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Northrop Grumman Could Get Massive $85 Billion Contract Ahead of Schedule

By Lou Whiteman - Apr 17, 2020 at 11:39AM

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The company's intercontinental ballistic missile win is coming into focus.

Northrop Grumman (NOC -1.58%) could receive a huge contract to build the Air Force's intercontinental ballistic missiles ahead of a planned September timeframe, a top Pentagon official told reporters on Thursday.

Northrop and Boeing were expected to compete to replace the aging Minuteman Ground Based Strategic Deterrent (GBSD), but Boeing unexpectedly pulled out last summer and called for government intervention, claiming that Northrop had an unfair advantage in the competition.

Rendering of a ballistic launch rocket.

Image source: Getty Images.

But Boeing's protests seemingly come to nothing, as the Pentagon is eager to move forward on this key cog in its $500 billion plan to modernize its nuclear arsenal. Will Roper, the Defense Department's acquisition chief, told reporters Thursday that "an early award is possible" on the program assuming the COVID-19 pandemic allows for the work to get started.

A significant amount of the GBSD work is classified, and therefore requires in-person development instead of remote work, so the award could be more vulnerable to delays than other, less-secretive defense projects, but Roper seems firm that it is Northrop's award for the taking.

With Boeing out of the race investors have been assuming a Northrop Grumman win, but the final award in what should be at least a $60 billion program and could rise to as much as $85 billion would be welcome news for the company and its shareholders.

Northrop Grumman also has a large list of partners on the project who will receive some of the revenue over time, including Lockheed Martin, General Dynamics, L3 Harris Technologies, Textron, and Raytheon Technologies

Lou Whiteman owns shares of General Dynamics, L3Harris Technologies, and Lockheed Martin. The Motley Fool recommends Textron. The Motley Fool has a disclosure policy.

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