LCS contract awarded to Lockheed Martin

31 Dec 2010
The first Lockheed Martin LCS vessel ‘Freedom’ was delivered in 2008

The first Lockheed Martin LCS vessel ‘Freedom’ was delivered in 2008

The US Navy has awarded Lockheed Martin Corp. a fixed-price incentive contract for the design and construction of 10 littoral combat ships (LCS) from fiscal 2010 through fiscal 2015.

This is in addition to the 10-ship LCS contract awarded to Austal USA announced yesterday. The amount awarded to Lockheed Martin for the fiscal 2010 littoral combat ships is $437 million while the amount awarded to Austal USA for the fiscal 2010 littoral combat ships is $432 million.

Both contracts also include line items for nine additional ships, subject to Congressional appropriation of each year’s LCS program requirements. When all 10 ships of each block buy are awarded, the value of the ship construction portion of the two contracts would be $3.62 billion for Lockheed Martin and $3.52 billion for Austal USA. The LCS program provides for the construction of a total of 55 ships within 2020, for a value of over $20 billion.

In partnership with Lockheed Martin, the ships will be built at Fincantieri’s Marine Group of Marinette Marine shipyard in Wisconsin where the company already built the first LCS ship, the Freedom, since 2008 in service with the US Navy. The yard is currently building the Fort Worth, which was launched 4 December and will be delivered to the Navy within 2012.

This award is a unique opportunity to maximize the buying power on the LCS program by leveraging the highly effective competition between the bidders. Each contractor’s 10-ship bids reflect mature designs, investments made to improve performance, stable production, and continuous labour learning at their respective shipyards. The award was based on limited competition between teams led by Lockheed Martin and Austal USA. Under these contracts, both shipbuilders will also deliver a technical data package as part of the dual award, allowing the government a wide range of viable alternatives for effective future competition.

This approach, which is self-financed within the program by adding a year to the procurement and utilizing a portion of the greater than $2 billion total savings (throughout the future years defence program), enables the navy to efficiently produce these ships at an increased rate and meet operational requirements sooner.

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