NATIONAL HARBOR, Md. ― Secretary of the U.S. Air Force Heather Wilson has no concerns “at this point” over Northrop Grumman’s proposed acquisition of Orbital ATK, but said the service will keep a close eye on how things move forward.
“I don’t have any concerns at this point,” Wilson told Defense News in an interview at the Air Force Association’s annual conference on Sept. 19. “Obviously, we watch these things and make sure that no matter [what] happens when companies acquire other companies that the Air Force gets what it needs and that contracts are complied with.”
Northrop announced Monday it will be buying Orbital for more than $9.2 billion, in a move that caught industry largely by surprise. It represents the second major defense acquisition of the month, following a United Technologies Corporation announcement that it intends to purchase Rockwell Collins for $30 billion.
That churn isn’t a surprise to Wilson.
“There’s a lot happening in defense and space at the moment, so it’s not a surprise to me that companies would be looking to acquire other companies, position themselves for the future; and in some ways it’s an indication of the health of the sector that there’s a lot going on,” she said.
One potential concern for the acquisition involves the Ground Based Strategic Deterrent program, which will replace the Air Force’s Minuteman III intercontinental ballistic missiles. The Air Force had mandated that both Orbital ATK and its prime competitor, Aerojet Rocketdyne, work with all three prime contractors ― Northrop, Lockheed Martin and Boeing ― during the initial competition.
Last month, the service downselected to Northrop and Boeing, but still mandated that the engine companies be available to work with both competitors. If Northrop completes the acquisition, it could create an awkward situation where its subsidiary would be potentially working with its competitor.
Gen. Ellen Pawlikowski, the head of Air Force Materiel Command, said Sept. 18 that she found out about the acquisition around the same time the information became public, and said that, like Wilson, she wanted to see more details before raising any potential concerns.
“I had the chairman of the board of Orbital ATK come to me and tell me that they want to come talk to me about it. So, my opinion is reserved until I get the details,” she said.
As for Wilson, she pointed out that there have been similar issues in the past, saying that “in the defense industry, sometimes you’re competitors, sometimes you’re partners, so it’s not unusual for these kinds of changes to go on. We will manage through them as we always have.”
One such example comes from the last major defense acquisition, when Lockheed procured helicopter manufacturer Sikorsky. Sikorsky was teamed with Boeing on an Army rotorcraft program that is competing with a Lockheed design; the Sikorsky team working with Boeing has been blocked off from the rest of the company and continues to work on their own design.