UPDATE 1-US Navy sees ship contract by early August

* Expects to execute contracts within budget

* Companies offered "very competitive pricing" (Adds details, byline)

By Andrea Shalal-Esa

WASHINGTON, June 10 (Reuters) - The U.S. Navy expects to award a contract for 10 new littoral combat ships by the end of July or early August, and should be able to meet its budget goals for the program, a top Navy official said on Thursday.

Dub Summerall, executive director of combatants for the U.S. Navy's program executive office in charge of ships, told a conference that the two teams bidding to build the 10 ships, and combat systems for five additional ships, submitted "very competitive pricing" with their offers in April.

Summerall declined to make a detailed comment on competing bids by Lockheed Martin Corp (LMT.N) and the U.S. unit of Australia's Austal Ltd (ASB.AX), which is teamed with General Dynamics Corp (GD.N) for a deal valued at well over $5 billion to build more fast, agile coastal warships for the Navy.

Affordability is critical to the future of the warships, which are designed to fight pirates, chase drug-runners, and sweep for mines in shallow coastal waters. The Navy plans to buy 55 of the ships overall, a key part of its plan to increase the number of ships in the fleet to 313 ships over time.

Summerall said both competitors' ships would meet the Navy's needs and he was confident that the Navy would execute the contracts within the five-year plan for the program that was submitted to Congress with the fiscal 2011 budget request, despite big cost increases while the ships were still in development.

"We can get very competitive pricing," Summerall told a conference hosted by Swiss bank Credit Suisse and Virginia-based defense consultant Jim McAleese.

Lockheed is offering a steel single-hull design, being built in Wisconsin by Marinette Marine, a unit of Italy's Fincantieri. The Mobile, Alabama-based U.S. unit of Austal is offering the Navy an aluminum trimaran design.

Summerall said the Navy is in discussions with both teams, and Navy officials are carefully evaluating the bids before making a decision later this summer.

He underscored the Navy's determination to cut shipbuilding costs so the Navy could buy the number of ships currently in the plan, adding: "We take this very seriously."

The Navy has said it expects to award a single winner a fixed-price contract for 10 Littoral Combat Ships, buying two in the 2010 fiscal year 2010 that ends Sept. 30, with the rest to follow through fiscal 2014. (Reporting by Andrea Shalal-Esa, editing by Gerald E. McCormick)