U.S. Navy Extends LCS Bids While Waiting on Congress

by: Matthew Potter
December 14, 2010

Category: Austal, Business Line, Companies, Congress, development program, Events, Federal Budget Process, General Dynamics, Lockheed Martin, production program, Proposal, Restructuring, Services, U.S. Navy | RSS 2.0

The U.S. Navy asked the two bidding teams for the new Littoral Combat Ship (LCS) contract to extend their prices until December 30 while they wait for Congress’ decision on whether two different contracts may be awarded. The original prices on the bids from Lockheed Martin (LMT) and Austal America (ASB:AU) were set to expire today but the Navy asked Congress to consider a change in the acquisition strategy from one to two sources.

As it is in their best interest to allow the Navy more time for this the two contractors agreed. The House of Representatives has already approved the move but the Senate must also.

The Navy recently decided 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 ships that it was felt that the rapid acquisition of the ships justified using two different builders.

At the start of the program the Navy intended to use ships from Lockheed and General Dynamics (GD) teamed with Austal to rapidly build dozens of the ships. In 2009 it was decided that the next contract would go to one contractor and then have follow on batches separately competed. Each of the original teams built two ships but cost increases and schedule delays led to rethinking that strategy.

The advantage gained by having more ships built quicker while keeping the U.S. industrial base busy in case of future demands may be worth the extra money the dual providers may require.

Since both designs carry almost identical weapon and sensor suites their capabilities are broadly similar the difference is in their hull designs. Lockheed is using a conventional shaped hull while Austal designed a trimaran based on their high speed ferries.

The Navy’s request for the price extension indicates that they support the two source program. If Congress does fail to act though there will be a return to the plan to order the next ships from one of the two bidders.

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