Northrop, Lockheed Teams Split $1.6 Billion for Missile Defense

(Bloomberg) -- Teams led by Lockheed Martin Corp. and Northrop Grumman Corp. will split $1.6 billion awarded by the Pentagon Tuesday for a new missile interceptor warhead, in the first major defense procurement award of the Biden administration.

Left out was a team led by Boeing Co., which managed a previous interceptor program that was canceled in 2019 after costing $1.2 billion.

The warheads are intended to crash into and destroy incoming missiles from an adversary such as North Korea or Iran. They would be installed on missile interceptors based in Alaska.

Northrop’s contract for the weapon known as the Next Generation Interceptor, or NGI, could be valued at as much as $3.9 billion and Lockheed’s at $3.6 billion if they are fully funded through their entire performance periods. For now, the Missile Defense Agency will spend a combined $1.6 billion on both contractors through 2022 and then reassess the program.

Raytheon Technologies Corp., which designed and produced the canceled warhead, is on Northrop’s team this time.

“Today’s awards are an important step in modernizing our Missile Defense System,” Stacy Cummings, who is performing the duties of under secretary of defense for acquisition and sustainment, said in a statement. “NGI plays an important role in our homeland defense, and our acquisition strategy is ensuring the department maximizes innovation to keep pace with rapidly advancing threats.”

The competition will culminate with a winner-take-all selection to build as many as 20 new warheads after a “Critical Design Review.”

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