On Tuesday, April 26, 2005, James R. O'Neill, corporate vice president and president of Northrop Grumman Information Technology, addressed the National Press Club in Washington, D.C. Below is a transcript of his remarks and the question and answer session that followed.

An Overview of Northrop Grumman's Information Technology Sector

RANDY BELOTE: Good morning and welcome to Northrop Grumman's ongoing media briefing program. Thanks for joining us this morning. My name is Randy Belote. I'm corporate director of corporate and international communications in Northrop Grumman's Washington office.

I think you'll agree with me that we have a very insightful briefing for you this morning. You're going to receive a comprehensive look into Northrop Grumman's Information Technology sector. With more than 23,000 employees in 350 locations in the United States and abroad, and approximately $5 billion in sales in 2004, Northrop Grumman Information Technology is based in McLean, Virginia. It's a trusted IT leader and premier provider of advanced IT solutions and engineering and business services for both government and commercial customers. The sector's technological leadership spans such areas as homeland security solutions, secure wireless, cyber and physical assurance, IT and infrastructure, managed services, knowledge management, modeling and simulation, and geospatial intelligence solutions.

This morning we are pleased to have Jim O'Neill with us. Jim is corporate vice president and president of Northrop Grumman's Information Technology sector.

Jim assumed the duties of sector president almost a year ago – I guess it will be a year ago next week – on May 1, 2004. Prior to his appointment, Jim served as the president of TASC, a business unit of Northrop Grumman Information Technology.

Jim came to Northrop Grumman in March 2002 as president of the TASC business unit. Prior to joining the company, he served as a senior vice president and general manager at Oracle Services Industries, overseeing sales and consulting groups in the company's communications and utility sectors.

He previously served as corporate officer and president of government solutions for Lucent Technologies, held senior management positions in the federal government region for Digital Equipment Corporation, and began his career at Sanders Associates – most of you know it now as BAE Systems.

Steve Perkins, the sector vice president of business development and strategy, joins Jim today along with Gregg Donley, president of Northrop Grumman Information Technology's Technical Services business unit, and Juli Ballesteros, manager of sector media relations.

A few administrative details: The briefing will be on the record unless otherwise noted. Please turn off cell phones, pagers, etc., and hold your questions until the end of Jim's briefing. There will be plenty of time for those then.

So with that, let me turn the podium over to Jim.

JAMES R. O'NEILL: Thank you. Good morning. I've met most of you. I'm really looking forward to this presentation today. Thank you so much for taking the time out of your busy schedules to spend an hour with us this morning.

As I talk about IT, most of you probably think Northrop Grumman, as a company, either flies or floats; either we have airplanes, satellites or ships. And by the way, a lot of our employees feel the same way as well as many of our customers. So we put a five-minute video together to tell you what IT is; so with that I want to play a five-minute video. See, you didn't know you were going to get video – we're going to bring in popcorn later on – but this really gives you some depth and breadth of what this 24,000-person sector does at $5.5 billion.

With that, if you could roll the video – thank you.

(Video segment plays.)

JAMES R. O'NEILL: Was that helpful, I hope? Giving you the depth and breadth of what our sector can do? With that, let me just go through this presentation. I'm anxious to answer your questions.

As you can see, our sector is close to 24,000 people now. We have 3,000 openings as we speak today. We're in 50 states and 18 countries. Our sector is probably the most diversified sector within the company. We have more than 8,000 different contracts as compared, if you will, to the Newport News sector, which has about a dozen contracts. We have 8,000 active contracts at any one time.

We're really focused in three areas: network engineering, security solutions, and enterprise services. As you can see, our $5.5 billion is not unlike a stock portfolio. It's well diversified in state and local, commercial, civil, federal, Department of Defense, intelligence, etc.

We go to market in four different areas, and we're one of the few companies that can actually do this. We can enter the marketplace at one of four areas. Ideally, we would love to design, build, deploy and operate those – the ideal parameters, but we can do one of four, three of four, two of four. We're one of few companies that can do this. Life-cycle capabilities enable growth across multiple large marketplaces.

This is what the press says about us – this is not what we say about ourselves. And I'll let you read this: number one federal contractor for services and products; number one security provider, which is very large. We are one of – if not the – largest security suppliers to the intelligence community, and we are the largest general services administration (GSA) and government-wide acquisition contract (GWAC) vendor.

Our market is really broken into two phases: The federal marketplace, which is $3.6 billion. This is our Department of Defense intelligence business – our largest business. Our current programs are homeland security as you can see – the Homeland Secure Data Network for the Department of Homeland Security. We're the leading supplier to the National Reconnaissance Office as well as the National Geospatial Agency. We have thousands of people on both of those.

We do the Joint Base Operations Support Contract (JBOSC) at NASA – you saw the photograph on that – and we do the battlefield commands, as well, out in Fort Leavenworth.

This is our growth expansion. We're going to go after these programs at Census. A lot of classified programs coming up – America's Shield, which we'll talk about later, and Department of Defense infrastructure programs.

Our major new market initiatives are health-information technologies, the Department of Energy. You'll probably have some questions on energy, as we've just announced that we're going to bid Los Alamos, and on homeland security. Those are our growth opportunities in that area.

Health is one of the largest opportunities; health records, in particular, within the federal government, and you've probably noticed our purchase of the company Integic about two months ago. I'll answer questions about that later. We're very excited about that opportunity. Recent acquisitions like Integic give us business, process-management tools, clinical trials – all the things that we believe are huge growth areas for IT within the federal government.

Energy – very excited about the potential of energy. If you look at Energy's (ed. Dept. of Energy) needs today for infrastructure and you bump those up against what we do today for the Department of Defense and the intelligence community; very, very akin to what our strengths are. And we just bid –we are in the process of bidding Los Alamos – the request for proposal should be out next month. We just bid Nevada test site last week, and hopefully the contract will be awarded in the August-September timeframe. But we look at Energy as a very large market for IT going forward.

Homeland security – a big market for us today. We enjoy a good position there. We put PeopleSoft Human Resources – we are the systems integrator for PeopleSoft Human Resources today within the Department of Homeland Security.

We also run the Department of Homeland Security's high-speed data network for the intelligence community. It's a classified network that will encompass not just the intelligence communities, but also state and local and first responders, as well as the Department of Defense – very large opportunity for our company. We are the designer and implementer of that high-speed data network.

On our commercial side of the business, we're the only business within Northrop Grumman that does both commercial and state and local. No other part of our company does that.

We're big on emergency preparedness and response; biometric identification, a big strong suit of ours – hundreds of millions of dollars a year.

We're doing state outsourcing. We're looking at the state of Virginia, which is about to announce an outsourcing for the entire IT infrastructure. Two companies have been downselected: ourselves and IBM. We're looking forward to hopefully winning that program in the fall timeframe.

Our key programs today are e-911 systems. We run it in 25 states, four provinces in Canada and two countries in Europe. In addition, we recently won the U.K. IDENT system, which is an identification system; if you will, a national identity card for the United Kingdom as well as Scotland and Wales. In Texas, managed IT services – we are very large in the state of Texas.

As I mentioned, major expansion opportunities in Virginia – again, very excited about this potential. We see more and more states looking to outsource their IT infrastructure to companies like ours who do this for a living. We believe we can bring the best technologies and the best solutions at the most affordable price to various states. Virginia will be a great example of that.

Our international business is growing dramatically. We've won lots of contracts, especially in the United Kingdom over the last year. Our latest is IDENT, which will afford us the opportunity, as the IDENT owner, to bid these other four programs. The National Police Intelligence capability – and these are all U.K.; e-Borders – so we believe by having the IDENT system, it positions us well to bid these international large IT infrastructure, bringing out what Northrop Grumman does best. A lot of our heritage and programs that we have today, much of the capabilities originated in the Department of Defense and the intelligence community so we're bringing the best of the capabilities in these particular regions to state and local, and in this case, to foreign countries.

In summary, we are the largest IT supplier to the federal government, with some $5.5 billion a year and 24,000 people. We believe we're ideally situated to grow in those businesses, in health care, as well as the Department of Energy, and we're very much looking forward to taking this business and growing it. And for the record, one of the things that's significantly different about our sector than any other sector – we don't sell any product. That $5.5 billion is all people. It's truly a professional service IT sector.

As I mentioned, we have 3,000 openings today. Last year – just to give you an example – we hired more than 4,000 people because the product is our people, and that $5 billion is all people, very highly educated, mostly SCI (sensitive compartmentalized information) cleared, polygraphed people, mostly engineers that reside at our customer sites to help them form solutions and to bring technology and solutions to their marketplace.

So thank you again for coming – very excited today about being here. With that, I'd love to answer some questions.

Q: Nathan Hodge from Defense Daily. I wanted to know if you could talk a little bit more about the Los Alamos bid.

JAMES R. O'NEILL: Sure. Absolutely.

Q: Particularly in light of some of the problems that they've had with bad management down there – everything from security to a number of issues. Tell us a little bit more about what you would possibly bring.

JAMES R. O'NEILL: Well, the incumbent contractor has had that contract for 64 years, sole source. It's a contract that we looked at, and we've looked at this very hard. Greg Donnelly is the president of our technical service group. Greg's business unit is going to be bidding on this.

If you look at what the lab is trying to accomplish and at the capabilities that Northrop Grumman Information Technology has today, it's mostly in infrastructure, information technology play. We believe we can bring the best practices coupled with change management. We have bought approximately 20 companies over the last seven or eight years, and one of the things that Northrop Grumman has done an impeccable job at – and I can say that because I worked for five other companies and watched them buy companies and not integrate them – is to integrate those companies that we have bought. And it all comes down to change management. It's getting the culture of those – that group of people – in this case, in Los Alamos, it is engineers, scientists, and our company is technology based, so what we look for is a solution for that particular customer.

We want those engineers to be freed up, those scientists to do what they do best; to concentrate on nuclear stewardship and nuclear weapons. We will bring the capabilities, the processes – proven processes with our partners in place to manage the infrastructure of that, to make it a much more efficient place, yet at the same time allowing the scientists and engineers to do what they do best.

So if you look at it and you remove the nuclear stewardship, we think it plays very nicely to the capabilities – not unlike J-BOSC that we manage today at Kennedy Space Flight Center. We manage about 4,000 people down there. We've had the contract for five or so years. By all means our customers are very happy with it. We've brought process improvements to it, we've made it a much more technology-based, process-improved place, and coupled with our employees, who are quite happy being part of a very large company with a large mission. So Los Alamos, to us, is a continuation of the capabilities that we have today.

We're also very excited about energy in particular – it represents not just that particular opportunity; not unlike Department of Defense or the intelligence community, they really need, if you will, an upgrade in infrastructure. And that's what we do and have done for quite some time.

Q: (Off mike) -- with Forecast International. Along those lines, probably one of the most glaring problems of late was based on security. Are you bringing any – are you looking at bringing any unique security aspects to the bid?

JAMES R. O'NEILL: Well, most of the work today that Northrop Grumman does is bound, it's wrapped in security. Whether it's Department of Defense, secret, top secret or SCI in the intelligence community, we are a company that – our DNA is really – it comes from the intelligence community and comes from security. We believe we have the best class of security. For example, in Newport News today, we build nuclear reactors for aircraft carriers. Our security around Newport News has been nothing less than stellar, as obviously it has to be.

Again, if you look at the requirements of the Department of Energy and you bump those requirements up against the capabilities of Northrop today – security obviously being first and foremost – it plays very nicely to what we can bring, with demonstrated customer satisfaction.

Q: Andrea Shalal-Esa with Reuters. Can you talk a little bit about where you see your sector's revenues going if you win Los Alamos? What does that do to your sales figures for the next year? And can you talk a little bit – just as you said – I'm just trying to make the numbers jibe. You said that you currently are doing about $5.5 billion and…

JAMES R. O'NEILL: This fiscal year, $5.5 billion is our commitment.

Q: With the federal government?

JAMES R. O'NEILL: With federal, state and local and commercial – the entire portfolio. Again, our sector's diversification is with state and local and commercial. It's not just Department of Defense and the intelligence community. Those are still big parts of our sector, clearly, but we also have state and local and commercial businesses as well.

Q: What about the federal end of it?

JAMES R. O'NEILL: In terms of dollars?

Q: Yeah.

JAMES R. O'NEILL: It's more than $3 billion out of the five.

Q: Can you say a word about Los Alamos and where you see your revenues going in the coming year?

JAMES R. O'NEILL: Well, I think you probably read the announcement yesterday. It's approximately $2 billion a year to the winner. I think it's a seven-year award contract, so that's $14 billion, give or take over that seven-year period.

Q: So, you know, what's your forecast for sales for 2006?

JAMES R. O'NEILL: Well, if we win that it will add $2 billion. We're not quite sure how to account for that yet in terms of what we will do with that particular opportunity, but as you can see, it's a large number. Two billion dollars is certainly a large number, even on a $30-billion base.

The other things that's not well known about Northrop Grumman – and I think you may be surprised – we're approximately a $30-billion contractor today. About 10 billion of that is IT, which most people are surprised. Between myself in the Information Technology sector and Dr. Winter in the Mission Systems sector, the combination of both of those is around $10 billion out of the $30 billion. So we really are a very large information technology company.

Q: Dave Hughes, Aviation Week. Do you have employees in India or China? Are you able to offshore portions of the work to Indian companies? And since U.S. IT is offshoring a lot of commercial stuff, why are you having trouble finding 3,000 folks.

JAMES R. O'NEILL: First of all, we don't have any employees in China or in India to date. Our future plan is not to offshore in India or any other country right now. Our job is to keep jobs in the United States. We're an aerospace and defense contractor. What was the second part of your question?

Q: Well, then why since commercial is offshoring so much, that would seem to free up IT talent that's maybe not – doesn't have the clearance (inaudible) – people when there are so many commercial working offshore.

JAMES R. O'NEILL: Well, again, we're in a very, if you will, a niche market, and we need people who are SCI-cleared for the most part or at least Department of Defense secret or top secret, typically master's and Ph.D. in engineering and software sciences, so that ilk of people is very hard to acquire. Our competitors are trying the same thing, and it really comes down to the security clearances.

Again, last year we hired almost 4,000 people, and we have the work to do that. We're very fortunate in that we could hire those people today, it's just finding the right people. And quite frankly, we're very selective because we are on the high end, and we want to make sure that when we do it, we have a technology base and our customers are satisfied with those candidates that we work with.

Q: (Off mike) – have the best job security in any IT – (inaudible) –

JAMES R. O'NEILL: Well, I was listening to the radio this morning while coming to work about the state of economy and about this region in particular, and it said we've had for the last 10 years the best economy of any place in the country by far. As a matter of fact, we just displaced Massachusetts as the high-tech belt. Having come from Massachusetts I was saddened, but happy that I've lived there. I moved here 15 years ago for a two-year assignment with Digital Equipment Corporation. You probably heard my bio; you don't want to work for a company that I worked for. They continue to go out of business or they become smaller.

But if you look at the IT, it is ubiquitous, it really is. It's not an airplane, it's not an aircraft carrier. It's so prolific. Each and every thing we do… I notice your Blackberries, your cell phones, etc. – it's all IT based. Even the platforms that we build, albeit incredibly complicated platforms, whether they're nuclear submarines or nuclear aircraft carriers or Global Hawk, the thing that's common among all of them is information technology and the software that drives those big platforms.

So I'm excited about not just Northrop Grumman; I'm excited about being in the IT business because there is no end in sight, and if you look back decades, the thing that really drives commerce and drives industry today is IT. I heard today the IT jobs are coming back. In my opinion, they really never went away; just in the telecom era and the dot-com era, we just hired more than we needed based on what we thought the need would be in the future.

I'm sorry I have so much passion about IT. I hope I answered your question somewhere in there.

Q: With regard to the Los Alamos National Laboratory solicitation, is the company definitely interested in forming a team to bid on the contract, and if so, what organizations are you talking to – or what sorts of organizations are you talking to?

JAMES R. O'NEILL: First of all, the answer is yes. We, Northrop Grumman, are very excited about the potential of bidding and hopefully winning Los Alamos, but that's such a nice tune – what was it, before you cut it off? (Laughter.)

We're very excited about that, but it's not an Information Technology sector bid; it is a Northrop Grumman bid. It will encompass all seven sectors. It will take the best from our Newport News facility, it will take our best from Ship Systems, the best from Information Technology, from Mission Systems, and from Integrated Systems. It's going to be a very large, complex bid.

Having said that, when you look back at Northrop Grumman and you look back at the reach of the scientists that we have, we have literally thousands and thousands of Ph.D. scientists that are very well versed in the types of things that Los Alamos does. Some of our engineers, quite frankly, have worked there and worked in other energy labs, so they're very excited about bringing the potential of what we have today as a company to that solution.

Q: Rebecca Christie from Dow Jones Newswires. What's your sense of the level of co-modification in the tech business, especially some of the stuff that you sell to both the government and the commercial sector? And then to follow on that, in the widget world there's been a real concern within the Department of Defense about buying things that are “commercial” versus buying things that are special defense widgets, and is there any potential for something like that to come up in the services sector?

JAMES R. O'NEILL: Our job as systems integrator is to take the best and brightest people coupled with the latest and greatest technologies, whether they're off-the-shelf and quite frankly, most of the solutions today, at least the ones that we address, have their origin in off-the-shelf software or off-the-shelf hardware. Occasionally, we will have to modify that hardware for a particular customer set or a customer mission, but for the most part, it really is driven by the commercial off-the-shelf software today.

If you look at what the industry is doing today, if you look at the wireless cell phone industry, the thing that's exciting about that is the content. It's not,the phones. Remember when the phones first came out? They were like 300, 400, 500 dollars. You can get like three of them now for $9.99 because no one cares about the phone itself.

What they care about is the content that goes across it. Anybody have teenagers here? I just got my 15-year-old daughter's text message bill last night. It's unbelievable! She didn't realize you text message, you make a lot of money on those, but I mean, that's kind of where it's going, and we look at – you know what's really interesting to me? We look at the warfighter – today's warfighter and the warfighter of the future, and quite frankly, they have their origins in Nintendo, in these X-Box games because that's really how wars will be fought in the future from our command and control center. But the graphical manmade interface is really that of a Nintendo game. We buy these games for our kids and we sit and we play. They're pretty realistic because when you go to a command war college and you look at what the officers are being trained at today, the people who are fighting today's battles for us, it is very much like a very large video game, with that type of manmade interfaces that go together.

So we as systems integrators try to help our customer define what they will need in the future, a lot of it is predicated on what exists today in the commercial marketplace.

As far as specialized widgets go, those will always be around, whether they are space-hardened for spacecraft or tempest or temperature control. It will never be a hundred percent off-the-shelf that will fit Uncle Sam's needs. It's impossible by their various missions that they have.

Q: Do you see a potential for corporate governance questions to come up down the road depending on how these things are sold and marketed? The parallel being, for example, the C-130J, which now people are talking about why are we buying this as a commercial product versus a military product, and it's really getting into a question of semantics, but it seems to be a pretty important issue?

JAMES R. O'NEILL: You know, I can't answer that with corporate governance. All I can tell you, based on 26 years of experience, is that there will always be room for commercial off-the-shelf equipment, whether it's hardware or software. If you look at Department of Defense's mission or our government's mission for that matter, it is very broad and diverse. Not one product, not one manufacturing capability will address all of them. The things that we're doing today, for example, in defining the future for some of our customers – what warfighting will look like, or first responders in 2010 and 2015 – will look a lot different 15 years from now with commercial technology than it does today.

So on corporate governance, I can't comment, but I will say both will exist – both commercial off-the-shelf as well as ruggedized and space-hardened.

Q: To piggyback on Rebecca's question, one of the sort of attendant questions and concerns that has come up in terms of the way that defense contracts are structured is sort of an emerging concern about leaving so much of the management of large defense systems to private companies, and that in fact, the Pentagon has, over the past 10-15 years outsourced managing these contracts. They don't even have the workforce any more to oversee it. Can you talk a little bit about Northrop Grumman's role because you do manage these vast systems, in terms of what mechanisms you have in place to ensure that there aren't concerns to sort of avert concerns about the way that you're managing these systems, and how you interact with the agencies that you're managing?

JAMES R. O'NEILL: It's a great, great question. As we look – and again in my 26-year history – if you look at our customers, you see a lot of retirements. You see a lot of people that are in their early 20s, early 30s that are mid-management or lower and then you see this chasm between them and very senior managers. And as the population ages and then people retire, the government has elected and in some cases is forced to outsource because they don't in fact have the technology capability today.

We view that as a privilege and an honor and we take that very seriously. You're only as good as your reputation and Northrop Grumman has a wonderful reputation. The reason I believe we're so successful as a company – and I mean this very sincerely – is because we have the customers' mission. We really believe in the customers' mission; what they are trying to accomplish. We, in essence, become the customer – we really do. We manage their business, we tell them what technologies are the best and brightest out there. We're in a very good position because – I call us Underwriter's Laboratory in some cases – we're not married to any particular technology. We're always out scouring the technology field to figure out what's the best, what can be used in the future. So we really do believe that it really is an honor to work with these large customers and to manage their infrastructure efficiently and give them an opportunity to scale it in the future as their demand requires. So we take it very seriously.

Q: But do you see that there could be a threat to your – you know – to the sort of trend in lead-system integrators and managing these big contracts, given the sort of concerns in Congress that are sort of just bubbling up now – (inaudible)?

JAMES R. O'NEILL: Well, I think again, not unlike the example I gave on commercial off-the-shelf versus ruggedized, there's probably room for both to exist in harmony – not one at the expense of the other, but complementary. In essence, the government still is the customer. At the end of the day, they still have the right to say yes or the right to say no. So they will always be part of that. They will always – in my opinion because technology changes so dramatically –be at some point need companies like Northrop Grumman to at least bounce ideas off of, go out and find new technologies on their behalf, because we do this for a living. And not unlike what you do for a living as newspaper reporters and columnists, that's what we do. That's our only existence when we get up every day – five days, some days, six days a week. That's what we're trying to do is make our customers more successful. And in order to do that, quite frankly, it's a full-time job.

Anybody manage your own portfolio here with stocks and bonds? I know I don't, because it changes so dramatically, right? Most of us have money managers or have somebody do it for you. And the reason quite simply is because that's what they do full-time. And they do it better, I think, than most. I tried it myself, that's why I'm still working after Lucent. I bought high and sold low – I just got that inverted. But not unlike that – and I say that genuinely – that I think the government will need companies like Northrop Grumman for a long time. The defense-industrial base, if you look back at the history from 1716 – the first cannons – still needed people in Concord, Massachusetts, to build it – Smith Wesson & Co, you pick. There will be this synergy between industry and government. The government is the largest IT user on the planet and always will be.

Q: Roseanne Gerin, Washington Technology. Following the Integic acquisition, are you looking at making other acquisitions this year? And if so, in which niche areas?

JAMES R. O'NEILL: Yes, we did buy Integic, next question? (Laughter.) We don't comment on acquisitions, but we do believe that health management is really a big part of our portfolio going forward. But I just can't comment on future acquisitions.

Q: I'm wondering how it would work as a practical matter – let's say that you have some situation – maybe at Los Alamos, somewhere else – where there has to be a customized application. And you happen to have some folks here at Baltimore working for Northrop Grumman who makes such applications. How do you select that, but at the same time, avoid the appearance of a conflict?

JAMES R. O'NEILL: First of all, applications in all businesses, whether it's 7-11 all the way through Los Alamos, there are always customized applications. In all cases we would put a request for proposal on the street and we would independently judge, which is the best technology at the right price. With an eye toward the future, not just the one-off application that fits a particular niche today, but something that will fit that niche and then be able to grow. But in all cases, we would put ourselves in a very independent situation to get that.

Q: Lockheed Martin, your competitor for the Los Alamos solicitation, recently announced that the individual that will be heading the bid and then who would lead the lab, should it be awarded the contract and since that's such an important position in that contract, I'm wondering where the company is with getting someone who is going to act as the lab director, should it be awarded the contract. And also, I want to go back and ask about the management, if you're definitely looking to form a management partnership and whether you're looking for academic partners?

JAMES R. O'NEILL: We have a world-class lab director today. We're not ready to announce that yet. We also have various partners and Mr. Donley can comment on that either here or after this session. He's been working this for the last six months. He used to have black hair and he was 5'4”.

GREG DONLEY: I used to have hair. We have a group of about eight universities and you'll see those press releases coming out in the following days. The degree for us forms the core of our science mission with Los Alamos.

JAMES R. O'NEILL: Again, very excited about that potential.

Q: Are there any transparency initiatives that you have to reassure the government and Congress that you are able to provide these services in a responsible manner? Certainly with other firms, there have been concerns that a lot of the data and things like that are hidden because they've been pushed out of the public sector and it has raised concerns about accountability. So is there anything proactive that you're doing to reassure people and maybe avoid any sort of more draconian measures if something goes wrong somewhere else?

JAMES R. O'NEILL: Okay, we're trying to look at the glass half-full in this particular case. We believe it's not unlike any other large enterprise opportunity we have dealt with. Yes, it has nuclear stewardship as the end result. Yes, it has a lot of Congressional oversight. But some of our other large, especially our classified programs, are in the same domain, and we've been very successful in assuring Congress and ensuring the public and more importantly our end-user customer that we have delivered quality solutions at a good price for long periods of time.

Q: But across the board, I think, there were concerns that some of these functions the government is buying – that in fact there are some transparency issues…

JAMES R. O'NEILL: I don't have all the details as to exactly how Los Alamos procures every single widget and every single application, but I will ensure you that if we're fortunate enough to win, we will do everything humanly possible to make it where – appropriate security, being obviously first and foremost – to the disclosure that Congress wants, how we conduct business there. But if you sit back and really look at it, it's just a very large program that does incredibly important things for our country, and it has for the last 64 years. And it's made up of a lot of Ph.D.s who do world-class research – very akin to what our company does.

We have world-class researchers in our company that spend lots and lots of time and lots and lots of dollars doing pure research for future battlefield, future applications and solutions for our customers today. It's not unlike what we do for other customers today. It really isn't. I think the mystique about it is because it's had one customer, one contractor for 64 years – sole source. So I think now is the time and I implore the government to look at it and to open it up to see if we can bring best industry practices to it. We should be able to.

Q: Moving west to the Nevada test site bid, that program hasn't received a whole lot of attention lately because of a lot of the changes. What size effort are you looking at and what are some of the things that you see you'd be focusing on, should you get that bid?

JAMES R. O'NEILL: Greg just actually submitted the bid last week and he has a lot more detail on it.

GREG DONLEY: Nevada test site is a five-year contract. It's approximately $5 million a year. We see that the customer dearly wants to turn Nevada test site into more of a testing range, and that's kind of in our core structure and values and that's what we do best, so we have had a great mixture of key people – not only on the signing side, but on the operations side.

Q: Thank you. A follow-up on that, you talk about turning it into a testing range. Would that be more possible – more cooperation with the Air Force range and Tonopah range – those sorts of things?

GREG DONLEY: It'd be that and some homeland security testing, that sort of thing.

Q: I want to know if you could address a little bit more or elaborate on some of the international growth opportunities that you see. I mean you had alluded to the U.K. contract. There's a lot of concern in the Pentagon that making sure that our allies have compatible battlefield management and things like that. Could you talk a little bit more about that and where maybe some of the specific programs you may be interested on?

JAMES R. O'NEILL: Sure, first of all, our sector would not do the battlefield management. We're much more focused on the infrastructure and national ID systems, whether they are retinal-scan systems, fingerprint systems, and large database systems for Interpol and places like that, mostly housed in the United Kingdom. We, as a company, had very good luck in the United Kingdom. IDENT is a program we just won, if I can go back. This will be a trick from a technology standpoint of view here. Those are the three programs that we think we will be best suited for, best situated for, by winning Ident. Steve, do you have any comment on that?

STEVE. PERKINS: You might mention the U.K. Airborne Warning and Control System (AWACS).

JAMES R. O'NEILL: We just won a contract with the United Kingdom – the Royal Air Force in England – to upgrade seven 707 AWACS aircraft. The importance of that was the first time ever that the Royal Air Force has awarded a non-OEM contractor that job. Boeing obviously manufactures the aircraft, but because of our work on the Joint Surveillance Target Attach Radar System (Joint STARS) program that comes out of Melbourne in our Integrated Systems sector. We fly, I believe – don't quote me on this – but I believe it's approximately 15 Joint STARS today. Same platform as the AWACS platform, different mission, same 707 body. We – the IT sector – bid on that to upgrade the entire infrastructure, including the electronics on it, and we were fortunate enough to win that. As a matter of fact, contract signing is scheduled for next week.

But as we look at the United Kingdom, and we look at what they're trying to do, especially in our national borders, as mentioned here, couples what we do today in public sector within the United States. It's a great marriage, it really is. Some of the latest and greatest technologies on both sides of the Atlantic are brought together, and Northrop Grumman gas the depth and breadth to be able to support an international bid of that size.

>Q: Since the United States and the United Kingdom – rather the United Kingdom on it's own and Europe on it's own – want to develop network-centric aircraft control systems, would that affect your sector at all? Or what other business do you do for airports or aviation besides the one you just mentioned?

JAMES R. O'NEILL: That would not be part of our sector.

Q: You don't work for airports at all then?

JAMES R. O'NEILL: We don't today. I mean, we as the Information Technology sector, I'm not aware of any of the other sectors working for them. You know, FAA (Federal Aviation Administration), obviously, is a client of ours but not the Information Technology sector.

Q: But you have the FAA?

JAMES R. O'NEILL: I don't know, but I know it's one of our other sectors, I just don't know exactly which one. Any other questions? Great, thank you very much. Thank you for coming today, I really enjoyed it. Thank you.