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Navy Wastes No Time and Gives New LCS Contracts to Lockheed, Austal

With the split buy acquisition strategy approved by Congress the U.S. Navy wasted no time and ordered up to twenty more of the Littoral Combat Ships (LCS) from its two suppliers.

This week both the teams led by Lockheed Martin (LMT) and Austal America (ASB:AUS) received contracts for one ship plus up to nine more options. As Congress allowed the Navy went out and bought up to twenty ships. Each contract is worth between $460 and $500 million for the first ships. If all twenty are built the two teams will received close to $5 billion each.

While each team is building a dissimilar hull shape the two designs carry similar weapon loads. Lockheed is partnered with Marinette Marine’s yard in Wisconsin. Austal America is building their ships at their facility in Mobile, AL. The ships are designed to be built at smaller yards allowing more rapid construction.

So far the Navy has received three LCS ships. USS Freedom (LCS 1) and USS Fort Worth (LCS 3) were built by Lockheed Martin and USS Independence (LCS 2) by Austal America. The USS Coronado (LCS 4) is under construction in Mobile and is expected to be commissioned in 2012.

If all twenty ships are ordered and delivered under these contracts the LCS class will quickly become one of the largest in the current Navy. Ultimately up to fifty or more of the LCS could be acquired.

The decision to allow the split contracts in line with the original acquisition strategy for the ship rather then just using one source as the Navy had proposed when it restructured the program in 2009 is a boon to Austal and Marinette. Both companies had been planning layoffs and restructuring if they had not one the contract. Now they both will have to ramp up their capabilities to support the Navy’s program.

Photo from avhell’s flickr photostream.

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2 Responses to “Navy Wastes No Time and Gives New LCS Contracts to Lockheed, Austal”

  1. Navy Continues LCS Production with Orders for Both Teams | Defense Procurement News on March 21st, 2011 2:43 am

    […] this year the U.S. Navy had gone ahead and awarded contracts to the two builders of the Littoral Combat Ships (LCS) for up to ten ships of their designs. The […]

  2. Navy Goes International for LCS Radar | Defense Procurement News on September 21st, 2011 2:22 am

    […] last year the Navy gave contracts for ten ships each to the two […]

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