Global Hawk Rumored to be Cut

January 26, 2012 by
Filed under: Business Line, Companies, Congress, Department of Defense, development program, Events, Federal Budget Process, Military Aviation, Northrop Grumman Corp., production program, Proposal, Restructuring, Services, U.S. Air Force, U.S. Navy 

Update – The Defense Department released their Budget Priorities and Choices today and that included cancelling the remaining Block 30 Global Hawk production. The rationale given was that it provided the “same capability as the U-­‐2 manned aircraft for significantly less money to both buy and operate. As the program has matured, these cost savings have not materialized and, at best, we project the future cost of Global Hawk Block 30 operations to be comparable with the U-2.” Northrop Grumman responded this afternoon and said in their press release that “Northrop Grumman is disappointed with the Pentagon’s decision, and plans to work with the Pentagon to assess alternatives to program termination.” They also said that:

“The Global Hawk program has demonstrated its utility in U.S. military operations in Iraq, Afghanistan and Libya, as well as its utility in humanitarian operations in Japan and Haiti. Just a few months ago, the Pentagon published an acquisition decision memorandum regarding Global Hawk Block 30 that stated: ‘The continuation of the program is essential to the national security… there are no alternatives to the program which will provide acceptable capability to meet the joint military requirement at less cost.’

Today the Pentagon will begin to present its plans to reduce the U.S. defense budget by close to $500 billion over the next ten years. There have already been reports of programs being ended or reduced but so far none have been confirmed. As the plans are revealed it will be seen if these reports are true.

Yesterday it came out that the U.S. Air Force is considering reducing its planned purchase of Northrop Grumman’s (NOC) Global Hawk strategic reconnaissance Unmanned Aerial Vehicle (UAV). The Global Hawk has been in development since before 2000 and early versions went into use right after 9/11 supporting collection and targeting efforts across Afghanistan and Iraq. The Global Hawk was planned to replace the manned high altitude reconnaissance U-2 aircraft.

The Air Force has been steadily improving the system and buying different versions. The current production model is the RQ-4 Block 30 and the plan was to buy about 28 of them. Now there are reports that 10 of the systems will not be purchased and the U-2 will continue flying for several more years.

The Air Force would buy 3 more of the Block 40 version and the naval version to fulfill the Broad Area Maritime Surveillance (BAMS) requirement would continue so Northrop would not be losing all of its Global Hawk business but the loss of the ten systems would significantly reduce near term revenue.

In order to save that kind of money the Pentagon will have to cancel entire programs preferably before they go into production such as the Army’s Joint Air-to-Ground Missile (JAGM) program which has been a potential cut or reduce the amount of procurement items significantly such as with the Global Hawk. You cannot cut a slice of the budget proportionally without seriously affecting readiness, training and effectiveness of the armed forces overall. It is better to kill off whole programs and continue to utilize existing systems.

With these kind of reductions in planned spending there may be a time of flat or little growth for defense contractors. These decisions will force defense contractors to lose development and production programs they will still be able to keep their business of maintaining and supporting existing, older programs and equipment. The decisions may also force contraction in the industry as a whole.

Photo from ewen and donabel’s flickr photostream.

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