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US Navy Awards $6.2 Billion In Destroyer Contracts

Jun. 3, 2013 - 03:45AM   |  
By CHRISTOPHER P. CAVAS   |   Comments
The USS Michael Murphy, commissioned in 2012, is the latest Arleigh Burke-class destroyer to be completed.
The USS Michael Murphy, commissioned in 2012, is the latest Arleigh Burke-class destroyer to be completed. (MCS2 Jon Dasbach/US Navy)
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WASHINGTON — Construction contracts worth more than $6 billion were awarded Monday to shipbuilders General Dynamics and Huntington Ingalls to build nine new DDG 51 Arleigh Burke-class destroyers, the US Navy announced, with an option for a tenth ship.

The awards keep destroyer construction humming at a pace that has been maintained since the DDG 51 class was restarted in 2009.

Huntington Ingalls Industries (HII) received a $3,331,476,001 fixed-price-incentive firm target (FPIF) contract for the design and construction of five ships, one each in fiscal 2013 to 2017, the Navy said in a press release. The ships will all be built at the company’s Ingalls shipyard in Pascagoula, Miss.

General Dynamics Bath Iron Works (BIW) was awarded a $2,843,385,450 FPIF contract for the design and construction of four ships, one in 2013 and one each in 2015 to 2017. The award also includes a contract option for a fifth ship, which, if approved, about be added to 2014.

The Navy officially has asked Congress to fund one ship in 2014, but is seeking multi-year procurement (MYP) authority to add a second ship in 2014, hence the option for another ship. Congress is generally disposed to support adding the ship, and the service, in a press release, said it is working with Capitol Hill “to resolve funding shortfalls resulting from sequestration reductions before contracting the tenth ship.”

HII received the five-ship MYP award due to a lower bid, which works out to about $666 million per ship. BIW’s four-ship award comes to nearly $711 million per ship.

The contract awards do not include high-priced government-furnished equipment (GFE) bought separately by the Navy. GFE includes such major items as the Aegis combat system and all weapon systems.

The construction awards, Navy said, are based on “a competitive allocation strategy used in the DDG 51 class shipbuilding program since 1996. Known as profit related to offers, or PRO, [the strategy] uses FPIF contracts to ensure reasonable prices while maintaining the industrial base.

“Congressional approval for the use of MYP contracts facilitated program budget savings of more than $1.5 billion while enabling the shipbuilders and equipment manufacturers to more efficiently plan future workloads,” the Navy said in its press release.

The nine-ship MYP awarded June 3 includes hull numbers DDG 117 through 125. The addition of a tenth ship would extend the contract through DDG 126.

Two ships already are funded in 2013, the Paul Ignatius (DDG 117), which will be built at Ingalls, and the Bath-build Daniel Inouye (DDG 118).

The yet-to-be-named DDG 119, requested in the 2014 budget, will be built at Ingalls.

Initially, the new ships will be built to the Flight IIA version of the Arleigh Burke class, to which all ships since DDG 79 have been completed.

Starting with the second ship in 2016, however, a significant addition, the new Air and Missile Defense Radar (AMDR), will be introduced to replace the SPY-1D radars in current ships. The AMDR, which will continue to work with the Aegis combat system, will have greater capabilities for the ballistic missile defense role, but also will require greater installed power and other design changes.

An AMDR contractor has yet to be chosen, although later this year the Navy is expected to select a radar from either Lockheed Martin, Raytheon or Northrop Grumman.

The switch to the Flight III will be contractually handled as an “engineering change proposal,” the Navy said.

It is not yet decided which hull, or which shipbuilder, will handle the first Flight III ship. Should Congress fund only one ship in 2014, Ingalls would also get DDG 120 in 2015, with DDG 121 going to Bath. That would work out to Bath building the first AMDR ship, which would be DDG 123.

Should the second 2014 ship be added, DDG 120 would become a Bath ship, and the second 2016 ship would become DDG 124, built at Ingalls.

It is also possible construction of the first AMDR ship could slide and be awarded at a later date, although that is not now the Navy’s intention.

Bath Iron Works continues as the DDG 51 program’s lead design shipyard, a position it has held since the 1980s.

Arleigh Burke destroyers currently under construction include the John Finn (DDG 113) and Ralph Johnson (DDG 114) at Ingalls, and the Rafael Peralta (DDG 115) and Thomas Hudner (DDG 116) at Bath.

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