Navy seeks to split next littoral ship contracts

The Navy wants to abandon its winner-take-all approach for the next 10 Littoral Combat Ships and instead award contracts for 10 warships apiece to the two competitors, Lockheed Martin Corp. and Austal USA.

But to change its approach, the Navy needs congressional authorization by mid-December, when the firms' current proposals for the lucrative shipbuilding contract expire.

Under original plans for the program, Lockheed and Austal had been expected to continue ship construction through at least fiscal 2011. Each has been building ships based on different designs at different shipyards, with Lockheed Martin using a yard in Marinette, Wis., and Austal doing the work in Mobile, Ala.

But after LCS costs more than doubled since its inception less than a decade ago, the Navy last year decided on a radical revamping of its plan to get the high-profile program back on track.

The Navy's revised plan, announced in 2009, was to inject competition in the program by requiring both teams to compete for the $5 billion contract for the next 10 ships. In fiscal 2012, the Navy said it would choose a second shipbuilder to build five more ships of the same design. After the first 15 ships, the shipbuilders would continue to compete for ships throughout the life of the program.

Now, however, the Navy says the competition has already cut program costs.

"Effective competition between the industry bidders has led the Navy, separate from the ongoing ... process, to engage with key defense committee members and their staff as well as industry on whether awarding each bidder a 10-ship block buy merits congressional authorization," the Navy said in a statement.

A Navy spokeswoman said the benefits of awarding contracts to both firms include stabilizing the program and the industrial base for shipbuilding, as well as enhancing the prospects for foreign military sales of the ships.

If it cannot get approval for the two-design, two-shipbuilders approach by the middle of next month, the Navy said it will proceed under the 2009 plan and award a contract to just one of the companies.

"Either approach will ensure the Navy procures affordably priced ships," according to the Navy statement.

The proposal brought positive responses from Alabama's senators, who said construction of 10 ships at Austal's Mobile plant would more than double the workforce from 1,800 to 4,000 employees over the next two to three years.

"I believe that this is a good strategy, and I will strongly support it," said Sen. Jeff Sessions, R-Ala., an Armed Services Committee member. But Senate Defense Appropriations Subcommittee member Richard Shelby, R-Ala., said he still has concerns about the Navy's proposal, how the Navy reached its decision, and any additional costs the new approach could add to the program.

"I look forward to learning more about this decision in the coming days," he said.

A spokeswoman for Sen. Herb Kohl, D-Wis., another member of the Defense Appropriations Subcommittee, was unaware of the Navy's change in approach. Lockheed Martin has planned to build its LCS at the Marinette Marine shipyard in Wisconsin.

Click here to get a glimpse of National Journal's new website.