(NOC) Northrop Grumman Wins OPTARSS II Contract

Northrop Grumman Corporation (NOC) has received a $100 million contract from the U.S. Army as part of an Operations Planning Training and Resource Support Services (OPTARSS) II contract. Per the deal, Northrop will continue to provide support to the III Corps Mission Command Training Center.

The five-year contract includes one base year and four option years. Per the contract, the company will provide training to the Army mission command systems, simulation-driven staff training exercises, and immersive training to the squad.

In March 2011, the company had received a $2.5 billion contract to provide OPTARSS II to the US Army. OPTARSS II is a master, indefinite delivery indefinite quantity, multiple award task order contract that is made to provide utmost flexibility for an expedited ordering process to satisfy the needs of operations customers throughout the Army and Department of Defense (DoD). The OPTARSS II program is important for the Army as it provides innovative training solutions that help to conquer emerging and unconventional threats and ensure overall success in a mission.

Northrop Grumman has been providing similar services to the Army since 2003. The team is highly efficient and possesses technical expertise to rapidly meet requirements under the OPTARSS II program. Going forward, the company plans to increase its opportunities for the OPTARSS II team to pursue such similar programs for the U.S. Army.

The company has a strong presence in Air Force, Space & Cyber Security programs. Revenue and earnings growth continue to be driven by its strong presence in the focus areas of cyber security, defense modernization and homeland security assets, intelligence, surveillance and reconnaissance (ISR) systems, advanced electronics and software development.

However, these positives are offset by apprehension regarding defense budget cutbacks on high-cost platform programs,overexposure to the (DoD) budget, lower backlog, cost overruns and reductions in the Afghanistan and Iraq operations. The company presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.

Northrop Grumman is a leading global security company providing innovative systems, products and solutions in aerospace, electronics, information systems, and technical services to government and commercial customers worldwide. Some of its main competitors include General Dynamics Corporation (GD) and Lockheed Martin Corporation (LMT).

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