Northrop Wins US Navy Contracts - Analyst Blog

Northrop Grumman Corporation (NOC) won two contracts from the US Navy for work on its aircraft carriers.  Firstly, the company via its wholly-owned subsidiary, AMSEC LLC was awarded engineering, technical and maintenance services contract worth up to $73.4 million. AMSEC LLC was one of the two contractors who received the five-year contract having indefinite-delivery, indefinite-quantity, cost plus fixed-fee terms.
 
AMSEC LLC will primarily provide services to the US Navy for maintenance of aircraft carrier, modernization planning, work package development and integration along with work package execution. The work will be done in Norfolk, Va., San Diego, Bremerton, Wash. and other locations and is expected to be completed by May 2011.
 
Secondly, Northrop was selected to provide scalable integrated bridge systems (SIBS) for five Nimitz-class (CVN) U.S. Navy aircraft carriers. The fixed-price contract was awarded to the company’s Maritime Systems business unit. Under the terms of the contract, Maritime Systems will provide Northrop's Voyage Management System (VMS) to the Nimitz aircraft carriers.
 
VMS will allow paperless navigation technology and is the only U.S. Navy certified system adhering to the Navy's Electronic Chart Display and Information System (ECDIS-N) requirements for paperless navigation, as defined by the Chief of Naval Operations in OPNAVINST 9420.2.
 
Northrop Grumman is one of the largest defense contractors in the U.S. and continues to benefit from high defense spending. The company has a diversified portfolio of programs with strong order bookings and order backlog, strong cash flow generation and focus on shareholder value. Ending first quarter of 2010, the company’s order backlog was worth $67.5 billion. Going forward, growth is expected to be driven by cyber security, intelligence, surveillance and reconnaissance.
 
Prime competitors of the company include Boeing Co. (BA), General Dynamics Corp. (GD), and Lockheed Martin Corporation (LMT). We are currently maintaining a Neutral recommendation on Northrop.
 

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