UPDATE 2-General Dynamics wins $212 mln deal for U.S. destroyer deckhouse

Fri Aug 2, 2013 7:02pm EDT

* Contract also covers missile launch system

* General Dynamics beat out Huntington Ingalls

* Contract runs through December 2016

WASHINGTON, Aug 2 (Reuters) - U.S. military shipbuilder General Dynamics Corp has won a contract valued at $212 million to design and construct a new steel deckhouse for the third Zumwalt-class destroyer it is building in Bath, Maine, the Pentagon said on Friday.

The fixed-price contract, which carries an incentive fee, also covers construction of a new aft peripheral launch system to launch missiles from the ship.

The contract runs through December 2016, the Pentagon said in its daily digest of major weapons deals.

Chris Johnson, spokesman for Naval Sea Systems Command, said the Navy initially planned to buy a composite deckhouse and the missile launch system for the ship from Huntington Ingalls Industries Inc. But it decided to launch a new limited competition after failing to reach agreement after a year of negotiations with Huntington Ingalls.

Ultimately, he said, Navy officials chose a cheaper offer submitted by General Dynamics for a steel deckhouse after concluding it would not compromise the weight and stealth requirements for the ship, Johnson said.

In a statement, the Navy said work was progressing well on all three Zumwalt class destroyers that General Dynamics is building for the Navy. The new class of destroyers will provide advanced land attack capability in possible future wars.

Work on the first destroyer, DDG 1000 is due to be completed in fiscal 2014, with the second ship to follow in fiscal 2016 and the third in fiscal 2018.

The Navy awarded General Dynamics a $1.826 billion contract for construction of the last two ships in September 2011.

Huntington Ingalls said it was disappointed but remained committed to working closely with the Navy to complete its work on the second destroyer by the first quarter of 2014.

"Ingallls Shipbuilding continues to perform well in building the composite products for the DDG 1000 program. We demonstrated considerable improvement from the first set of class products to the second set and we are confident this trend would have continued on DDG 1002," said Beci Brenton, a spokeswoman for the shipbuilder.