Even as Johnstown’s business community celebrates Friday’s announcements of $110 million in federal contracts and dozens of new jobs, developments in Washington threaten a program envisioned to create 150 jobs.

The Missile Defense Agency on May 11 issued a stop-work order on Northrop Grumman’s $4 billion contract for a missile-defense weapon.

The entire Kinetic Energy Interceptor program was cut from President Barack Obama’s 2009-2010 defense budget.

Kinetic Energy Interceptors, or KEIs, are supposed to hit nuclear missiles shortly after launch, while they are still in their “boost” stage, Northrop Grumman spokesman Brandon Belote III said.

“We had a program that was doing well,” Belote said last week during Showcase for Commerce in Johnstown. “This is one of the layers in our layered missile defense. It is clearly a part of national security.”

The stop-work order threatens 10 jobs at Northrop Grumman’s Greater Johnstown Technology Park facility. More significantly, it will severely impact the company’s planned growth in Johnstown.

At full capacity, the Kinetic Energy Interceptor project would employ 150 people here, Belote said.

“We had great plans for this program,” Belote said.

Ten jobs would be a severe cut into Northrop Grumman’s 56-employee Johnstown work force, but would not close the new Tech Park location, Belote said. Other programs here expand the defense contractor’s reach into civilian markets, including health care. All those programs are expected to grow.

Although Northrop Grumman acknowledges the KEI project had some problems in earlier tests, the company thought the issues had been addressed. The first test launch was scheduled for September.

“They killed the program before they completed the test,” Belote said. “They didn’t feel the program was moving fast enough.”

But the controversial missile defense project has strong support in Congress, said Matthew Mazonkey, spokesman for Rep. John Murtha, D-Johnstown, chairman of the defense appropriations subcommittee.

In a hearing May 20 before Murtha’s committee, Rep. Jerry Lewis, R-Calif., grilled Defense Secretary Robert M. Gates about the administration’s decision to kill the project.

“Six years of development and testing, with most of the more than $1 billion of funding spent to date, was to culminate in the first booster flight in the fall of ’09,” Lewis said. “With the issuance of the stop-work order, the department is walking away from this investment without benefit of knowing what the technology has to offer.”

There are funds available in the 2009 budget to complete the test, Lewis continued.

“Why would the department kill a program four months before its booster flight?” he demanded. “Why not allow the program to execute the (fiscal-year) ’09 funds?”

The Kinetic Interceptor Program was on its way out before Obama took office, Gates told the subcommittee.

Besides the slow-developing technology, Missile Defense Agency leaders saw deployment logistics issues, he said.

“A big part of the problem with this program is that it needs to be close to the launch site to be able to be effective,” Gates said. “The only potential country where it could have a role with some confidence would be North Korea. It has poor capability against Iran and virtually no capability against either Russia or Chinese launch facilities. And so you have a very limited capability here at considerable cost.”

Ironically, North Korea conducted an underground nuclear test and launched two test missiles in the week following Gates’ testimony.

Northrop Grumman may still get its chance to show the KEI system’s progress. Testifying before the House armed services subcommittee on strategic forces, Brig. Gen. Patrick J. O’Reilly, deputy director of the missile defense agency, said his agency will consider a proposal.

“The contractor has indicated they can complete their flight test by the end of September 2009 in a manner that accommodates our legal liabilities for program termination, and we will assess their proposal,” O’Reilly testified. “If their proposal is valid, we will modify the stop-work to allow the flight test in September.”

“That is what we are waiting on now,” spokesman Richard Lehner said from Missile Defense Agency headquarters in Washington. “We’ll see how much it costs and how much we’ll get out of it.”

It is only fair to go through with the test launch, Belote argued.

“At least let’s get through the test,” Belote said. “Then we can make the decision based on real data and analysis. Unless you meet the test milestones, how do you know if you are achieving the project’s goals?”