Northrop Grumman Corporation

Based on public information, there is evidence that the Chairman, CEO and President supports the ethics and integrity agenda of the company. Statements from the Chairman, CEO and President, which emphasise ethical standards and integrity, appear in the Corporate Responsibility Report, Standards of Business Conduct, Annual report, company website, and in guidance documents for business associates.

Based on public information, the Chairman, CEO and President is a member of the Defense Industry Initiative (on Business Ethics and Conduct) Steering Committee. Furthermore, the Chairman, CEO and President has demonstrated active external engagement in anti-corruption matters on more than one occasion over the last two years in public speeches.

Based on public information, there is some evidence that the Chairman, CEO and President has demonstrated an internal-facing commitment to the ethics and integrity agenda of the company over the last two years. TI notes that in 2013 the Chairman, CEO and President sent out messages to employees highlighting the company’s 2013 theme, “Ethics: The Foundation of Performance.” The company therefore scores 1.

Based on public information, there is evidence that the company demonstrates its commitment to high standards of business conduct through the publication of ‘Our Vision, Values and Behaviors’. This document emphasises the importance of trust (Vision), honesty, accountability, openness, and equitability (Values), and transparency, integrity and openness (Behaviours). The company’s values are well publicised and explained, and have been translated into policies and codes.

Based on public information, the company is a member of the Defense Industry Initiative (DII) and International Forum on Business Ethical Conduct (IFBEC). The company also subscribes to the IFBEC Global Principles of Business ethics for the Aerospace and Defense Industry, which are based on the Common Industry Standards for European Aerospace and Defence.

Based on public information, there is evidence that the company’s Policy Committee has overall corporate responsibility for its ethics and anti-corruption agenda.

Based on public information, there is evidence that the Vice President of Global Corporate Responsibility is responsible for implementing the company’s ethics and anti-corruption agenda. This individual is identifiable by name: Sandra Evers-Manly.

Based on public information, there is evidence that the wider ethics agenda is reviewed on a regular basis. The ethics office reports quarterly to the Audit Committee of the Board and annually to the Policy Committee of the Board. The Board reviews the Principles of Corporate Governance at least annually to determine whether they should be modified in response to changed circumstances or legal or other requirements, or otherwise to be made more effective.

Based on public information, there is no readily available evidence of a formal, written plan on which the review of the ethics and anti-corruption agenda is based or examples of improvement plans that have been implemented when issues have been identified. TI does note that the Board reviews the ‘Principles of Corporate Governance’, which guides the company’s values and commitment to ethics and integrity, at least annually to determine whether changes should be made.

Based on public information, there is no readily available evidence that the company has a formal process for review and where appropriate updates its policies and practices in response to actual or alleged instances of corruption.

Based on public information, there is some evidence of a company risk analysis process, as identified in the 2013 Corporate Responsibility Report. However, there is limited detail provided about this process and no mention of mitigation planning related to the anti-corruption risk assessment. The company therefore scores 1.

Based on public information, there is some evidence of a formal anti-corruption risk assessment procedure for assessing proposed business decisions. However, it is unclear how the procedure should be applied or to precisely which business decisions it applies. The company therefore scores 1.

Based on public information, there is evidence that the company conducts due diligence that minimises corruption risk when selecting agents. However, TI found no readily available evidence that this is refreshed at least every 3 years or when there is a significant change in the business relationship. The company therefore scores 1.

Based on public information, there is evidence that all employees, consultants, agents, contract labour, employees of limited liability companies, joint ventures, and anyone who represents the company in any capacity are required to adhere to the Values and Standards of Business Conduct, as well as U.S. and foreign laws and regulations. The wording of these policies is strict but TI has found no readily available evidence relating to contractual rights and formal processes to prevent or deal with violations. The company therefore scores 1.

Based on public information, there is evidence that the company communicates its ethics and anti-corruption agenda down the supply chain. Anyone who represents the company in any capacity must adhere to the company’s Values and Standards of Business Conduct, as well as all U.S. and foreign laws and regulations. This document also makes clear the consequences of a contractor, sub-contractor or supplier breaching the company’s ethics standards.

Based on public information, there is no readily available evidence that the company explicitly addresses the corruption risks associated with offset contracting.

Based on public information, there is no readily available evidence that the company conducts due diligence that minimises corruption risk when selecting its offset partners and offset brokers.

Based on public information, there is evidence that the company has an anti-corruption policy that prohibits corruption in its various forms. TI notes that the company prohibits the “offering or making of any improper payments of money or anything of value to any of our business associates” for anyone conducting business on behalf of the company. Facilitation payments are prohibited and it is a requirement that all employees complete an annual conflict of interest disclosure form. The company website states a commitment to “comply with anti-corruption laws in every country in which we operate” as well as a “zero tolerance for corruption”. Guidance on the Foreign Corrupt Practices Act provides a number of examples to help individuals to identify corrupt behaviour.

Based on public information, there is evidence that the company has a zero tolerance policy towards corruption. The company also subscribes to the Global Principles of Business Ethics for the Aerospace and Defense Industry, which includes zero tolerance to corruption amongst its principles.

Based on public information, there is evidence that the company’s ethics and anti-corruption policies are easily accessible. The materials are publicly available in a variety of foreign languages on the company website. Employees also receive regular ethics communications and suppliers receive resources, including the ‘One Northrop Grumman Charter’ and an annual letter outlining the company’s ethics policies and code of conduct.

Based on public information, there is evidence that the company’s ethics and anti-corruption policies are written in accessible and comprehensible language.

Based on public information, there is evidence that the company’s ethics policies, which include policies on corruption and bribery, vision, values, and behaviour, explicitly apply to all employees and members of the Board.

Based on public information, there is evidence that all employees are required to disclose potential conflicts of interests on an annual basis. The designated disclosure form and associated conflict of interest notice provide clarification on potential conflicts of interest and confirm that these policies apply to board members as well as employees. Guidance for business associates indicates that any individual associated with the company is required to disclose potential conflicts of interest and obtain management approval.

Based on public information, there is evidence that the company has a policy for the giving and receipt of gifts. TI notes that the giving or receipt of gifts, entertainment, services or favours to actual or potential government representatives is prohibited. Anyone conducting business on behalf of the company is prohibited from offering or making improper payments of “anything of value” to business associates. All individuals associated with the company are prohibited from soliciting or accepting gifts, payments or gratuities from suppliers. Exceptions must be approved in writing by a “company officer”. Further, the Standards of Business Conduct indicates that business courtesies offered to commercial customers must “demonstrate good business judgement and be reasonable (for example not frequent or lavish)”. However, TI has found no readily available evidence of clear upper limits for gift exchange, audit procedures or authorisation processes. The company therefore scores 1.

Based on public information, there is evidence that the company has a policy for the giving and receipt of hospitality. TI notes that the company prohibits the giving or receiving of services or favours to actual or potential government representatives. Anyone conducting business on behalf of the company is prohibited from offering or making improper payments of “anything of value” to business associates. All individuals associated with the company are prohibited from soliciting or accepting gifts or gratuities from suppliers. Exceptions must be approved in writing by a “company officer”. Further, the Standards of Business Conduct indicates that business courtesies offered to commercial customers must “demonstrate good business judgement and be reasonable (for example not frequent or lavish)”. However, TI has found no readily available evidence of clear upper limits for gift exchange, audit procedures or authorisation processes. The company therefore scores 1.

Based on public information, there is a clear policy that explicitly prohibits facilitation payments except in cases where there is an imminent threat to an individual’s life, health or safety. Supplementary information is provided in ‘Foreign Practices Act, Test yourself’.

Based on public information, there is evidence that the company regulates political contributions. The company engages in a number of political processes, including providing corporate political contributions to two national gubernatorial associations, and supporting public policy issues in-line with the company's objectives. These processes are transparent and accountable. The Policy Committee of the Board provides oversight of government relations strategy and activities. Management of participation in the political process is the responsibility of the Corporate Vice President of Government Relations who reports directly to the CEO. The company publishes annual spending reports for its political action committee, corporate contributions and trade association memberships on its website. Direct political contributions to candidates or their political action committees are prohibited.

Based on public information, the company actively engages in lobbying activities and these activities are regulated by the Policy Committee of the Board. Details of the company’s lobbying activities are publicly available through the Lobbying Disclosure Act Report online.

Based on public information, there is evidence that the company makes charitable contributions through the ‘Contributions Program’. The company also discloses detailed information about charitable contributions in its 2013 Corporate Responsibility Report.

Based on public information, there is evidence that the company provides written guidance to clarify and elaborate on its ethics and anti-corruption policies. These documents are publicly available in a number of foreign languages and they include illustrative scenarios and examples.

Based on public information, there is evidence that ethics and compliance training is provided globally to Northrop Grumman employees. The 2013 Corporate Responsibility Report notes that “more than 99%” of the company’s global workforce was trained in 2013.

Based on public information, there is no readily available evidence that targeted training is provided to Board members, or that training is refreshed regularly.

Based on public information, there is evidence that training for employees is tailored to their roles, responsibilities and associated risks. Business conduct officers, who are responsible for implementing the company’s ethics and anti-corruption policies, attend annual workshops which include sharing best practices, program updates, compliance and skill training and networking. Furthermore, the company holds monthly webinars to ensure that business conduct officers are knowledgeable on key topics.

Based on public information, all employees are required to disclose potential conflicts of interests on an annual basis. The designated disclosure form and associated conflict of interest notice provide clarification on potential conflicts of interest and confirm that these policies apply to board members as well as employees. However, TI notes that the disclosure form is submitted to ‘immediate management’, rather than an independent department. The company therefore scores 1.

Based on public information, there is evidence that the company explicitly states that it will apply disciplinary procedures to employees, Directors and Board members that violate its ethics and compliance policies.

Based on public information, there is evidence that the company provides multiple different channels for reporting suspected corrupt activity, as well as clear and appropriate reporting lines. Internal reporting includes local Business Conduct Officers, legal counsel, and human resources. In addition, employees can file anonymous reports via OpenLine.

Based on public information, there is evidence that employees from all geographies have access to multiple reporting and whistleblowing channels. Employees can raise concerns with their manager, local Business Conduct Officer, legal counsel, or human resources. In theory, employees can raise concerns via telephone (OpenLine) or online (ethicspoint). TI notes the ethicspoint website currently indicates that the company is not accepting reports from International employees through the OpenLine system.

Based on public information, there is evidence of a range of practices to ensure that whistleblowing is supported. In 2012, the company participated in the Defense Industry Benchmark survey, which indicated that fewer employees were observing misconduct and those who did were more likely to report actions. Employees also appeared to have gained confidence in reporting processes and reported less fear of retaliation. Usage of the OpenLine system is monitored and data is published in the internal employee ethics newsletter. Data relating to reports, investigations and outcomes from OpenLine is also published in the Corporate Responsibility Report. However, this data is limited to the OpenLine system and, as previously mentioned, this facility is not available to international employees.

Based on public information, there is evidence that employees have access to resources such as trained Business Conduct Officers, legal counsel, and telephone and online helplines (Openline), to provide them with guidance on anti-corruption policy.

Based on public information, there is evidence of a clear, enforceable, non-retaliation policy for bona fide reporting of corruption. However, the evidence that disciplinary measures are applied to employees who breach this policy is not assessed to be explicit in relation to the non-retaliation commitment. The company therefore scores 1.