Northrop’s $12.4 Billion Global Hawk Still Vital, Pentagon Says

The U.S. Defense Department has found no suitable alternative to Northrop Grumman Corp. (NOC)’s Global Hawk drone and must continue the $12.4 billion program, the Pentagon’s chief weapons buyer Ashton Carter told Congress.

Carter, in a letter sent to U.S. congressional defense committees on June 14, said that the Global Hawk program, which is over budget and has fallen short in performance tests, “is essential to national security.”

“The U.S. government considers the Global Hawk as a high priority aviation program,” Carter said.

The Pentagon’s support of the Global Hawk, Northrop’s largest drone program, follows a report by Pentagon weapons tester which found that a newer version of the drone was “not operationally effective for conducting near-continuous, persistent” intelligence, surveillance and reconnaissance (ISR) missions that it was designed to conduct.

The RQ-4B Global Hawk Block 30 was capable of providing only about 40 percent of requested coverage when flying two or three sorties a week, using three aircraft, during a test period from October through December, according to the May 27 report signed by J. Michael Gilmore, the Defense Department’s director of operational test and evaluation.

The Global Hawk program in April triggered a provision of the Nunn-McCurdy law, which requires the Pentagon to explain to Congress why a program should continue after cost overruns of more than 25 percent.

The program in 2001 was expected to cost $5.3 billion for 63 aircraft, according to the Government Accountability Office.

Restructured Program

The restructured Air Force program will now consist of a total of 55 aircraft, Carter said. The program includes 13 older Block 10/20 drones, 31 Block 30 drones and 11 Block 40 drones, which are the newest version. A separate effort would develop an advanced ground control and communications system, according to documents Carter submitted to Congress.

The cost of the restructured Global Hawk program is $12.4 billion, which is $1.6 billion less than the cost estimate the Pentagon reported on Dec. 31, 2010. The independent cost estimate was developed by the Pentagon’s director of cost assessment and program evaluation. Carter said the independent cost estimate has a confidence level of 50 percent.

“ This is the best program for cost to provide the needed capability,” Ed Walby, Northrop Grumman’s director of business and development for the Global Hawk program, said in a telephone interview. “The reduction in numbers reflects the increased reliability of the system which allows for a reduction in replacement aircraft for the aircraft that wear out. In recent months the use of the aircraft in operations has shown that it is much more reliable than it was in testing.”

Cost Increases

Causes of program’s cost increases have included deferred development and new requirements, Carter said in a letter to the leaders of the House Armed Service Committee. The letter was obtained by Bloomberg News.

Pentagon “incentives failed to motivate” Northrop Grumman to deliver aircraft on time and “with acceptable quality,” Carter said. The government’s negotiating power was “eroded” by “extreme delays” in issuing a final contract, he said.

“Oversight was not consistent and persistent,” Carter said. Also, even though a reliability program was directed, it was not pursued. Engineering and risk management practices were “not conducive to the management and control of costs,” Carter said.

No Alternatives

Carter said the Pentagon has looked at alternatives to the Global Hawk Block 30 version, such as Lockheed Martin Corp. (LMT)’s U- 2 “Dragon Lady” spy plane, Boeing Co. (BA)’s RC-135 Rivet Joint reconnaissance plane and the broad area maritime unmanned system (BAMS), also a Northrop Grumman program. These alternatives have not been found to provide “acceptable capability” to meet the military requirements at “less cost,” Carter said.

The U-2 would cost $220 million per year more than the Global Hawk for conducting similar operations and can’t carry all the sensors that the Global Hawk carries.

The combined cost of operating the BAMS, which is a modified version of the Global Hawk, and RC-135 was $470 million per year more than the Global Hawk. The RC-135 fleet is “not large enough to perform the Global Hawk Block 30 mission,” Carter said.

To contact the reporter on this story: Roxana Tiron in Washington at rtiron@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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