Lockheed, Austal win U.S. coastal warship orders: Pentagon

WASHINGTON Mon Mar 4, 2013 9:07pm EST

The littoral combat ship USS Freedom (LCS 1) departs for a deployment to the Asia-Pacific region, in San Diego Bay, California, March 1, 2013. REUTERS/ U.S. Navy/Mass Communication Specialist 3rd Class Christine Walker-Singh/Handout

The littoral combat ship USS Freedom (LCS 1) departs for a deployment to the Asia-Pacific region, in San Diego Bay, California, March 1, 2013.

Credit: Reuters/ U.S. Navy/Mass Communication Specialist 3rd Class Christine Walker-Singh/Handout

WASHINGTON (Reuters) - Lockheed Martin Corp (LMT.N) and Australia's Austal (ASB.AX) each won orders to build two more smaller warships for the U.S. Navy, while Lockheed beat out two rivals to remain the chief developer of the Aegis combat system, the Pentagon said Monday.

Lockheed won an order valued at $697 million to build two more of its steel monohull Littoral Combat Ships (LCS) for the Navy using fiscal 2013 funding, the Defense Department said in its daily digest of large weapons contracts. It said work on the two new Lockheed ships would be completed by July 2018.

The U.S. unit of Austal received a contract valued at $682 million to build two more LCS ships based on its aluminum-hulled, trimaran design for LCS ships for the Navy, with the work slated to be finished by June 2018, the Pentagon said.

Navy acquisition chief Sean Stackley said the strategy of buying the new LCS ships in blocks was translating into "tremendous savings."

"One of our imperatives in dealing with this fiscal crisis is to execute our programs as effectively as possible," Stackley said in a statement. "This (latest contract action) again demonstrates our efforts to bring stability to industry, from the shipyards to the small businesses that support these ships' construction, in a period of great uncertainty."

The first LCS ship built by Lockheed, the USS Freedom, began its voyage last Friday to Singapore, where it will be based for some time.

Austal said the contract funded the fifth and sixth ships in a 10-ship block buy awarded to Austal in December 2010. The overall value of the 10-ship block was over $3.5 billion, it said.

Separately, the Pentagon announced that Lockheed beat out a rival team including Raytheon Co (RTN.N) and Boeing Co (BA.N) to retain its role as chief developer of the Aegis combat system for use on Navy destroyers, cruises and future warships.

It said Lockheed won a five-year contract with an initial value of $101 million, to be the chief engineer for the design, development, integration, test and delivery of the next generation of the Aegis combat system, which was developed by Lockheed and the Navy and first went into service in 1983.

The Navy had sought to inject competition into the Aegis program by opening the contract, valued by analysts at several hundred million dollars over time, to competition for the first time in 40 years.

Lockheed's top executive for the Aegis program told reporters the company was "thrilled with the news that we get to continue on in this role," calling it a "franchise program" for the Pentagon's biggest supplier.

Jim Sheridan, director of Aegis programs for Lockheed, said the company won the contract by showing the Navy that it would "continue to push the envelope with respect to capability, but doing so affordably in a fiscally responsibly manner."

Navy Rear Admiral Joe Horn, program executive officer for integrated weapons systems, said the contract underscored the Navy's commitment to competition.

"By openly competing the Aegis ... contract, the Navy will benefit from improved systems at a lower cost, which is absolutely critical in light of our budget challenges," Horn said in a statement.

Sheridan said the contract would be allowed to proceed, despite a U.S. congressional budget resolution that bans new programs, because it continued ongoing efforts on the Aegis program and did not constitute a new program.

(Reporting By Andrea Shalal-Esa; Editing by Stephen Coates)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (3)
fingerlakes54 wrote:
Aluminum Hull??? The Brit’s lost 3 Destroyers in the Falklands war in 1982. They were made of Aluminum. After the war the Brits started removing aluminum from their warships because it burns at intense heat. The USA which had started building ships with an aluminum superstructures had to recall them in and replaced the Aluminum which would make the ships more survivable and save lives it attacked. Has everyone retired that knew of this danger to our ships and sailors? A monohull? Well that makes it easy for our enemies–just one hull to punch a hole in and sink the vessel. Great work Lockheed–you got everything wrong. And you want money for this? I say lets just pass the hat around

Mar 04, 2013 11:13pm EST  --  Report as abuse
MichaelWorld wrote:
is our gov exporting our job again? Australia company … unbelievable.

Mar 05, 2013 2:05am EST  --  Report as abuse
Get your facts straight fingerlakes. Lockheed builds the steel hull, Austal builds the aluminum hull.

Mar 05, 2013 7:43am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.