CLEARFIELD, Utah – June 15, 2005 – A team of contractors led by Northrop Grumman Corporation (NYSE: NOC) has received a value-engineering achievement award from the U.S. Air Force for implementing innovative changes to the $1.6 billion intercontinental ballistic missile (ICBM) guidance replacement program that will result in a projected five-year savings of $32.9 million.

The guidance replacement program is a key modernization effort to upgrade the guidance-system electronics in the Minuteman III ICBM and extend the 30-year-old missile's service life through 2020. The program is expected to be complete by 2009.

"The Air Force's desire to keep costs low on the guidance replacement program contract and Northrop Grumman's desire to enhance contract incentive performance dovetail into a mutually beneficial effort to decrease production costs," said John Clay, vice president and general manager of the ICBM prime integration contract at Northrop Grumman's Mission Systems sector. "The changes we've made in partnership with the Air Force and our subcontractor, The Boeing Company, realize the goals of all parties."

Kenneth Krieg, undersecretary of defense for acquisition, technology and logistics, presented the award on June 15.

To achieve the high level of savings, Northrop Grumman eliminated the need for expensive external shields to protect critical guidance system parts from nuclear environments. The critical material used in the shields was difficult to work with and cost approximately $90,000 per unit.

Instead, the Northrop Grumman team chose to improve the chassis construction of two guidance replacement program missile-guidance set components—the missile- guidance set control and the missile-guidance computer—with a rugged coating, thus eliminating the need for the external shields, which reduces production costs and eliminates the need for multiple shield inspections.

The production cost savings is projected at $32.9 million for 348 systems. The changes also will save the Air Force two hours per system inspection and two hours per system deployment over the remaining life of Minuteman III. Depot-repair savings include elimination of the shield inspection and the removal and installation of the shields-per-system repair.

Northrop Grumman Mission Systems is the Air Force's ICBM prime integration contractor charged with maintaining alert readiness of the United States' ICBM weapon system through 2020. As part of the contract, Northrop Grumman manages nine modernization efforts, including the guidance replacement program. The 15-year prime contract was awarded in December 1997 and is currently valued at $4.5 billion with a total projected value of more than $6 billion.

Northrop Grumman manages a team consisting of four principal teammates and more than 20 subcontractors. Northrop Grumman's guidance replacement program teammate, Boeing Electronic Systems Missile Defense, produces the missile-guidance set systems for the program under subcontract to Northrop Grumman. Honeywell Space Systems Division is a major subcontractor to Boeing and provides the system's missile-guidance computer.

Northrop Grumman Mission Systems, based in Reston, Va., is a global integrator of complex, mission-enabling systems and services for defense, intelligence and civil government markets. The sector's technology leadership and expertise spans areas such as: strategic systems, including ICBMs and missile defense; intelligence; surveillance and reconnaissance; command and control; and technical services and training.

  Contacts:
Marynoele Benson
(703) 741-7723
Marynoele.benson@ngc.com