Homeland Security Firms Need Legal Shield, Northrop CEO Says

U.S. officials should do more to insulate companies from potential lawsuits when they bid for homeland security contracts, Northrop Grumman Corp.’s top executive said Friday.

Ronald Sugar, chief executive of the Century City-based company, said the federal government needed to provide further assurances that contractors wouldn’t be hit with huge lawsuits if they provided technology and it failed to prevent an attack on the United States. Northrop is the nation’s third-largest defense contractor.

“In the case of a terrorist attack, with armies of tort lawyers reaching for the deepest pockets to pick, the result could be economic annihilation for any company involved,” Sugar said.

In a speech to the Heritage Foundation, a think tank in Washington, Sugar said the prospect of contractor suits could interfere with projects such as antimissile systems to protect civilian jetliners and sensors to detect chemical attacks.

“It’s a very serious issue for those of us in the industry,” Sugar said.

Congress passed legislation last year that enables homeland security contractors to apply for indemnification with the Department of Homeland Security.

But Sugar said that the law had loopholes that the government should close and that it left too much discretion to courts.