Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SD
SPECIALIZED DISCLOSURE REPORT
NORTHROP GRUMMAN CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE | | 1-16411
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(State or other jurisdiction of incorporation or organization) | | Commission file number | | (IRS Employer Identification No.) |
2980 Fairview Park Drive, Falls Church, Virginia 22042
(Address of principal executive offices) (Zip code)
Gloria A. Flach
Corporate Vice President and
Chief Operating Officer
(703) 280-2900
Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:
x Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2015.
Introduction:
This Form SD of Northrop Grumman Corporation (herein referred to as "Northrop Grumman," the "company," "we," "us," or "our") is filed pursuant to Rule 13p-1 (the "Rule") promulgated under the Securities Exchange Act of 1934, as amended, for the reporting period January 1, 2015 to December 31, 2015.
Rule 13p-1 requires disclosure of certain information when a company manufactures or contracts to manufacture products using the minerals specified in the Rule (gold, columbite-tantalite (coltan), cassiterite and wolframite, including their derivatives, tantalum, tin and tungsten, which we collectively refer to as "3TG minerals") and where those minerals are necessary to the functionality or production of such products. "Conflict Minerals" for purposes of the Rule and this Report include the 3TG minerals and any other minerals determined by the U.S. Secretary of State to be financing conflict in the Democratic Republic of the Congo, the Republic of the Congo, the Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, Zambia and Angola (the "Covered Countries").
Statements in this Form SD or the Conflict Minerals Report included as Exhibit 1.01 may include forward-looking statements. Words such as "expect," "intend," "may," "could," "plan," "believe," "anticipate," and similar expressions generally identify these forward-looking statements. Forward-looking statement include, among other things, statements relating to our intended improvement efforts to mitigate risk. Forward-looking statements are based upon assumptions, expectations, plans and projections that we believe to be reasonable when made, but which may change over time. These statements are not guarantees of future performance and inherently involve a wide range of risks and uncertainties that are difficult to predict. You are urged to consider the limitations on, and the risks associated with, the forward-looking statements and not unduly rely on the accuracy of the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
Section 1 - Conflict Minerals Disclosures
Item 1.01 Conflict Minerals Disclosure and Report
We determined that during 2015 we manufactured and/or contracted to manufacture products containing 3TG minerals necessary to the functionality or production of such products. As discussed in more detail in our Conflict Minerals Report included as Exhibit 1.01, we are not able to determine the countries of origin or facilities used to produce the 3TG minerals in our products.
Item 1.02 Exhibit
As specified in Section 2, Item 2.01 of this Form SD, the company hereby files its Conflict Minerals Report as Exhibit 1.01 to this report. The Conflict Minerals Report is also available on our website at: www.northropgrumman.com.
Section 2 - Exhibits
Item 2.01 Exhibits
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Exhibit | | Description |
1.01 | | Conflict Minerals Report of Northrop Grumman Corporation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned on the 26th day of May, 2016.
NORTHROP GRUMMAN CORPORATION
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By: | /s/ Gloria A. Flach | |
| Gloria A. Flach Corporate Vice President and Chief Operating Officer
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Exhibit
Exhibit 1.01 – Conflict Minerals Report
Northrop Grumman Corporation
Conflict Minerals Report
For the Year Ended December 31, 2015
Section 1: Introduction
This Conflict Minerals Report ("Report") of Northrop Grumman Corporation (herein referred to as "Northrop Grumman," the "company," "we," "us," or "our") has been prepared pursuant to Rule 13p-1 (the "Rule") and Form SD promulgated under the Securities Exchange Act of 1934, as amended, for the reporting period January 1, 2015 to December 31, 2015.
Rule 13p-1 requires disclosure of certain information when a company manufactures or contracts to manufacture products using the minerals specified in the Rule (gold, columbite-tantalite (coltan), cassiterite and wolframite, including their derivatives, tantalum, tin and tungsten, which we collectively refer to as "3TG minerals") and where those minerals are necessary to the functionality or production of such products. "Conflict Minerals" for purposes of the Rule and this Report include the 3TG minerals and any other minerals determined by the United States (U.S.) Secretary of State to be financing conflict in the Democratic Republic of the Congo, the Republic of the Congo, the Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, Zambia and Angola (the "Covered Countries").
We have issued a Conflict Minerals statement. This statement sets forth our commitment to the responsible sourcing of minerals through our global supply chain and can be found on our website at www.northropgrumman.com. References to our website in this report are provided as a convenience and do not constitute, and should not be viewed as, incorporation by reference of the information contained on, or available through, our website.
Company Overview
Northrop Grumman is a leading global security company. We offer a broad portfolio of capabilities and technologies that enable us to deliver innovative products, systems and solutions for applications that range from undersea to outer space and into cyberspace. We provide products, systems and solutions in autonomous systems; cyber; command, control, communications and computers (C4), intelligence, surveillance and reconnaissance (C4ISR); strike aircraft; and logistics and modernization to government and commercial customers worldwide. We participate in many high-priority defense and government services programs in the United States (U.S.) and abroad. We conduct most of our business with the U.S. Government, principally the Department of Defense (DoD) and intelligence community. We also conduct business with foreign, state and local governments and commercial customers.
At December 31, 2015, the company was aligned into four segments: Aerospace Systems, Electronic Systems, Information Systems, and Technical Services. Effective January 1, 2016, the company streamlined our sectors from four to three to better align our business with the evolving needs of our customers and enhance innovation across the company - Aerospace Systems, Mission Systems and Technology Services.
Supply Chain and Reasonable Country of Origin Inquiry ("RCOI")
We determined that during 2015 we manufactured and/or contracted to manufacture products containing 3TG minerals necessary to the functionality or production of such products. Our global supply chain is complex and includes many third parties in the supply chain between us and the original source of 3TG minerals in our products.
We conducted an RCOI to seek to determine whether the 3TG minerals in our products originated from the Covered Countries. Our RCOI principally consisted of attempting to: (i) identify products we believed contained or were likely to contain 3TG minerals, (ii) determine the source of 3TG minerals directly procured by the company, and (iii) survey direct suppliers and/or subcontractors (collectively "suppliers") who provide components and parts for those of our products with potential 3TG content. We rely on our direct suppliers to provide information regarding the presence of 3TG minerals in components and materials that they supply to us and the origin of that 3TG mineral -- including sources of 3TG minerals that lower tier suppliers supply to them.
The following is a summary of our major product categories, which we believe are likely to contain 3TG content:
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Air and missile defense systems | Communications and intelligence systems
| Naval surface and undersea systems
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Airborne C4ISR systems | Cybersecurity systems
| Satellite and space systems
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Airborne fire control radars | Early warning systems
| Signals intelligence systems
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Airspace management systems | Electronic warfare systems
| Situational awareness systems
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Autonomous systems
| Manned aircraft
| Training and simulation systems |
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Command and control systems
| Modernization and sustainment systems
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Section 2: Due Diligence Process
We exercised due diligence to determine the source and chain of custody of 3TG minerals in our products and designed our due diligence process to conform to the Organisation for Economic Co-operation and Development ("OECD") Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD, 2013) ("OECD Framework").
Section 3: Due Diligence Measures Undertaken
We undertook the following due diligence measures during the 2015 reporting period:
Utilize Established Company Management Systems
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• | Utilized a new data management approach that enabled the company to increase the number of suppliers surveyed. |
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• | Utilized a new data tool that helped the company to automate the review of supplier surveys. |
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• | Participated as a member of Conflict Minerals working groups led by the National Association of Manufacturers and the Aerospace Industries Association. |
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• | Participated as a member of the Conflict Free Sourcing Initiative (CFSI). |
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• | Continued documentation and certification of our internal compliance process. |
Identify and Assess Risks in the Supply Chain
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• | Communicated to our suppliers, via our online supplier portal, our compliance efforts with the Rule and the need for supplier input and cooperation. |
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• | Conducted a survey of direct suppliers of the company who provide components and parts for those of our products with potential 3TG content utilizing the CFSI's Conflict Minerals Reporting Template (CMRT). |
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• | Provided access to training materials for suppliers who received the CMRT template. |
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• | Reviewed supplier survey responses and identified for follow-up those responses that were incomplete or inconsistent. |
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• | Compared smelters identified by our suppliers to the list of conflict free smelters produced by the CFSI. |
Leverage Established Strategy to Respond to Identified Risks
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• | Continued to use a management reporting dashboard to summarize and evaluate the results of our supplier surveys, and periodically shared the dashboard with senior leadership. |
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• | Followed-up on incomplete and inconsistent supplier survey responses. |
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• | Sent follow-up letters and contacted via other means (telephone, electronic mail), as appropriate, those suppliers who did not respond to our survey requests. |
Carry Out Independent Third-Party Audit of Smelter/Refiner Due Diligence Practices
We do not, to our knowledge, directly purchase 3TG minerals from any of the Covered Countries. We are a downstream consumer of 3TG minerals and are many levels removed from the smelters and refiners who provide minerals and ores to our suppliers. Therefore, we did not perform or direct audits to be performed of smelters and refiners in our supply chain but rather we relied on audits carried out by the CFSI.
Report Annually on Supply Chain Due Diligence
This Report and the associated Form SD are available on our website at: www.northropgrumman.com.
Section 4: Independent Audit
An independent private sector audit was not required for the 2015 reporting period.
Section 5: Determination
We requested data at the supplier company level and accepted responses from the company level, division/segment level or product level, as applicable. We then followed up with suppliers for product detail when they indicated they may be sourcing 3TG minerals from the covered countries. Currently our suppliers are unable to specify the smelters or refiners used for components supplied to us. We were therefore unable to determine whether any of the 3TG minerals that these suppliers reported was actually contained in components or parts that the suppliers supplied to us, or determine if any of these smelters or refiners were actually in our supply chain.
For the 2015 reporting period, we believe we surveyed suppliers representing approximately 95% of our 2015 expenditures for parts or components that we believe could contain 3TG minerals. Based on our 2015 RCOI process and after exercising due diligence measures, including evaluating survey responses received from our suppliers, we are not able to determine the countries of origin or facilities used to produce the 3TG minerals in our products.
Section 6: Continuous Improvement Efforts to Mitigate Risk
We currently intend to take the following steps to support our due diligence process for the 2016 reporting period:
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• | Enhance further our risk management and mitigation efforts by leveraging internal data analysis capabilities. |
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• | Maintain membership and participation in the CFSI. |
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• | Perform an internal review of our conflict minerals due diligence process. |