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$200-plus million Congressional cut to E-2D Advanced Hawkeye puts 350 U.S. jobs at risk

Calling a $200-plus million cut to production procurement for the E-2D Advanced Hawkeye a "high risk" move that will put U.S. jobs and global security at risk, Northrop Grumman Corporation (NYSE:NOC) and its 280-member supplier team is calling on Congressional leaders to restore the funding. The reduction in funding jeopardizes the building of production aircraft initially planned in fiscal years 2009 and 2010.

"We've just completed a very successful Operational Assessment with our two E-2D Advanced Hawkeye System Development & Demonstration (SD&D) aircraft and we are on schedule with our three pilot production aircraft. There is a great sense of urgency today to restore production procurement dollars into the E-2D Advanced Hawkeye budget-otherwise hundreds of U.S. jobs will be lost and taxpayers will not derive the benefit of economies of scale," said Tom Vice, sector vice president for Northrop Grumman Aerospace Systems sector. "We have the manufacturing capacity now to accommodate up to ten E-2D's a year, which certainly supports the Navy's plan to contract for 70 more aircraft. More importantly, these budget cuts may delay Initial Operating Capability beyond the Navy's current program of record."

Vice said the SD&D program has been performing very well, is meeting all contract commitments, and is currently on track for Milestone C in Spring 2009. "We entered flight test in 2007 in accordance with program milestones established at Milestone B in 2003. In August 2007, we were granted, via an Acquisition Decision Memorandum, release of Low Rate Initial Production (LRIP) Lot 1 Long Lead Procurement. We have been successfully managing this program and are achieving all technical and program milestones. I can't understand this draconian cut now to what is widely recognized as a 'model' major defense acquisition program."

"We have major concerns about the jobs impact and here's why. Northrop Grumman and its 280 suppliers will make their final E-2C Hawkeye deliveries this year, as well as transfer our two SD&D aircraft to Patuxent River Naval Air Station. During this critical transition to LRIP, a reduction in the number of aircraft the Navy had planned to produce has dramatic consequences. This will increase the unit cost to the Navy by approximately 20 percent. It will mean a loss of 350 jobs across our supplier base in 38 U.S. states beginning in the first quarter of 2009. This loss will erode the highly skilled workforce, particularly in the state of Florida, that has been dedicated to this program for decades," said Program Manager Jim Culmo, vice president of Airborne Early Warning and Battle Management Command and Control Programs. "Getting these critical skills back once they are gone is going to be extremely challenging."

The E-2D Advanced Hawkeye is the Navy's carrier-based Airborne Early Warning and Battle Management Command and Control system, providing Theater Air and Missile Defense. Utilizing the newly developed AN/APY-9 Mechanically and Electronically Scanned Array Radar and the Cooperative Engagement Capability system, the Advanced Hawkeye works in concert with surface combatants equipped with the Aegis combat system and F/A-18E/F aircraft to detect, track and defeat cruise missile threats at extended range, providing battle group commanders required reaction time.

"Without Advanced Hawkeye operating from the decks of our nation's aircraft carriers, our joint forces operating in all warfighting scenarios will be at serious risk," Vice said. "In today's environment, we need to reduce the risk to our troops, not add to it."

Press release issued by Northrop Grumman Aerospace Systems on February 6, 2009


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