSE NEWS:  What do you see as the growth potential for this business, say in the Pacific and as a whole for your company?

STEVE HOGAN : If we specifically look at the capabilities that we Northrop Grumman have that we are going to international with – and I’ll use Triton as a good example – we believe that we’re going to have to put infrastructures, sustainable and affordable infrastructures in place, in countries that frankly don’t have anything right now, from the sense of – and I’ll just stick with unmanned systems as a good example – Unmanned systems require a slightly different infrastructure than manned systems.

And we typically use those aircraft at a longer endurance because of the fact, as Jim mentioned, there’s no pilot in those aircraft. So as we try to move to that kind of an operation forward-deployed, the strategies in international countries are a little bit different. The United States DOD philosophy has been to utilize sailors, Marines – I guess to outfit the system, and then go ahead and do their mission.

Internationally we’re actually finding that a lot of the infrastructure they’d like to have be the industrial partners responsibility. So there’s a lot of discussion about what they really want is pictures per dollar, you know whatever metric you’d like to use for that. And that what they’d like us to do is to provide that infrastructure.

So I think as we look to a place like Australia, or we look to a place like Korea or Japan, who are strongly considering unmanned systems these days, the infrastructure requirements are going to give industry an incredible opportunity to control that affordable, innovative approach to both providing what they really want, which is either information about a particular vessel, subject, movement on the ground, back in a form that we can use and manage for them, which right now we partner with our DOD domestic partners in a different way.

So I think it’s very exciting. And I think the market space there is a very open area that we can shape into I think a more affordable solution because of the uniqueness that we can put in a country like that. So I think everything that you’ve heard about our deployed operations’ history, as Jim mentioned, we already know how to do it with the customers we’re working with now. Transitioning to a new way of doing business in these international partners is a very, very exciting piece. So I think it’s going to be a big large piece that we’re going to have to aggressively go look at.

MARCUS WEISGERBER:  Can you talk about any specific programs you’re pursuing other than you mentioned the F-18 and Growler?

JIM ZORTMAN:  Steve’s done a good job of laying out the ones that are specifically related to the acquisition in Australia. In addition to that, the Republic of Korea is actively interested in Global Hawk. Japan is same thing with Global Hawk, and also with E-2D. So those are three, in addition to those three that Steve talked about in Australia that are active, publicly working their way through the system in the Pacific region.

There’s others that are in various stages of being talked about. But I’d say those three are the biggest ones right now.

PAT HOST, DEFENSE DAILY:  I believe it was Steve who said “Now that the sale is over with Quantas that Northrop Grumman can help meet their full potential. Could you please elaborate on that a little bit. Tell me a little bit more.

STEVE HOGAN:  During the acquisition process, the industry teams that were interested in acquiring this capability were given access to basically the current portfolio of capabilities and programs that they had. So I think as any challenge, any company makes decisions on what they’re willing to invest in a company that has good ideas or opportunities for expansion. And when you’re being sold that’s probably a pretty tough way to consider internal precious investment dollars.

So they had a bunch of activities that they were considering, but they couldn’t go pursue while they were being sold. So they basically were quarantined to the programs they had of record, and moving through those. Now, they have an excellent track record of positioning themselves for further work on those particular contracts. So much like the CPAR system the U.S. uses, the DMO rates companies to their activity in Australia as well. And they have outstanding ratings there.

So the things that we’re really concentrating on right now are the specific expansion of Northrop Grumman capabilities that we already have fielded that we don’t have MRO capability in that region. So we’re cutting down on logistics time between sending boxes all the way back to the United States that could be repaired forward in that capability. In the procurement process we were also able to get some very key facilities. So we have a very nice hangar, just to give you a size, could fit about seven F-18’s in it with room to work around them.

So just to give you an idea of that, we also have the capability of having a clean room in there. So expansion capabilities to add on to systems that we, Northrop Grumman, already have positioned in that area is going to be our first effort. So we’ll look at things like Large Infra-Red Counter Measures, that’s one program that we’re really looking to bring to that region. And then support all the countries. So if you think about C-130’s, that system has been proliferated on C-130’s. And almost every country in that region has a C-130 variant, as I think somebody mentioned in one of the questions.

So that’s the initial target. And then we’re of course looking at all the capabilities that we have internally that we’ve been selling domestically, working a lot of them through foreign military sales, and a lot of them through direct commercial sales to bring those kinds of capabilities into regions like Saudi Arabia, the UAE. So Jim mentioned the Korean and Japan opportunities, clearly we see those as really a regional hub kind of a concept where we can support anywhere with JP’s data push, and then maintain anywhere through a regional hub concept.

So those are the big areas that we’re going to push on right now. So bringing new weapon systems to those countries is a primary focus. But they’re primarily weapon systems we already have.

ED HAZELWOOD, AVIATION WEEK : Steve, you mentioned, if I got this right, that country executives had already been named in four countries and there were sort of two more hanging out there. I’m assuming Australia, Japan, Republic of Korea would be three of those. Could you name the fourth and the other two?

STEVE HOGAN:  Sure. So we’ll start with the four that we announced last year through a couple of various press releases. And Randy, if you want to help me out here. I’ll be happy to tell you.

So we started in the U.K./Europe environment, so we have a country executive that covers all of that area. We have a country executive that we’ve named in Saudi Arabia. We have a country executive we’ve named in the UAE. And we have a country executive that we’ve named in Australia. So those were the first four. This year, we’re expanding to Korea and Japan. And those announcements will come through the fall here as we look at those very, very differently as Jim mentioned with very near term opportunities in hand. We feel like our presence there is just as important as the first four that we announced last year.

ED HAZELWOOD:  Can you state a little bit more on Middle Eastern opportunities, where you see that going, UAE, Saudi, do you see anything in Turkey and the sort of Southeastern European region?

STEVE HOGAN:  Sure, so I’ll start, Jim, and then I’ll let you pick up a couple. So in the technical services sector, where I am from, we have some maintenance contracts and opportunities that we already do in the U.K. And they are very much aligned with the strategy that the Saudi Arabian team uses to support their AWACs aircraft. So there are some opportunities that we are already involved in where we’re providing sustainment, spare parts, and then installation of those spare parts as a primary focus.

We also have a couple of joint ventures that we’ve been working for a number of years where we provide mission training for helicopters, English language training, a couple of the other ILLITIES that people don’t talk as much about. But we have been doing that for 25 to 30 years now. And we have a very nice stronghold there.

There’s a couple of procurements that are coming out in Saudi Arabia right now for opportunities that are very interesting that are new. But from based on what we do already for the Saudi Arabian government, we will be positioned very, very well for those as well. And then Jim, why don’t you speak of UAE.

JIM ZORTMAN:  I’d say the main one that we’re focused on is the UAE competition for AEW. And E-2D is a primary candidate for that. The UAE is on a schedule to announce that sometime. We’re not sure exactly when that’s going to be. But we feel like the E-2D is a very well-suited for the capabilities that they’ve said that they want to have in an AEW platform. So that’s a primary one that I’d say is the closest-in right now.

JOE TAYLOR:  Again, I represent more of the command and control side of the house. But we have a number of opportunities that are command and control related. For instance, one of them that we’re going through the process right now has to do with the modernization of the Saudi Arabian land forces from a command and control perspective. And primarily kind of brigade and below.

So that’s a natural area where we would provide sort of the C3 integration solution, and we’d lean very heavily on our TS partners with respect to the long-term support of those platforms that we would end up touching with command and control solutions and that sort of thing. So it tends to be a partnership on a lot of those.

LEIGH MUNSIL, POLITICO:  I was wondering we’ve been hearing a lot about the pivot to Pacific from the Pentagon and yet other threats in other parts of the world haven’t really diminished as much as maybe was anticipated. So I’m wondering from an industry perspective how much do you trust the Pentagon’s word and what to invest in the Pacific? Do you believe that that actually is going to be a place for opportunity in the future? And having a footprint in places like Australia, how will that help you work with the Pentagon in this new Pacific-focused world?

JIM ZORTMAN:  I think that the countries in the region of the Pacific have very real and enduring defense needs. They’ve got – you look at the sea lanes that go through there, you look at the mineral resources, you look at some of the oil resources that are there, they’re going to come in a lot of cases more into conflict. And so they are preparing for the kind of national security needs that they have.

So I think regardless of the way that the U.S. chooses to approach it, and U.S. is engaged and will continue to be really heavily engaged in the Pacific, those nations have needs that they very clear, and a lot of cases they’ve approached us to help them satisfy.

STEVE HOGAN:  A slightly different twist. I think what we’re also looking to do is enable the partners that are going to be part of that pivot to the Pacific that we certainly hear a lot in the U.S. press about, and we certainly hear the Pentagon talk a lot about. We tend to follow the programs, versus necessarily the front end of the policies. So we’re trying to make sure that we’re positioned to enable programs to be successful in that Pacific pivot.

So Australia, as a great example, if we can have an MRO capability that can take care of the jets, the helicopters, the land vehicles that will go into different areas of operation than we currently are in, at that point we’ll be able to utilize those services and capabilities in a way that obviously meets our shareholder value needs, and also helps meet the needs of our service members, both domestically and internationally.

JIM ZORTMAN:  One other thing is that some systems that are particularly well suited to the Pacific because of its size, high altitude, long endurance surveillance as an example, cover huge swaths of territory and not nearly as dependent on basingin a lot of cases, can go a long ways to the area of interest. The other one is particularly rotary wing that not a lot of, in some cases, prepared or in disaster response, being able to get there and operate once you get there.

So the Pacific, as a region, is a place that’s going to have everybody’s interest for a long time to come, whether there’s a pivot or not.

RANDY:  Okay, we’re going to take a question from our webcast. The question is, how are you integrating logistics and technical support across multiple sector platforms?

JIM ZORTMAN:  I’ll take a crack at that, because in the aerospace system sector first of all we are organized by sectors, but the four of us up here would be hard pressed to think like sectors. We think about how we take everything we’ve got and apply it to the problem we’re trying to solve, for whether it’s one of our DOD customers or one of our international customers.

When we’re designing and developing that’s necessarily a lot of times a more technical solution that is very much focused on an engineering approach. When we do that, we bring in, whether it’s our partners in electronic systems or integrated systems, information systems, we come in and we talk about those sensors, or we talk about those attributes, and we bring together with our technical services folks that are in a lot of cases going to be the folks that are out on the flight line, turning the wrench or making the day-to-day contact with the airplane. So that we bring that into the front end design of the system, and not when it finally gets out there and they go, “Who is the knucklehead that put this together this way?”

So we like to think that we’re able to do that very early in the process and get the outcome we want to have, rather than get to the spot where we’re operating it and be surprised that it came out the way it did.

JOE TAYLOR:  Information systems, again we tend to be command and control communications. But those inevitably have a physical component as well. So whether it be radios, the computer systems that have to go into the platforms in order to be integrated. And so by bringing in the support team as part of the initial design we can both design the cost-end capability, includes ease of long range development of the system. I mean, it’s true of any platform that’s built nowadays, the day it rolls off the assembly line essentially most of the components in it are out-of-date.

So you have to build that ability to have inherent modernization capability into the system as it’s designed. And it has to be done easily. You can’t afford to rebuild from scratch from ground up, that vehicle, that platform, that aircraft when you do that. So we bring that team, that logistics, that modernization team as part of our basic engineering group. And we do initial designs on all of our offerings.

STEVE HOGAN:  And I think I would add you watched us do several of these press conferences. And if you noticed we don’t do press conferences by sectors, because the philosophy at Northrop Grumman is for us to look at these pillars, as Randy mentioned, and look at these areas, these mission capability areas. So we’ve done a lot more integrating across the company from what our sectors, which are our operating disclosure statements, to our capabilities. So the logistics pillar is a good example. As we sit here and represent you today, we have all four sectors working logistics issues, not just a particular sector who wants to call themselves logistics.

So I think that’s been a fundamental shift in the way that Northrop Grumman has considered opportunities in the marketplace. And that is a very big deal in how we’re putting together the teams that Jim was just talking about, cross-functional, cross-sector, cross-capability to provide an affordable solution to our war fighters.

RICK BURGESS, SEAPOWER MAGAZINE:  Mr. Hogan, can you describe the extent to which Northrop Grumman is involved in sustainment of the F-18 and soon to be 18-G fleets in Australia? This is Quantas doing a lot of that? And you’re assuming it or you’re adding to it? How is that being worked?

STEVE HOGAN:  Well, in any situation there are teaming relationships that we establish. In a particular case of the F-18, we have a sustainment and a teaming arrangement with Boeing Company to provide sustainment for the part of the platforms that we provide our work share from. So we actually have a firm agreement on what it is that we’re to continue to support, and what it is that we will deploy and support as well.

So that goes domestically and internationally. So as we move through the globe and different areas of operating expansion, we make individual decisions along the way with the Boeing Company as to how we’re going to best support that platform internationally.

So in some cases you’ll see a large Northrop Grumman footprint in areas where it makes sense. In other cases, we opt to decide that it’s a better footprint for Boeing. So that’s kind of the way we do business, and it’s been very successful for both companies. And we’ve been very excited about any of these expansion opportunities.

Now on the Growler, we have a little more content on the Growler because if you understand how the Growler was originated, we took all the capability from the advanced capability enhancement program developed on ICAPIII Prowler, and we moved that over to the F-18, and we renamed that the Growler. So inherently, a Northrop Grumman designed and developed system, we moved that to the F-18 so we have some more work share, I guess, is the best way to term it, that we have on content on that particular one. And that follows internationally to where we go as well.

So we’re a big part of that program. We have an excellent partner in Boeing. And we have a great relationship on how we sustain and maintain that.

RICK BURGESS:  As a follow up, how would you characterize your involvement in Australia? Was it more than you would provide for the U.S. Navy, or less, or same?

STEVE HOGAN:  To date, how we’re handling Australia, they have a small number of jets. And so our involvement has been minimal just trying to push the pieces that we felt were important. As that fleet size grows, and as Growlers become more a part of that, our expectation is that we’re going to expand the current level of work that we do in Australia to the appropriate teaming agreement relationship. Similar to what you know we do in Whidbey Island for how we support the Navy fleet for the Growler.