?>

Navy Continues LCS Production with Orders for Both Teams

Earlier 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 LCS is a new small warship that will be the a largest class of ships built over the next few decades for the Navy.

Two teams one lead by Lockheed Martin (LMT) and the other by Austal America (ASB:AUS) are building the ships. Lockheed uses the Wisconsin based Marinette Marine as their shipbuilder and Austal utilizes their yard in Mobile, AL. Each team had orders for two but the new contracts increased that to up to 12.

Now the Navy is allocating funding for the ships under these contracts with Lockheed and Marinette receiving a contract for the second ship of their order of ten, LCS 7, which will be named the U.S.S. Detroit. The ships are expected to cost upwards of $400 million when completed but the contract is for about $375 million. The Navy had previously ordered LCS 5, the U.S.S. Milwaukee.

Austal has completed U.S.S. Independence (LCS 2) and is building the U.S.S. Coronado (LCS 4). They received an order for a further LCS at the same time Lockheed did which is worth about $368 million. This should be for LCS 8 but no name or number was given.

The subsidiary of the Australian maker of high speed ferries and other ships had earlier received a contract for engineering support worth about $20 million while Lockheed received one as well worth a little more.

The Navy had originally planned to use multiple sources for the LCS due to the need for the rapid construction of so many ships. This acquisition strategy went through some changes with at one point the Service planning a single source for the second batch after the delivery of the first four ships. Due to the competitive bids received from Lockheed and Austal the Navy asked Congress for permission to use two sources which was approved late last year. This led to the similar contracts for ten ships each.

The Navy has had plans to build upwards of fifty of the ships which while they have dissimilar hull designs carry the same basic payload of weapons and sensors. The ships will conduct a variety of missions including patrol, anti-submarine warfare and mine warfare.

Photo from uscgantareapa flickr photostream.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

LCS Spin Off Contracts Begin to be Awarded

At the end of last year the U.S. Navy announced that it would go ahead and use two sources for the new Littoral Combat Ship (LCS). This was a reversion to the original plan for the small warship designed to fight inshore. Contracts were quickly awarded to Lockheed Martin (LMT) and Austal America (ASB:AUS) for ten ships each.

Now a variety of support and sub-contracts are beginning to be announced by suppliers for components to help assemble the new ships. While the two designs have very different hull forms the basic combat systems and weapons will be the same.

BAE Systems (BAE:LSE) has announced that they will fabricate 57-millimeter cannons for the Lockheed ships. These guns will be made at their plant in Minnesota. This is part of Lockheed’s almost $4 billion order for ships.

General Dynamics (GD) received a contract from Austal to build their ship’s combat and seaframe control systems. This is an open architecture system that supports the Navy’s plan to have different combat modules that are interchangeable on the ships.

One of the companies that may stand to gain the most from the contracts is Alcoa (AA). They not only provide engineering support to the Navy for the use of aluminum and other metals in ship construction including the LCS but also make the metal that Austal will use to assemble their LCS in Mobile, AL. If the Navy builds upwards of thirty or forty ships the amount of aluminum required will be quite substantial.

Lockheed also has awarded Rolls-Royce (RR:LSE) a contract for the power plants and propulsion systems. The Lockheed ships will be built at Marinette Marine’s yard in Wisconsin. Rolls-Royce makes the MT30 gas turbine which then uses water jets to propel the LCS.

As the two LCS programs continue more-and-more of these large sub-contracts will be announced as the money and work flows to different parts of the United States and many different companies. This continues to illustrate the economic effects of large defense procurement programs.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Navy Changes LCS Aquisition Strategy Again Orders for GD and Lockheed

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.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

>