Northrop Drone Cost Increase UnacceptableSeptember 24, 2010
 The U.S. Defense Department and the Air Force are reviewing an $11.1 billion program to purchase 77 unmanned drones and they are unhappy with what they have found so far. The cost of each Northrop Grumman Global Hawk unmanned reconnaissance aerial vehicle has jumped 11% to $100.8 million since the project's inception in 2000, according to the Air Force. That cost is soaring too quickly and must be controlled, the Pentagon's top buyer told Bloomberg Television. “We are not happy with the productivity we are getting," said Ashton Carter, the Undersecretary for Acquisition, in the Bloomberg Television interview. "We are very much discussing that program and going through its management in detail.” The review is an attempt to control costs before the rising expenses trigger the 1982 Sunn-McCurdy law, which takes effect when a program's expenses rise above initial cost estimate by 15%. Once triggered, the Pentagon will have to certify a program's importance to national security, said Carter. "Why is there an increase year upon year?" Carter said at the Pentagon. “We look at every element of what we are paying for and ask 'how can we get that cost down?' We are aggressively managing that, with some good effect." Northrop is responding by assessing costs and manufacturing issues to make sure that the Global Hawk systems can be delivered in sufficient numbers, according to a company spokesman. The Global Hawk will enter a combat-testing phase for six-weeks and if all goes well, it could result in the sales of another 26 drones for about $2.5 billion, the Air Force said. The unmanned aerial vehicle category will become even more important to Northrop Grumman as the company begins to move away from most of its shipbuilding business, according Philip Finnegan, an analyst interviewed by Bloomberg. Drones now account for about $1 billion in annual sales, said Finnegan. The Global Hawk is one of several drones that will be deployed to meet Defense Secretary Robert Gates' goal of increasing the number of 24-hour drone patrols to 65 per day in 2013 from 39 now, according to Bloomberg.
(U.S. Department of Defense photo. VIRIN: 010621-F-1851B-065) |
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