Pentagon says Navy ships meeting likely this week

WASHINGTON Mon Nov 1, 2010 7:45pm EDT

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WASHINGTON (Reuters) - Top U.S. defense officials will meet soon, possibly this week, to review the Navy's new Littoral Combat Ship program for a new class of warships that operate close to shore, a spokeswoman said.

The meeting of the Pentagon's high-level Defense Acquisition Board, which has been postponed several times, should pave the way for the Navy to award a contract valued at over $5 billion for the modular warships, according to industry executives and Navy officials.

Lockheed Martin Corp and Australia's Austal are locked in a close competition for a contract to build 10 of the new warships and supply combat systems for five more. Lockheed is offering a more traditional steel monohull design, while Austal, teamed with General Dynamics Corp, is offering an aluminum trimaran.

Pentagon spokeswoman Cheryl Irwin gave no specific date, but said a meeting was expected "probably the first week of November."

Navy, Lockheed and Austal officials declined to comment.

Industry executives, who were not authorized to speak on the record, said they believed the meeting would occur on November 4, but these dates often changed, even at the last minute.

The Navy had hoped to pick the winning bidder this summer, but the award date has repeatedly been postponed.

Defense officials said the Navy could proceed with a contract award once Pentagon acquisition chief Ashton Carter signed a memorandum approving the program's next phase after the Defense Acquisition Board meeting.

Virginia-based defense consultant Jim McAleese said it was critical for the Navy to award a contract soon, given mounting budget pressures.

"Every day that they're delaying, there is increasing budget pressure which could erode the probability that the Navy will ever be able to buy all 55 ships planned," McAleese said.

The Navy plans to buy 55 of the fast, agile ships that can be reconfigured within a day to carry out a variety of missions such as fighting pirates or sweeping for mines, as a key part of its drive to expand the naval fleet to 313 ships.

But lawmakers and watchdog groups say they are skeptical that all those ships will ultimately be bought, given heavy cost growth on the program in the past, and warnings of possible further increases in the future.

Admiral Jonathan Greenert, vice chief of naval operations, told reporters on Monday that he hoped a contract could be signed before the end of the year. He said the Navy was pleased with the performance of both the Lockheed and Austal designs.

The second of the prototype steel hull ships built by Lockheed is due to be christened at the Marinette Marine shipyard in Wisconsin on December 4.

(Reporting by Andrea Shalal-Esa; Editing by Gerald E. McCormick and Richard Chang)

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