T he Navy has awarded two contracts for construction of up to 20 Littoral Combat Ships at an average cost of approximately $440M each. In something of a surprise, the trimaran Austal design came in slightly below the Lockheed Martin offer.

“Lockheed Martin Corp., Baltimore, Md., is being awarded a fixed-price-incentive contract for the fiscal 2010-2015 block buy of Flight 0+ Littoral Combat Ships (LCS).  The fiscal 2010 LCS Flight 0+ ship award amount is $436,852,639.  There are additional line items totaling $54,742,639 for technical data package, core class services, provisioned items orders, ordering, a not-to-exceed line item for non-recurring engineering, and data items.  The total amount of the contract is $491,595,278.  The contract includes line items for nine additional ships and options for post delivery support, additional crew and shore support, special studies, class services, class standard equipment support, economic order quantity equipment, selected ship systems equipment for a second source and selected ship system integration and test for a second source which, if authorized/exercised, would bring the cumulative value of this contract to $4,570,604,367.  The cumulative value excluding any option items related to the second source is $4,069,913,166.  Work will be performed in Marinette, Wis. (56 percent); Walpole, Mass. (14 percent); Washington, D.C. (12 percent); Oldsmar, Fla. (4 percent); Beloit, Wis. (3 percent); Moorestown, N.J. (2 percent); Minneapolis, Minn. (2 percent); and various locations of less than one percent, each totaling seven percent.  Work is expected to be complete by August 2015.  Contract funds will not expire at the end of the current fiscal year, except for fiscal 2010 RDT&E.  This contract was competitively procured via the Federal Business Opportunities website with two offers received.  The Naval Sea Systems Command, Washington, D.C., is the contracting activity (N00024-11-C-2300).

“Austal USA, LLC, Mobile, Ala., is being awarded a fixed-price-incentive contract for the fiscal 2010-2015 block buy of Flight 0+ Littoral Combat Ships (LCS).  The fiscal 2010 LCS Flight 0+ ship award amount is $432,069,883.  There are additional line items totaling $33,398,998 for technical data package, core class services, provisioned items orders, ordering, a not-to-exceed line item for non-recurring engineering, and data items.  The total amount of the contract is $465,468,881.  The contract includes line items for nine additional ships and options for post delivery support, additional crew and shore support, special studies, class services, class standard equipment support, economic order quantity equipment, selected ship systems equipment for a second source and selected ship system integration and test for a second source which, if authorized/exercised, would bring the cumulative value of this contract to $4,386,301,775.  The cumulative value excluding any option items related to the second source is $3,785,807,006.  Work will be performed in Mobile, Ala. (50 percent); Pittsfield, Mass. (17 percent); Cincinnati, Ohio (3 percent); Baltimore, Md. (2 percent); Burlington, Vt. (2 percent); New Orleans, La. (2 percent); and various locations of less than two percent each totaling 24 percent.  Work is expected to be complete by June 2015.  Contract funds will not expire at the end of the current fiscal year, except fiscal 2010 RDT&E. This contract was competitively procured via the Federal Business Opportunities website with two offers received.  The Naval Sea Systems Command, Washington, D.C., is the contracting activity (N00024-11-C-2301).”

There is a good discussion of the implications here.

Coast Guard LEDETS and possibly Airborne Use of Force assets can expect to see a lot of these ships in the future for drug enforcement, counter-piracy, and partnership type missions.

There seems to be some surprise that they are getting a 3,000 ton ship for $440M (even though the rest of the world seems to do it for far less), but that doesn’t compare that well against the latest NSC contract for a 50% larger ship that cost less than 10% more. If we can maintain the same price per ton, approx. 2500 ton OPCs should cost about $270M. Perhaps if we could get a multi-year contract, they could be even less.