FTC Investigates Northrop: GBSD?

WASHINGTON: The Federal Trade Commission appears to be investigating whether Northrop Grumman acted in restraint of trade and violated an order requiring the company to sell its solid motor rocket engines on “a non-discriminatory basis to all competitors for missile contracts.”

Northrop disclosed the investigation today in its quarterly report: “In October 2019, the company received a civil investigative demand from the FTC requesting certain information relating to a potential issue of the company’s compliance with the Order in connection with a pending strategic missile competition. The company is working to respond to the request. We believe the company has been and continues to be in full compliance with the Order, but we cannot predict any potential impact on the pending competition.”

Now, that does not make clear that the FTC is looking at the Ground Based Strategic Deterrent (GBSD), but there aren’t a lot of other candidates for “a strategic missile competition” and it refers to an “Order.”

If the FTC finds the company violated its order, say for sales of the engines to Boeing for the GBSD Minuteman replacement program, it appears this could open the way for Boeing to rejoin the competition. Boeing abandoned the competition after Northrop bought one of two makers of solid rocket motors in the country, Orbital ATK. Of course, that would all depend on how the FTC decides to enforce its order and what the Air Force would then decide to do.

Here’s what Boeing Defense spokesman Todd Blecher said:

“One of the factors in Boeing’s decision not to bid for the U.S. Air Force’s Ground Based Strategic Deterrent program was our concern about Northrop Grumman’s compliance with a 2018 Federal Trade Commission order that prohibits it from discriminating in the sale of solid rocket motors. Northrop Grumman has now acknowledged that the FTC is questioning its compliance with that order. We stand ready to support the FTC inquiry.”

Under the FTC order, Northrop must make its solid rocket motors and related services available on a non-discriminatory basis to all competitors for missile contracts and must separate the operation of its SRM business from the rest of the company’s operations with a firewall.

Kathy Warden, Northrop’s chief executive, told analysts today that the company is preparing its GBSD proposal, which is due to the Air Force in December.

CORRECTED: I said Northrop bought both Aerojet Rocketdyne and Orbital ATK. They did not. They only bought Orbital. I apologize.