Provision Aiding Northrop Is Criticized by White House

The White House and an Oklahoma senator are urging the Senate to strip language from an emergency spending request that could force the Navy to pay Northrop Grumman Corp. as much as $500 million for Hurricane Katrina-related shipbuilding costs that its insurer has denied.

The Bush administration and Sen. Tom Coburn (R-Okla.) criticized the provision added this month by Senate Appropriations Committee Chairman Thad Cochran (R-Miss.), whose state is home to a Northrop shipyard.

Century City-based Northrop employs about 10,000 workers at its Ingalls unit in Pascagoula, Miss., where it builds Wasp-class amphibious assault ships and Arleigh Burke-class destroyers.

“This doesn’t make common sense,” said Coburn, who has filed an amendment to eliminate the provision. “Northrop is a big, profitable company. We should be paying the bills that they took out insurance for? Do you want to defend this back home?”

Northrop is suing Factory Mutual Insurance Co. for denying its Katrina claims. The Navy says it is negotiating with Northrop for all allowable hurricane damage costs and these claims are not among them.

Separately, the White House urged that the language favoring Northrop be eliminated because federal acquisition regulations “expressly disallow insurable losses.”