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Northrop Grumman (also referred to as the “Company,” “we,” “us,” or “our”) is committed to being a responsible corporate citizen and at all times to acting consistently with its values throughout its global operations. We fully support the elimination of human trafficking and modern slavery throughout businesses and supply chains. This statement has been prepared in accordance with the UK Modern Slavery Act 2015 (the UK Modern Slavery Act), the Australian Modern Slavery Act 2018 (the Australian Modern Slavery Act) and the California Transparency in Supply Chains Act of 2010, and covers the financial year ended December 31, 2020. The reporting entities covered by this single joint statement are: (i) for the purposes of the UK Modern Slavery Act: Northrop Grumman UK Limited; Park Air Systems Limited; and the UK Establishment of Northrop Grumman Sperry Marine BV (a company incorporated in the Netherlands); and (ii) for the purposes of the Australian Modern Slavery Act: each of Northrop Grumman Australia Pty Limited (NGAPL) and its wholly owned subsidiaries, Northrop Grumman Integrated Defence Services Pty Limited and Northrop Grumman M5 Network Security Pty Limited. Each of the Australian and UK reporting entities are indirectly owned by Northrop Grumman Corporation, which is listed on the New York Stock Exchange.
Northrop Grumman is a leading global aerospace and defense company. We use our broad portfolio of capabilities and technologies to create and deliver innovative platforms, systems and solutions in space; manned and autonomous airborne systems, including strike; strategic deterrence systems; hypersonics; missile defense; weapons systems; cyber; command, control, communications and computers, intelligence, surveillance and reconnaissance (C4ISR); and logistics and modernization. We participate in high-priority defense and government programs in the United States (U.S.) and abroad. We conduct most of our business with or for the U.S. Government, principally the U.S. Department of Defense (DoD) and intelligence community, as well as other U.S. prime defense companies. We also conduct some business with foreign, state and local governments (including with the UK Government and the Australian Department of Defence), as well as commercial customers. We are currently aligned in four operating sectors, which also comprise our reportable segments: Aeronautics Systems, Defense Systems, Mission Systems and Space Systems. Our principal executive offices are located in Falls Church, Virginia, U.S.A. In 2020, we employed approximately 97,000 people around the globe.
We regard our suppliers as essential team members and a key part of the Company’s success. In 2020 we utilized a broad base of suppliers, across the U.S. and approximately 45 other countries, resulting in managed spend of approximately US$15 billion with our suppliers.
We have two broad supply chain categories from which we purchase a diverse range of products and services each year:
• Deliverable products or services that are integrated into or form part of the products, solutions or services we sell directly to our customers (direct procurements); and
• Non-deliverable products or services, which are used to support the running of our internal operations (indirect procurements).
Our business is predominantly based on programs. Our program requirements are generally defined by our customers and typically have customized supply chain requirements, making the supplier base of our direct procurements diverse and specific in nature. Our direct purchases range from ‘off the shelf’ catalogue items sourced from original equipment manufacturers, to modified ‘off the shelf’ items, to bespoke developmental items sourced from high end specialist providers of often leading edge technical products and services.
Our suppliers of products and services intended for internal use are also diverse. This category of suppliers includes reputable providers of office consumables, information technology and communications equipment and services, transport, freight and travel services, facilities and property management, security, human resources, legal and accounting services.
We believe the risk of modern slavery and human trafficking in our global employee workforce is low. This view is informed by the fact that we operate in an industry that is highly regulated with a complex technology focus. Moreover, our employee base, their work, and our recruiting and hiring practices are not typically characteristic of those associated with labor exploitation and trafficking. The majority of the individuals we employ worldwide hold science-related degrees, and perform engineering or highly skilled technical jobs.
We work hard to comply with all applicable local labor laws and regulations (including federal and state laws in the U.S., the Australian Fair Work Act 2009 and the United Kingdom’s National Minimum Wage Act 1998 and Employment Rights Act 1996) and we believe that our global business is governed by well-established Company policies, practices and procedures that provide for diversity, and fair pay and working conditions for our employees.
With respect to our supply chain, the diversity and complexity/layers of our direct and indirect suppliers and products, as well as the geographic locations, markets and regulatory systems in which we operate, may expose us to certain potential modern slavery and human trafficking risks. We assess these risks, among others, taking into account a number of factors, including the nature of the products and services we purchase, the location, business and reputation of our suppliers, and our practices of dealing with our suppliers. Our overall assessment, based on a combination of these factors, is that our first tier supply chains are low risk for modern slavery and human trafficking. The vast majority of the products and services we purchase directly are from industry partners who are operating in sectors and based in countries considered to be low risk for modern slavery practices. The regulated nature of the industry and markets in which we operate are such that many of our suppliers are subject to the same regulations as we operate under and produce high end technology equipment or provide specialized technical services using a largely professional or technically skilled workforce. We have longer term relationships and an established practice of dealing with many of our first tier suppliers, who are obligated to follow our Supplier Standards of Business Conduct (SSOBC) and applicable Purchase Order Terms and Conditions for U.S. and International suppliers.
Potentially higher risks can exist in the sub-tiers of some products we purchase, particularly where the overall supply chain is complex and runs many tiers deep to include raw materials or component parts sourced from, or manufactured in, countries and sectors with higher inherent risks related to modern slavery. While it is difficult for us to identify and manage such risks, especially where we are many tiers removed and have limited visibility, we continue to work with our direct suppliers to flow down our SSOBC and applicable terms and conditions in support of their supply chain practices as part of our ongoing collective efforts to minimize the risks of modern slavery.
Northrop Grumman Values
Our Values are critical to our ability to deliver on our purpose of advancing global security and human discovery in support of our customers’ missions around the world. While our purpose reflects what we do and why we do it, our Values reflect who we are and how we behave. These Values are the bedrock of our culture.
• We do the right thing – we earn trust, act with ethics, integrity and transparency, treat everyone with respect, value diversity and foster safe and inclusive environments.
• We do what we promise – we own the delivery of results, focused on quality outcomes.
• We commit to shared success – we work together to focus on the mission and take accountability for the sustainable success of our people, customers, shareholders, suppliers and communities.
• We pioneer – with fierce curiosity, dedication, and innovation, we seek to solve the world’s most challenging problems.
Northrop Grumman Policies on Human Trafficking, Modern Slavery and Human Rights
We maintain a broad-based and robust corporate ethics and compliance program that includes values, leadership, responsibility, training and audits, and is intended to ensure compliance with applicable laws and a culture committed to ethics and integrity in all we do. Our culture, ethics and compliance program also help ensure that we do business with parties that share our Values and our commitment to transparent and ethical business practices.
As a responsible corporate citizen, Northrop Grumman fully supports the eradication of human trafficking (including the procurement of commercial sex acts and the use of forced or child labor) and modern slavery, including from the supply chain. The Company is committed to supporting and maintaining the highest standards of ethical conduct along with respect for human rights. This respect is embedded in the Company’s culture and reflected in the Company’s robust Human Rights policy. We also maintain a Human Rights Working Group comprised of senior executives from across the enterprise, which helps to oversee our approach to respecting human rights and mitigating risks (including modern slavery and human trafficking) in our global business.
Our employees are responsible for complying with our Standards of Business Conduct and other policies and procedures, including those that relate to human trafficking and forced labor. These policies and procedures require Northrop Grumman employees to behave and operate in a manner consistent with our Values, and employees found to be in violation of our policies and procedures are subject to discipline, up to and including termination.
We also have comprehensive supplier policies and procedures which we require our suppliers to adhere to, including our SSOBC. Among other things, the SSOBC set out requirements relating to ethics and integrity, labor and employment practices, compliance with applicable law, and protecting human rights. The SSOBC also require suppliers to ensure that child labor is not used in the performance of work and to adhere to regulations prohibiting human trafficking.
We believe our SSOBC help to mitigate the risk of human trafficking in our supply chain. In addition, our standard procurement terms and conditions contain provisions requiring our suppliers to comply with applicable laws and regulations, including obligations regarding modern slavery and anti-human trafficking, and incorporating these modern slavery and anti-human trafficking obligations into their lower-tier subcontracts. Our standard terms and conditions for supplier agreements are intended to help ensure compliance with our Values, policies, and applicable laws and regulations. Following the introduction of the Australian Modern Slavery Act, we are reviewing and considering how we can enhance further the standard procurement terms and conditions applicable to our Australian operations, as well as the types of training and awareness we provide to our Australian employees and suppliers, consistent with the legislation.
How We Train Employees and Suppliers
For many years, we have provided training and awareness on human trafficking and forced labor through various methods, including online training modules, enterprise communication campaigns, ethics articles, posters at applicable work sites and postings on internal and external Northrop Grumman websites. We provide training to employees who work directly with suppliers, and to various suppliers through materials that are published on the Northrop Grumman supplier portal (OASIS). We periodically refresh our training, as we work to ensure that such training remains current with applicable law and other requirements.
Due Diligence and Compliance
In addition to the mandatory training mentioned above, which our employees are required to complete, we seek further to mitigate modern slavery and human trafficking risks in the Company’s operations with our global OpenLine reporting mechanism. Third parties, including employees of our suppliers, are able to submit questions, expressions of concern, or allegations through our OpenLine. We address each one.
We also typically require prospective suppliers to complete a due diligence process during which we: (1) collect information from the supplier; (2) review the supplier’s reputation and background; and (3) conduct a risk-based assessment of certain suppliers operating in international locations. In evaluating third parties with whom we may wish to do business, we focus on risk-based analyses, applying greater scrutiny where we find the risk is higher. We seek to do business with those who share our Values and our commitment to integrity and performance. We may terminate a subcontract or other agreement with a third party if we discover misconduct contrary to our Values.
U.S. Government Contracts
As a U.S. Government contractor, we are subject to and comply with the Federal Acquisition Regulation (FAR), including 52.222-50 on Combating Trafficking in Persons. We flow down the FAR 52.222-50 requirement to our covered suppliers, subcontractors and agents, consistent with the FAR. We also require our suppliers to provide certifications of compliance with respect to their plans regarding anti-human trafficking where required by the FAR.
Reporting Violations and/or Concerns
We expect and ask our employees to raise concerns regarding potential violations of our Values, policies or law, and we provide multiple reporting avenues, including submitting allegations anonymously through our OpenLine. We encourage our employees and third parties to raise concerns without fear of retaliation. We investigate allegations of misconduct and take appropriate steps, including corrective action when allegations are substantiated. These reporting opportunities include concerns that relate to human trafficking or other modern slavery practices.
Further information regarding our OpenLine processes is available on our corporate website Ethics and Business Conduct - Northrop Grumman
The Company has a variety of tools it uses to assess risk and the effectiveness of our policies and mitigation efforts, including those related to anti-human trafficking and modern slavery. They include compiling and assessing data on the nature and number of OpenLine complaints and the results of investigations into those complaints; our annual engagement surveys and compliance interviews; internal and external audits (of the Company and our supply chain); senior management and board oversight; our enterprise risk management council; our supplier assessment management system, and our supply chain leadership council, among others.
In 2020, we did not substantiate any incidents of modern slavery or human trafficking in our business or global supply chain.
We will continue to review and enhance, as necessary, our efforts to prevent human trafficking and other misconduct within our business and global supply chain, as we seek to progress our commitment to ethics and integrity, to performance and to our stakeholders, including our employees, our customers, our shareholders and the communities in which we operate.
Addressing and combatting the risk of human trafficking and other forms of modern slavery is a shared responsibility among the various elements of our global business. This statement has been prepared with the benefit of enterprise-wide collaboration and consultation, and input from various parts of the Company, including our reporting entities under the Australian Modern Slavery Act and the UK Modern Slavery Act, procurement, employee management, HR, ethics and corporate responsibility, supply chain management, and the law department.
To review our prior years’ Anti-Human Trafficking and Slavery Statement, please follow the links below.
• 2019 anti-human-trafficking-and-slavery-statement
This statement was approved by the Board of Directors of NGC UK Limited and the Board of Directors of NGAPL on June 29, 2021, including on behalf of their respective wholly owned subsidiaries.