Los-Angeles based defense contractor
Northrop Grumman Corp.
) turned out to be the clear winner in yesterday's contract
appropriations made by the Department of Defense (DoD). Northrop
Grumman received a mammoth contract, worth $9.9 billion, from the
U.S. Air Force to offer modernization and support services to the
B-2 stealth bomber program.
The contract calls for a broad range of enhancements, sustainment
logistics services including engineering, software maintenance and
support equipment. Additional services like depot maintenance of
the aircraft fleet and other interim support are also a part of the
The base contract is slated to be completed by May 2, 2019 with an
option for extension through 2024. The tasks related to the order
will be performed primarily at Palmdale, Calif.
The B-2 bombers are loaded with stealth technology that allows it
to sneak past enemy anti-aircraft defenses thereby avoiding
detection. It is also designed to carry heavy arsenals including
nuclear bombs. B-2 bomber has mostly been used in bombing missions
to weaken the defense of the opponents at war due to its superior
flying capacity and capability to carry large quantity of bombs.
The B-2 project came under heavy pressure as the U.S. government is
planning to trim defense expenditure, despite it being equipped
with cutting-edge technologies. Immense pressure from public forced
the DoD to reduce its purchase order from the initial 132 B-2 to
just 21 aircrafts.
However, recent media reports suggest that the U.S. government
might shell out significant money to develop next generation
stealth bombers. The government plans to replace the ageing stealth
fleet with a more sophisticated new variant, Long-Range Strike-B
(LRS-B) heavy bomber, by 2025.
Although defense giants like
Lockheed Martin Corp.
The Boeing Company
) could be vying for the plum contract, Northrop Grumman with its
stealth-building experience might be the favorite to win.
Going ahead, the ongoing sequestration seems to have a moderate
impact on big entities like Northrop. Despite reduction in the
frequency of big ticket contract flows, the company has managed to
clinch some big orders. In early 2014, it received a $200 million
contract for the acquisition and sustainment of the Embedded Global
Positioning System Inertial Navigation System.
In addition, the company's prospects will further be buoyed by
increasing foreign military sales led by rising security tensions
in the Middle East and in Asia between China and Japan.
Currently, Northrop carries a Zacks Rank #3 (Hold). Another
better-placed defense operator is
), carrying a Zacks Rank #1 (Strong Buy).
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