Secret Review of Northrop May Stir Furor : Aerospace: The company says an Air Force report is favorable; others term it damaging. Congress may focus on it at hearings next month.

An intensive and still confidential Air Force review of Northrop Corp.’s management problems, ordered by Assistant Secretary John J. Welch Jr., is becoming the centerpiece of what is likely to be an adversarial congressional hearing about the Los Angeles aerospace firm.

Northrop Chairman Kent Kresa said Wednesday that the Welch review, which was completed in July, resulted in a “very favorable” report about the company and that he has “no quarrels” with the findings.

“They found some things that we could improve, but there were many things that were very favorable,” Kresa said Thursday during his first meeting with reporters since becoming the company’s chairman earlier this month.

But congressional investigators for Rep. John D. Dingell (D-Mich.), who plans to call a hearing next month and subpoena Kresa, on Thursday took a substantially different view of the Welch report.

“The report is one of the most damaging things I have ever seen,” said a Dingell staff member who has read it. “I don’t understand how he could say it is favorable.”

Neither Kresa nor his congressional critics would discuss the specific findings of the report. But a letter last June from Welch to Kresa, a copy of which was obtained by The Times, made it clear that the review was a severe measure.

“The nature of the performance problems is most serious,” Welch wrote to Kresa. “I encourage your direct personal involvement in promptly correcting them.”

In the letter, Welch told Kresa that he was “concerned about recurring program problems the Air Force is having with Northrop. While some programs have shown improvement in the past year, others, including Tacit Rainbow (a missile program) and key classified programs, continue to reflect poor performance.”

The tough language is nothing new for Northrop. In addition to criticism from Pentagon leaders, the company has been excoriated by three congressional committees in seven hearings since 1987. Additional hearings are pending.

Dingell’s Energy and Commerce Committee and two other House committees are expected to hold Northrop hearings next month. If Kresa testifies, the hearing is likely to be unusually adversarial. In earlier hearings, members of Congress have expressed outrage at the unwillingness of Northrop executives to appear.

“We have to get the confidence of Congress,” Kresa said Thursday. “They (members of Congress) have been shaken by a lot of the allegations. We have to get beyond that.”

The congressional furor is taking a toll on Northrop and creating a major challenge for Kresa in his new job just as he is attempting to emphasize corporate ethics.

Kresa acknowledged that the company has made mistakes in the past and at one point referred to some of those errors as “not a glorious chapter.” Though he did not explicitly criticize former Northrop Chairman Thomas V. Jones, the mistakes occurred during Jones’ tenure.

In other matters, Kresa said flight testing of the firm’s advanced tactical fighter is going well and will be completed in another month. He also said the second B-2 Stealth bomber, which has yet to fly, is about a month behind schedule.