U.S. Navy Picks Lockheed Martin, Austal for 10-Ship Orders

Dec. 31, 2010
Littoral Combat Ship assignments could approach $10 billion if fully optioned

The U.S. Navy has placed orders with Lockheed Martin and Austal USA, assigning each to build up to 10 Littoral Combat Ships (LCS) according to fixed-price-incentive-fee contracts that run through 2015. The full value of the contract placements would approach $10 billion if fully optioned.

Lockheed is a consortium leader for its part of the project. Marinette Marine Corp. will build the ships in Marinette, Wis., and naval architect Gibbs & Cox will perform engineering and design support. Lockheed indicates the value of the first ship is $437 million.

Austal USA is the domestic subsidiary of Australian shipbuilder Austal Ltd. It reports the value of the first ship to be delivered through its 10-ship contract is $432.1 million. It indicated the construction work will begin immediately, including a 12-month, $140 million facility expansion and workforce development program at its Mobile, Ala., shipyard. Austal USA indicated it would more than double its workforce to around 3,800 employees.

The LCS program began in 2002 to establish a series of 55 ships capable of “multi-mission support,” including combat, in littoral zones (i.e., near to shore.)

“The Lockheed Martin team’s Littoral Combat Ship is designed to confront rapidly changing global threats while providing a cost-effective solution in an era of tight budgets,” stated Lockheed Martin Chairman and CEO Bob Stevens. “This team’s strong performance will enable the Navy to deploy a class of affordable, multi-mission combatants to address the nation’s needs for decades to come.”

Lockheed Martin designed and constructed the nation’s first LCS, USS Freedom, which was commissioned in 2008, and the third LCS is 80% complete and on target for commissioning in 2012.

Austal has the second LCS, the USS Coronado, under construction. Austal Ltd. chairman John Rothwell called the new 10-ship contract is a significant milestone for the company. “This contract has firmly established Austal as an international defense shipbuilder, is a strong vote of confidence in Austal’s aluminum trimaran LCS design, and also reflects the strength and capability of our USA operations and highly skilled workforce,” Rothwell stated.

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