Air Force Takes Key Work Away From Northrop : Aerospace: Rockwell is awarded the lucrative business of building a guidance device for the MX missile.

Culminating one of the largest defense procurement controversies of the last decade, the Air Force on Tuesday knocked Northrop out of its job of building a key guidance device for the MX missile and awarded a contract to Rockwell International for all subsequent production of the equipment.

Rockwell’s Autonetic ICBM Systems Division in Anaheim received a $134.9-million contract to build 50 inertial measurement units (IMUs) for the MX and Midgetman missiles, a job that Northrop has performed since the program started in the mid-1970s.

The Air Force turned to Rockwell in 1986 as a second source for the complex guidance systems after Northrop had failed to meet its production schedule since the inception of the program. Rockwell was awarded an initial $9.7-million contract in 1986 and a $61-million contract in 1988.

At one time, the MX guidance program was the largest activity at Northrop’s electronic division, which employed a peak of 5,000 workers in Hawthorne. Today, the division employs about 2,500.

Northrop is projected to complete its IMU production contract in May, 1991, and presumably will then terminate jobs on the program. Northrop officials said Tuesday that they had no information about possible layoffs.

The decision Tuesday to award future production to Rockwell was based on a competition between the two firms on price and performance, Air Force spokesman Lt. Col. Barry Glickman said. But details about each firm’s bid were not disclosed.

The Rockwell production contract translates to a cost of less than $3 million per guidance system, far less than the roughly $5 million to $6 million per unit that Northrop was charging for the devices during the mid-1980s.

The three-year Air Force contract calls for Rockwell to produce 29 IMUs for the large, multiple-warhead MX missiles and 19 of the same systems for the small, single-warhead Midgetman missiles, as well as two spares.

The contract represents the final IMU purchases for the MX program, Glickman said, as well as the last procurement for the development phase of the Midgetman program.

Rockwell had long been the dominant supplier of nuclear missile guidance systems to the Air Force, building equipment for the Minuteman series of missiles. When Northrop won the MX program against Rockwell, it represented a major upset.

The guidance device, roughly the size of a basketball, contains 19,000 parts. It contains a ball that floats inside a special fluid, providing what the Air Force says is unparalleled accuracy in its capability to deliver nuclear warheads to targets.

But the very complexity of the device caused major problems at Northrop, which had difficulty managing the production task and ensuring quality of the product. It overran its cost-plus-type development contract by $65 million.

Glickman acknowledged that Northrop’s past performance on the MX program was a factor in the Air Force decision, adding: “Northrop has had schedule problems. It got a little out of hand, you could say.”

Northrop’s problems became public in 1986 when it was disclosed that the firm had fallen four months behind schedule and was delaying the entire MX missile system. Ultimately, four congressional hearings were held to investigate Northrop’s poor performance.

Air Force officials disclosed at those hearings that Northrop had repeatedly failed Air Force performance audits and reviews and had failed in several “get-well” plans to remedy the problems at the Hawthorne plant. By 1987, one-third of the MX missiles in silos did not have guidance systems because of Northrop production delays, prompting House Armed Services Committee Chairman Les Aspin (D-Wis.) to brand the MX an “unguided missile.”

In addition, it was disclosed that Northrop had set up several fictitious businesses with tens of thousands of dollars of petty cash to procure MX parts when its regular purchasing system became backed up. The practice led to still-unresolved civil fraud allegations that Northrop overcharged the government.

Northrop was admonished before congressional hearings as a “Mickey Mouse” and “sorry” operation. But criminal fraud allegations against Northrop on the program were dropped as part of a guilty plea on another matter two weeks ago. And allegations about significant technical problems on the guidance system were denied by the Air Force and never resulted in action against Northrop.

“We feel disappointed, because we felt we have performed very well,” Northrop spokesman Les Daly said Tuesday. He noted that the firm has been ahead of schedUle in deliveries during the last 16 months and that the guidance systems built by Northrop meet or exceed Air Force requirements.

Northrop reported MX guidance system sales of $359 million in 1988, $290 million in 1987, $328 million in 1986, $239 million in 1985 and $232 million in 1984.