Top-gun defense firms in dogfight over radar

Northrop's ESSS hopes to win pact for system new to rival Raytheon

Aerospace

November 11, 1999|By Greg Schneider | Greg Schneider,SUN STAFF

When the Navy decided to put a snazzier radar on its new F/A-18 E/F fighter plane, the Linthicum unit of Northrop Grumman Corp. made a push to win the job. There was only one obstacle: Raytheon Co. already builds radars for the plane.

Northrop Grumman's predatory move to unseat a fellow contractor has turned heads in the defense industry.

"This is more aggressive than is normal," said Paul Nisbet, a financial analyst with JSA Research Inc. "But as these companies become bigger because of consolidation, they become more aggressive, and it just gets to be a meaner world."

No one questions the big payoff that Northrop Grumman could enjoy if it wins what has become a competition pitting its Electronic Sensors & Systems Sector, or ESSS, against Raytheon.

Boeing Co., the builder of the Super Hornet, expects to choose between the companies by the end of the month.

One expert puts the value of the contract at $2 billion.

Beyond that, a win would make ESSS the world's top supplier of airborne radars.

It already makes systems for upgraded F-16 fighter planes, the Apache Longbow helicopter and the Joint STARS ground surveillance plane, and its radar for the Air Force's new F-22 fighter promises to be the most sophisticated ever built.

"It's brutal. At stake is the future of the electronically scanned radar market. This is a predatory move on Northrop Grumman's part, pure and simple," said Richard Aboulafia, a military-aircraft expert with the Teal Group consulting firm.

Electronically scanned radar is a powerful new breed of sensor that is far more accurate and versatile than traditional systems. It is also harder for enemies to detect.

Instead of a radar dish that physically turns to sweep the sky for targets, an Active Electronically Scanned Array, or AESA, consists of dozens of tiny sensors that do not move but electronically "look" in every direction.

While Northrop Grumman makes AESA radars for the F-16 and F-22, Raytheon has never built such a system. "This is a new program for us," said Dave Shea, a Raytheon spokesman.

The Massachusetts company makes a traditional radar system for the F/A-18 E/F Super Hornet that is identical to the radar on the older C/D, or Hornet, models of the Navy fighter and attack plane.

When the Navy decided to upgrade to an electronically scanned radar, Boeing originally intended to stick with Raytheon for the new product, said Ellen Lemond-Holman, a Boeing spokeswoman.

But Northrop Grumman saw an opportunity. The company is already Boeing's top subcontractor, making 40 percent of the components on the Super Hornet, and seized on the fact that Raytheon has never marketed an electronically scanned radar.

"With 15 years of innovative AESA experience, we believe our offering, which has been successfully flight-tested, provides Boeing the best value," said Jack Martin, a Northrop Grumman ESSS spokesman. The company would say nothing beyond that prepared statement because of the competition.

None of the companies would comment on the potential value of the contract, but Aboulafia said each radar unit could cost about $5 million.

The Navy is planning to buy at least 548 Super Hornets, and it wants 408 of those to have the new radar. That amounts to a radar contract of about $2 billion.

The potential is far greater, though, because the winner will pick up momentum for an even bigger radar contract for the Joint Strike Fighter. The Pentagon could buy more than 3,000 of those jets for the Air Force, Navy and Marines.

With that epic contract on the horizon, the Pentagon may worry about having only one U.S. com- pany building electronically scanned radars, Aboulafia said. "It's your classic industrial base decision: Do you want one supplier or two suppliers?" he asked.

That argument and Raytheon's position as the Navy's incumbent radar-maker may work against Northrop Grumman on the Super Hornet contract.

"I'm sure Raytheon is not looking very kindly at what's going on here," Nisbet said. Losing the Super Hornet contest "would help flatten out their defense electronics when otherwise it should be growing."

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