Ethics and Integrity

At Northrop Grumman, we are guided by our company VALUES. They describe our company as we require it to be, and we want our decisions and actions to demonstrate these Values. We believe that putting our Values into practice creates long-term benefits for shareholders, customers, employees, suppliers and the communities we serve.

Our ethics vision is to foster a workforce that takes ownership of our ethical culture, operates with integrity and lives our company values. To support our ethics program, we have a strong network of global business conduct officers at strategic locations. These are full-time employees who have a strong ethical commitment to the company, are approachable and trained in Northrop Grumman policies and procedures. Additionally, many of our lead business conduct officers hold compliance and ethics professional certifications from the Society of Corporate Compliance and Ethics.

Our mission is to promote a culture where leaders create and encourage an open and ethical work climate, foster trust, and lead by example. We enable and require employees to act with integrity and in compliance with all ethical and legal responsibilities by providing the necessary tools and knowledge. We pledge to conduct ourselves with integrity to support an internal culture of innovation and trust. Our ethical obligations extend to all employees and those who represent the interests of Northrop Grumman anywhere in the world.

"Trust is not a given; it is earned and a vital part of our relationships with colleagues, business partners and customers. We earn their trust by living our company Values, abiding by our Standards of Business Conduct and consistently exhibiting ethical behavior. We must work hard every day to earn their trust through our actions and behavior."

WES BUSH | Chairman and Chief Executive Officer

We provide LEADERSHIP As a company and as individuals
Northrop Grumman leaders are talented employees effectively applying advanced technology, innovation and sound business management. We each lead through our competence, creativity and teamwork.

Our ETHICS: LEAD IT messaging encourages inclusive, honest communications and an environment where everyone is included and comfortable challenging one another. In his 2017 annual CEO ethics message, our CEO reinforced that respect and trust are fundamental to an engaged and productive workforce.

In addition to our commitment within Northrop Grumman, our ethics and compliance staff and business conduct officers lead, partner, participate and support external ethics and compliance organizations. This effort includes leadership in the Defense Industry Initiative on Business Ethics and Conduct (DII); our executive team serves on both the steering committee and working group. DII activities in 2017 included ethics briefings to the Interagency Suspension and Debarment Committee and Small Business Procurement Advisory Council as well as outreach to multiple U.S. government procurement agencies including the Office of Federal Procurement Policy and Army and Navy Procurement offices.

In addition, executives in our Ethics office actively assisted our industry colleagues with content development of the DII Small Business Toolkit and establishing a webinar series to discuss implementing key elements of an effective ethics and compliance program. They also shared best practices and spearheaded the DII Benchmark Survey development and launch so signatories could compare their programs with their industry peers.

Northrop Grumman is a founding member and serves on the steering committee of the International Forum on Business Ethical Conduct (IFBEC). The mission of the Forum is to promote and foster, through Global Principles, development of industry-wide ethical standards for companies that are active in the aerospace and defense business sector.

We are members and actively participate with the Society of Corporate Compliance and Ethics, Institute of Business Ethics (UK), International Forum on Business Ethical Conduct, various university ethics competitions and the Aerospace Industries Association. Additionally, we have a Northrop Grumman Senior Fellow at the Ethics and Compliance Initiative.

We value PEOPLE
We treat one another with respect and take pride in the significant contributions that come from the diversity of individuals and ideas. We are committed to openness and trust in all relationships.

Ethics: Own It, Live It, Lead It Award, Mascot, Australia
Ethics: Own It, Live It, Lead It Award,
Mascot, Australia

We use positive reinforcement with our ongoing “ETHICS: OWN IT, LIVE IT, LEAD IT” award for employees who demonstrate integrity and inspire others to do the right thing. Twenty-six employees received this award in 2017. In addition to local recognition and an engraved crystal award, they receive a letter from our Chairman and Chief Executive Officer, Wes Bush.

We act with INTEGRITY In all we do
We are each personally accountable for the highest standards of behavior, including honesty and fairness in all aspects of our work. We fulfill our commitments as responsible citizens and employees. We consistently treat customers and company resources with the respect they deserve.

In 2017, we provided enterprise training on building trust and respect, information security, import compliance and global trade security, and for U.S. employees, the importance of time- and laborcharging accuracy. For international employees, we included a module on anti-corruption and translated training content into German, French, Italian, Dutch and Arabic. The interactive format was engaging, and feedback from our training survey showed positive responses to continued improvements in the content format and structure.

Our corporate intranet site provides additional resources and guidance to assist with ethical dilemmas and decision-making. Furthermore, we provide a series entitled "Integrity Talks: Manager Led Discussions” that provides managers ethics and compliance content and relevant scenarios based on lessons learned, along with an implementation guide to assist them with discussing ethics with employees, building trust and creating an environment where employees feel comfortable speaking up.

Business conduct officers

Provide ethics leadership to management and employees, implement enterprise ethics and compliance initiatives, raise concerns and potential risks, and respond to questions and concerns raised by employees about the company's values, ethics and business conduct. We have 126 Business Conduct Officers across the globe, located in the United States, Europe, Asia, the Middle East and Australia.

In February 2017, more than 40 international business conduct officers and ethics partners representing 11 countries came together in Hamburg, Germany for the annual business conduct officer workshop. The two-day session included compliance hot topics and briefings on creating workplace culture, global data protections, emerging risk areas, OpenLine data and trends, and executive leaders sharing their views on ethics and integrity. Our business conduct officers had an opportunity to discuss challenges, share best practices and lessons learned, and develop strategic plans for program enhancements.

In April, the ethics organization hosted a similar workshop for U.S.-based business conduct officers in Dallas, Texas. More than 80 attendees participated in two days of training, sharing ideas, and regional networking. These events enabled our business conduct officers to drive the company’s Ethics and Business Conduct program and work to ensure successful implementation of ethics initiatives.

Both events were preceeded with a full-day ethics "boot camp" training for new business conduct officers. The training included policies and procedures, Standards of Business Conduct and roles and responsibilities.

We take responsibility for QUALITY
Our products and services will be “best in class” in terms of value received for money paid. We deliver excellence, strive for continuous improvement and respond vigorously to change. Each of us is responsible for the quality of whatever we do.

We are responsible for knowing the rules and regulations that apply to the work we do and ensuring that we have the appropriate training and guidance to do our jobs with absolute integrity and quality.

Quality banners are proudly displayed at our manufacturing sites with slogans supporting this critical Value: Quality is Everyone’s Responsibility, Quality is the Key to Success, Protect our People and our Products, and How do I know that Quality is Built In? - Because I built it! and more. This messaging enforces our employees' pride, patriotism and commitment to quality.

We regard our SUPPLIERS as essential team members
We owe our suppliers the same type of respect that we show to our customers. Our suppliers deserve fair treatment, clear agreements and honest feedback on performance. We consider supplier needs in conducting our business.

In 2017, we translated and published the new SUPPLIER STANDARDS OF BUSINESS CONDUCT in Arabic, Chinese, English, Dutch, Danish, French, German, Italian, Japanese, Korean, Norwegian and Spanish. This document sets expectations and informs and assists our suppliers and business partners. We encourage our partners and suppliers in our worldwide supply chain to adopt and enforce concepts similar to those in this policy.

We expect that our suppliers will treat others with dignity and respect, encourage diversity, remain receptive to diverse opinions, promote equal opportunity and foster an inclusive and ethical culture. They must refrain from violating the rights of others and address any adverse human rights impact on their operations. This includes child labor, human trafficking, harassment, nondiscrimination, wage and benefit compensation and social dialog.

Our suppliers must not seek to gain advantages through unfair, unethical or illegal business practices and must also exhibit good trade practices including responsible sourcing of minerals, protecting intellectual property and sensitive information, and maintaining accurate records.

Supplier Standards of Business Conduct

Additional supply chain Anti-Human Trafficking and Slavery information, including verification and evaluation of risk, compliance, program accountability, training and reporting options are posted on our company website.

We deliver CUSTOMER SATISFACTION
We are dedicated to satisfying our customers. We believe in respecting our customers, listening to their requests and understanding their expectations. We strive to exceed their expectations in affordability, quality and on-time delivery.

The ETHICS: OWN IT, LIVE IT, LEAD IT quarterly newsletter presents a broad range of topics, including executive messages, case scenarios and best practices, and serves as a continued refresher for ethics awareness and the importance of customer satisfaction.

NORTHROP GRUMMAN SPEAK UP CULTURE

Our ethics program goes beyond the minimum standards to create and sustain an open environment and a “speak up” culture that fosters trust, helps employees achieve goals and improves our performance. By making the right decisions based on Values, Northrop Grumman employees maximize both individual and company success.

We act in line with our Values and Standards of Business Conduct. Our employees are encouraged to raise concerns or questions to managers or business conduct officers. Our “Speak Up - We’re Listening” OpenLine posters, with contact information for local business conduct officers and the OpenLine, are prominently displayed at all Northrop Grumman facilities and serve to reinforce our commitment to integrity. In 2017, we translated our international posters into nine languages, created more than 30 versions and printed more than 200 copies for in-country distribution.

Our Northrop Grumman OpenLine is a valuable resource where employees, business partners, suppliers and other stakeholders can ask questions, seek guidance on ethics questions or matters of employee relations, and report suspected violations of laws, regulations and company policy or other concerns. The toll-free 24/7 number, administered by a third-party service provider, is communicated on brochures, posters, the company intranet and internet sites. Callers may choose to remain anonymous, however, this varies in global locations based on country laws. In addition, an online web-based reporting system is available to employees. The company provides dedicated OpenLine numbers at many of our international locations so that employees in those countries can speak to a representative in their native language.

In 2017, employee inquiries to the OpenLine increased by 17 percent from the previous year, and reports of allegations increased by 10 percent. These increases are consistent with the enhanced training on certain compliance topics and increased awareness of OpenLine availability.

The trained Compliance and Ethics Investigation Team investigates reported allegations in a manner that respects the individual and the trust they have placed in us. Northrop Grumman does not tolerate direct or indirect retaliation against any individual who reports a concern in good faith; this messaging is prominently posted online and in brochures.

For 2017, we substantiated 31 percent of allegations reported through the Openline, down from 36 percent in the previous year. Actions taken on cases with merit included coaching, verbal and written warning, demotions and 66 terminations. Notable in 2017 was the 17 percent increase in inquiries that may reflect increased awareness of OpenLine availability and increased awareness on the Northrop Grumman business courtesies policy.

OPENLINE CONTACTS

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