Northrop gets $2.35 billion for weather satellite contract changes

Northrop Grumman Corporation will get $2.35 billion from the US Air Force (USAF) as part of a contract modification, following the restructuring of a weather satellite project, the US Defence Department has announced. Northrop's entire contract covers about $4.2 billion from 2006 through 2016.

Since NPOESS programme began in 2002, Northrop Grumman has received about $1.6 billion.

The $11.2-billion National Polar-Orbiting Operational Environmental Satellite System (NPOESS) programme was restructured — with a reduced number of sensors — following the so-called Nunn-McCurdy process, after cost overruns and schedule delays threatened its cancellation.

The deal aligns Northrop Grumman's contract with the new plan and also extends the life of the contract from 2013 to 2016. NPOESS is aimed at increasing the accuracy of weather forecasts so that five- to seven-day forecasts are as reliable as three-day forecasts. The military decided to proceed with NPOESS after it concluded that the system was essential to US national security.

Contract modifications include two manufacturing development satellites, with an option for two more, the Pentagon said. A revised fee structure provides incentives for holding down costs, meeting schedules and achieving technical requirements.

Lawmakers in the US Congress have questioned whether the new plan would actually rein in the cost overruns, and whether the satellites — which are to replace the USA's fast aging weather satellites — will perform as needed without all of their originally planned sensors.

NPOESS officials say that the new system has a much better chance of success under the new 'back to basics' plan, which strips out some sensors but has a backup plan to add them on later, if the budget and schedule permits. Northrop Grumman's new contract has a fee structure that ties incentives cost, schedule and technical performance.

A demonstration satellite will be launched in 2009, followed by the first full-fledged NPOESS satellite in 2013. The new contract buys two big satellites with options for two more; half the satellite purchase options under the old contract. The restructured programme will provide the meteorological community with the performance it requires to maintain quality forecasting capabilities, an NPOESS statement said.