These are challenging times for Northrop Grumman’s space business, which is almost entirely U.S. government dependent at a time of heavy downward pressure on federal spending.
The company’s biggest civil space program, the James Webb Space Telescope, is facing possible cancellation over a price tag that according to NASA has climbed to $8.7 billion, some $3.7 billion higher than agency estimates from last year.
At the Pentagon, meanwhile, development programs have moved into production and, with almost nothing new in the pipeline, companies like Northrop Grumman are having trouble retaining critical and in many cases unique engineering skills. One example is secure satellite communications payloads, a niche Northrop Grumman has filled since the 1980s, when the Milstar satellite program was hatched.
On the positive side of the ledger, Northrop in May won the contract for the Defense Weather Satellite System, which grew out of the ruins of the civil-military National Polar-orbiting Operational Satellite System (NPOESS). The company had been prime contractor on NPOESS, which was canceled in early 2010 due to massive cost overruns and a dysfunctional management structure.
Jeffrey Grant, who took the reins of the Space Systems Division in March after running its classified business, spoke recently with Space News Editor Warren Ferster.
What went wrong on the James Webb Space Telescope?
The James Webb Space Telescope is an audacious program, the idea of putting, to my knowledge, the first deployable optics into space, the largest optics ever into space, operating them at the second Lagrange point at temperatures approaching absolute zero; there are materials-science and engineering challenges that have been successfully addressed over the last five to six years, and we’ve gotten to the point that we’re making tremendous technical progress. For the nation to build one of these 18-segmented mirrors — it’s taken us years to do that. The technical challenges that we all knew were there have taken us longer and taken us more resources to successfully get behind us, but we’re feeling very good about the program now.
What’s your argument against terminating this program?
The United States as a leader in the world and a technological leader in space has the opportunity to build an instrument that will do more than any other telescope built by man. It has the opportunity to reveal the secrets of the universe, give us more insights into dark matter, dark energy, the formation of the universe. I’ve heard scientists describe how the James Webb Space Telescope can be a key telescope to help us image planets. Today we’re detecting them with inferential means: wobble, occultation. James Webb offers the possibility of spatially resolving planets, seeing them.
What are the lessons from the James Webb experience?
It’s impossible when you take on a program of this complexity — that advances the state of the art as much as this one does — to have certainty in your predictions. We should all go into this with our eyes open. The science community, the user community, Congress — we should all realize the challenges, the range of cost that the program might come in at, so that we’re not surprised.
How’s business in general?
I think I’m safe saying that we’re experiencing in our forecast a decline in our sales. I’m not going to quantify it but we’re not growing, that’s for sure.
What might turn things around in the near term?
We have a stunning array of technologies that are available to use on our spacecraft. We have a program that we just started this year to incorporate Advanced Extremely High Frequency (AEHF) antenna technology into B-2 stealth aircraft. We’ve got a very large program going forward.
You’re eager to supply government payloads to be hosted aboard commercial spacecraft. Are you discussing hosted payload partnerships with commercial satellite builders and operators?
I’m not going to speak to any specifics but let me just say that within that business area we are pursuing opportunities with a number of companies who have those kinds of relationships.
What are some of your concerns relating to the U.S. industrial base as government budgets decline?
In the last decade we’ve seen a number of programs canceled. Space Radar was one of them; the Transformational Satellite program was another. This has a great impact on not just us but our suppliers. Their decisions to capitalize facilities, to invest in production lines, are based on their confidence that we and our customers are getting it right. We understand business risk — we bid on a program and don’t win — but we weren’t counting on so many programs being canceled. So industry finds itself having prepared for a bunch of these programs to come to fruition and then they just didn’t. A bunch of companies are at risk of not being able to sustain key skills.
What about at the prime contractor level?
We worry deeply about skills that don’t easily transfer somewhere else. If I lose somebody I can’t go hire them back because they’ve found a spot with another company or another program within Northrop Grumman. We end up in our business with some pretty esoteric skills that are critical to a mission area or customer and once you lose them, it takes time to get them back. One example is protected communications. Over time you could look back and see a cadre of engineers who were doing both the development work as well as the production work. The current program of record is production work. So the engineers — the people who were responsible for the circuit designs, the microelectronic designs — those folks don’t necessarily have a job because in the era of affordability, you don’t update the prints, you say, “I want two more of those so build me more boxes” like those that were designed back in pick the year. So now where do those engineers go?
Is there consolidation pressure at the top-tier prime contractor level?
I’ve sensed no pressure at all there. The customer is focused on economies and challenging us to be far more affordable. So we’re looking at how can we at Northrop Grumman produce the hardware we’ve produced before more efficiently. For example, we have had an aggressive program to consolidate disparate organizations of people into fewer buildings. With the consolidation of the two sectors — Space Technology and Integrated Systems — we brought a great deal of efficiency to our day-to-day operations.
Can you give me an example of a program where you’re cutting costs?
With fewer instruments the Defense Weather Satellite System will carry we had the opportunity to size a spacecraft to just the size you need. We’re using hardware that has legacy from NPOESS, power control systems, things like that, but the bus itself is substantially different. We’re also looking at trades on payloads to make sure they are sized appropriately for the mission needs. The Air Force has taken what I call a strong ownership of the program now. They want a program that is in fact a Defense Weather Satellite System, not just what was left over from NPOESS.
Do you see much in the way of international opportunities for Northrop Grumman?
It’s been a little frustrating for me in that we think it’s in the normal course of business to have an international space station with lots of international partners, and it’s normal to have the Joint Strike Fighter co-produced in countries around the world and bought by a number of countries. In the defense satellite business we don’t do very much of that. There seems to be a marked difference in how we engage with our allies in the space business versus other space elements, or air elements. Hosted payloads, disaggregated constellations and things like that afford the opportunity for some countries that may not be able to afford full-up strategic protected satellite communications.
Are U.S. export controls a big barrier to your international business?
It’s not held us back but it complicates business. We’re very protective of our intellectual property and how we do business and the things we build and then we add on top of that the export restrictions and the approvals required and the time it takes to get those approvals, and it adds a great deal of business complexity for what I would consider narrow results.
Northrop Grumman’s attempts to get the Pentagon interested in Israel’s TecSAR radar satellite platform have been unsuccessful to date. Are there still opportunities there?
Yes, there are. We believe the radar commercial market in the United States hasn’t matured. It took a long time before you had the National Geospatial-Intelligence Agency in the mode of buying electro-optical imagery as a matter of routine. Other countries have made significant investments in similarly sized and capable radar programs and made them available commercially or to their governments. We haven’t gone down that path yet in this country but I believe there’s an opportunity to do so.
