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Northrop (NOC) Wins $17.3M Contract for JTAGS From U.S. Army

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Northrop Grumman Corporation (NOC - Free Report) secured a $17.3-million contract from the U.S. Army. The company will be working on development and production of the Joint Tactical Ground Station (JTAGS). Per the contract, the company is expected to finish the related work by Sep 30, 2017. All the work related to the deal will be carried out at the company's facility in Boulder, CO.

Joint Tactical Ground Station (JTAGS)

Joint Tactical Ground Station also known as JTAGS is the only deployable system which is capable of providing direct down linked, in-theater early warning of ballistic missile launches to the combatant commander. It gives passive defense by providing the early warnings by sending alerts when it detects enemy ballistic missile launch events. It also helps in active defense by cueing the air defense assets to the missile track. As of yet, there are five operational JTAGS systems.

Northrop Grumman has a longstanding relationship with the U.S. Army in providing service for the JTAGS systems. Over the years, the company has improvised the system and has replaced the two prototypes that were built in Europe and Korea in 1993 and 1994, respectively for demonstration purpose.

Growing Stronger New Orders

The company is one of the largest defense contractors in the country. Owing to its vast product portfolio, the company enjoys a strong presence in Air Force, Space & Cyber Security programs. Northrop Grumman also invests substantially in product innovation and has a strong focus on strengthening its ISR wing. This has helped the company in maintaining a stable earnings stream amid the rapidly changing needs of the defense landscape.

The company receives orders from both domestic and international sources. The international market of the company accounted for 13.1% of its business in 2016. Of the recent FMS orders, notable ones include a $169-million deal that Northrop Grumman won in the reported quarter, for developing a new satellite communication system for Australia. The system will enable deployed military forces of the nation to connect to strategic information networks.

Additionally, the current defense scenario has proved to be a great growth opportunity for the defense giants like Northrop Grumman, Lockheed Martin Corporation (LMT - Free Report) , The Boeing Company (BA - Free Report) etc. Recently, the U.S. Senate passed fiscal 2018 defense policy bill worth $700 billion, which was proposed in July 2017. Of the total amount, about $640 billion is for Pentagon’s main operations like buying weapons and paying the troops. The remaining $60 billion for Overseas Contingency Operations will be utilized to fund the conflicts in Afghanistan, Iraq, Syria and elsewhere. There new orders are expected to flow in as a result of this newly passed bill.

Expansion Via Acquisition

Northrop Grumman recently announced that it will acquire Orbital ATK for $7.8 billion in cash and the assumption of $1.4 billion in net debt. Currently, the acquisition is subject to regulatory approvals. With the acquisition of Orbital ATK, Northrop Grumman will benefit from the former's rocket motors, missiles and electro-optical countermeasure product lines. (Read More: Northrop Grumman Announces Orbital ATK Buyout for $9.2B).

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