The U.S. Navy gave itself along with Lockheed Martin and Austal USA a last minute holiday gift today, giving both companies contracts to build 10 of their respective Littoral Combat Ships.
The service is kicking off the dual buy with a $430 million, fixed-price contract to each company to build one apiece of their ships, followed by an option for both firms to build nine more ships through 2015 for a total of roughly $7.1 billion, according to a Navy announcement. Congress must appropriate cash for the remaining nine ships in each of those five years.
The Navy predicts each ship will cost an average of $440 million.
The sea service revealed its hopes to buy both classes of LCS last month, claiming that competition between Lockheed and Austal had resulted in both company's bids being far lower than what the Navy had expected. Navy officials insist that the split buy will save $2.9 billion over the next five years and allow for the purchase of 10 ships from each class versus 19 of a single class as previously planned.
Money saved by the dual-buy will now be redirected into other shipbuilding programs, according to the Navy.
Service officials insisted they needed Congressional approval for the deal before Dec. 31, otherwise, they would have to move ahead with the original plan to award a sole source contract for 19 ships.
Congress gave the Navy the green light to buy both classes of LCS so last week, despite the objections of Arizona Sen. John McCain who recently called the once-troubled LCS program an embarrassment and urged his fellow lawmakers to study the Navy's proposal for several more months.
As part of the contract, both teams will give the Navy a "technical data package" about their designs. This will let the Navy start a new round of competition to build the remainder of the planned 55 ship program after 2015.
A Lockheed official downplayed concerns over the fact that the two classes of ships have unique combat systems, which could lead to incrased costs should the Navy someday decide to install a common combat suite on both classes.
Paul Lemmo, vice president of Lockheed's mission systems and sensors division told reporters during a Dec. 29 teleconference that the Lockheed ships come with the same command and control suite found on the sea service's Aegis-equipped cruisers and destroyers.
"Certainly, for our part, we believe that we've offered a very cost effective solution from a combat systems standpoint," said Lemmo.
Still, "we follow the Navy's lead and if they would like us to move down that path we'd certainly be open to that," said Lemmo, referring to the idea of building a common combat suite for the two ships.
Lockheed expects to begin work on the ship awarded under today's contract in June 2011, with its keel being laid six months later. The company expects a contract for the next ship after that to come in the "first half of 2011," with construction starting six months later, said Joe North, director of Lockheed's LCS program during the same teleconference as Lemmo.