Austal sees design edge in U.S. Navy bid

WASHINGTON (Reuters) - Australia's Austal (ASB.AX) said the bigger size and better fuel efficiency of its aluminum trimaran design should give it a competitive edge in a U.S. Navy coastal warship competition worth over $5 billion.

"Size should matter," Austal USA President Joseph Rella, the company's top U.S. executive, told the Reuters Aerospace and Defense Summit on Tuesday. "If I can get a bigger ship that burns less fuel, that would be pretty easy decision to make."

The Navy eventually plans to buy 55 of the new shore-hugging warships to carry out a variety of missions, including sweeping for mines, chasing pirates and fighting submarines.

The winner of the current competition will eventually vie for the remaining ship orders against a second shipbuilder to be chosen in a separate Navy competition later this decade.

Austal would hire 1,200 additional workers if it beats Lockheed Martin Corp (LMT.N) to win the Navy's Littoral Combat Ship (LCS) 10-ship competition, on top of 800 workers already added this year, Rella told the Reuters session.

Austal, prime contractor for the Navy's lighter and smaller Joint High Speed Vessel, should be able to maintain its current workforce of around 1,800, even if it loses the competition, he said.

He said Austal's new role as prime contractor on the LCS warship program had resulted in pricing advantages for the current proposal that he described as "gains of merit."

Austal is now leading the team bidding for the work, while the former prime, General Dynamics Corp (GD.N), is a subcontractor supplying the combat mission package.

Rella declined to say how much overhead Austal had been able to save, since the competition is still ongoing, but said there were clearly savings.

He said the company's new shipyard in Mobile, Alabama, which is based on modular manufacturing techniques, would also help produce its ships more efficiently.

Both companies are due to submit revamped final bids by September 15, and the Navy has told the contractors it plans to pick a winner by November 1, Rella said.

The Navy last month said it would miss its summer target for awarding the contract, but still expected to announce a winner by the end of the year.

Rella said the delay had forced Austal to recalculate the cost of its offering, particularly on several time-sensitive items and the impact of inflation. He declined to give details, saying only, "It has an impact that must be contemplated."

Rella said he thought the Navy's decision to ask for more information from the bidders reflected its desire to bullet-proof the contract award against a possible protest.

Austal would carefully study its options if it lost the contract to determine if a protest was warranted, Rella said, adding that it was a common practice now to pre-position lawyers for either filing a protest or defending against one.

(Reporting by Andrea Shalal-Esa and Jim Wolf; Editing by Tim Dobbyn)