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Navy Changes LCS Aquisition Strategy Again Orders for GD and Lockheed

November 5, 2010 by
Filed under: Austal, Business Line, Companies, Congress, Contract Awards, Department of Defense, development program, Events, General Dynamics, Lockheed Martin, Marinette Marine, production program, Proposal, Restructuring, Services, U.S. Navy 

The Littoral Combat Ship (LCS) will be the next mass produced small warship for the U.S. Navy. As it names implies it is designed to operate close to a coast conducting patrol and combat missions. The Navy originally planned when the program began to buy fifty-five of the ships. In order to meet the production goals a novel acquisition strategy for the program was chosen with two different ships built to the same requirements being designed and ordered.

General Dynamics (GD) and Lockheed Martin (LMT) teamed with small shipyards were both given contracts for two ships. The two designs were not much alike with GD and Austal USA using a ship based on Austal’s fast multi-hull ferry designs built in Mobile, AL to deliver USS Independence (LCS-2). Lockheed and Marinette Marine of Wisconsin built a more traditional looking ship the USS Freedom (LCS-1).

Due to schedule delays and the delivery being more complicated then originally planned both teams faced cost growth. Due to this the Navy in late 2009 changed plans and decided to cancel the program and start over with a new competition. Because money had already been spent on LCS-3, the USS Fort Worth, Lockheed was allowed to complete the ship. It was decided to have one contest with a winner being announced this Fall and allow them to build ten ships. In 2015 another contest would be held to choose a builder for the next batch.

This week though the Navy said that the prices submitted by both teams for the competition were so good that they want to change acquisition strategy yet again to buy from both bidders. Obviously this is good news for Austal USA and Marinette and their bigger partners as they may each now get ten ships apiece to build.

This plan makes much more sense and is consistent with the original plan and will allow the LCS to enter service much more quickly in large numbers. It is based though on the bidders meeting their price quotes and this is where Congress may have second thoughts about it. They will be committing to buying a large number of ships at prices that based on the experience of the first three might be too low. This would mean that more money would have to be provided later on or quantities reduced.

There is every reason to think that the two teams can deliver on the prices they bid. They have had experience building ships and their supply chains are established giving good insight into costs. Congress might protest as their will be desire by the respective delegations to give as much work as possible to the shipbuilder in their state.

An interesting turn in the LCS program that will be the future of Navy surface warships for the next few decades as well as affecting revenue and earnings for the companies involved.

Photo from uscglantareapa flickr photostream.

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Comments

One Response to “Navy Changes LCS Aquisition Strategy Again Orders for GD and Lockheed”

  1. U.S. Navy Extends LCS Bids While Waiting on Congress | Defense Procurement News on December 14th, 2010 2:01 am

    [...] after reviewing the proposals from the two bidders that it was in their best interest to return to the original acquisition strategy of using two sources for the new light warship. The prices offered were so good especially compared to the original four [...]

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