* Huntington wins $3.3 bln order for 5 ships
* General Dynamics to build 4 ships for $2.8 bln, gets
option for 5th
* Huntington to earn 14 percent profit on order
By Andrea Shalal-Esa
WASHINGTON, June 3 Huntington Ingalls Industries
Inc beat out General Dynamics Corp for a larger
share of a $6.1 billion U.S. Navy order for nine new DDG 51
destroyers, scoring a $3.33 billion deal for five ships that
carries a 14 percent profit.
The Defense Department and the Navy announced the 10-year
contract with Huntington Ingalls, and a separate $2.84 billion
deal with General Dynamics for four new warships, after the
close of business on Monday.
General Dynamics also got an option for an additional ship,
which would bring the value of the company's contract to $3.53
billion, if exercised, the Defense Department said.
The Navy said it planned to buy the 10th ship as part of its
spending plan for fiscal years 2013 through 2017, but needed to
resolve funding shortfalls resulting from mandatory
across-the-board spending cuts before signing that deal.
The Navy said the competition generated estimated savings of
$1.5 billion, while allowing the companies and their suppliers
to plan more efficiently for future work.
The two companies are the only makers of the Navy's DDG 51
The Navy has used a competitive strategy to buy DDG 51
destroyers since 1996 that gives the winning bidder a higher
profit margin on the ships.
In this case, Huntington Ingalls would earn a profit of 14
percent on the contract, said Navy spokesman Chris Johnson. He
had no immediate details on the profit to be earned by General
Dynamics, which won the upper hand in the previous competition.
The Navy said Huntington Ingalls' contract included options
for engineering change proposals and other items that would
bring the value of the contract to $3.38 billion, if exercised.
Huntington Ingalls said the contract would allow it to build
ships more efficiently by buying bulk material and moving the
skilled workforce from ship to ship.
Huntington Ingalls, which was spun off by Northrop Grumman
Corp in 2011, has built 28 DDG 51 destroyers for the
Navy to date, and has two more under construction. It will build
the new ships at its shipyard in Pascagoula, Mississippi, which
was damaged by Hurricane Katrina in 2005.