Falls Church, Va.-based Northrop Grumman (NYSE:NOC) snagged two Pentagon defense contracts Thursday -- 10% of the 20 contracts announced this evening. One was small, but the other contract was -- potentially -- quite big indeed.
Addressing the small one first, Northrop was awarded a $25.2 million contract modification to supply the U.S. Naval Sea Systems Command in Washington, D.C., with three "mission modules" to be loaded aboard the new class of Littoral Combat Ships that the Navy is building out. In addition to the modules themselves, Northrop will supply "support containers" and provide engineering and production planning services for "mission packages" that will comprise the mission modules. (The rule for remembering this new military lexicon: An LCS is outfitted with mission packages. Each mission package is made up of multiple mission modules). Northrop is scheduled to deliver all of the above by September 2015.
Northrop's other contract win was both somewhat smaller but also potentially much bigger. In it, Northrop is hired to provide supplies, maintenance, and other services needed for the U.S. Army's Counter Rocket Artillery Mortar (C-RAM) Command and Control System. Sometimes described as a land-based version of the Navy's Phalanx air defense system, C-RAM is an Army weapons system designed to destroy incoming, indirect-fire missiles of various shapes and sizes.
Winning this cost plus incentive fee, option-eligible, non-multiyear C-RAM contract modification will initially mean $22.9 million in incremental revenues for Northrop. However, if all options are exercised, the Pentagon notes that Northrop's contract value could ultimately grow as high as $157.4 million.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
IBM Struggled With the Tax Man in the 4th Quarter
A long-awaited return to actual sales growth was overshadowed by a $5.5 billion one-time tax charge.
1 Big Improvement That Apple Needs to Bring to the New iPhone SE
It's time for a new display.
Sears Holdings' Store Closures: No Problem for Seritage Growth Properties
Seritage Growth Properties gets most of its rent from Sears and Kmart. But the numerous store closures at both chains won't hurt Seritage as it works to increase its rental income and diversify its tenant base.