Northrop Spins Loss of Drone Contract

In a case of "he said, Germany said," a $1.3 billion contract hangs in the balance.

Rich Smith
Rich Smith
May 30, 2013 at 10:50PM
Industrials

Following media reports that bungled relations with German regulators cost it a $1.3 billion defense contract, Northrop Grumman (NYSE:NOC) fired back at its critics over the holiday weekend.

Last week, aviation news site Flightglobal reported that the German government has canceled plans to buy five Northrop "Euro Hawk" unmanned aerial vehicles. According to the site, "difficulties" were encountered with the aircraft's flight control system, yet Northrop refused to share technical data needed by German regulators that could have helped them to resolve the difficulties and certify the UAV for flight in civilian airspace over Germany. So despite having already invested some $722 million in the program already, Germany is pulling the plug and pulling out of a deal to buy four Euro Hawks in addition to the one that was undergoing testing.

For its part, Northrop issued a statement Monday declaring that it and its partner company EADS (NASDAQOTH:EADSY) remain "committed" to the program, and averring: "[T]he full Euro Hawk system, including the mission control system and the sensor, has performed flawlessly and safely throughout the entire flight test program. Media reports that indicate there are challenges with the aircraft's flight control system, as well as excessive costs associated with completing airworthiness certification, are inaccurate."

Of course, none of this addresses reports that Northrop itself is refusing to share data needed to certify the plane for use over Germany. Multiple requests to the company to clarify its position in response to Germany's complaint on this point were met with no response.