Friday, June 11, 2010

DTN News: U.S. Navy Sees Ship Contract By Early August

Defense News: DTN News: U.S. Navy Sees Ship Contract By Early August
* Expects to execute contracts within budget
* Companies offered "very competitive pricing"
* Lawmaker expects losing bidder to protest
Source: DTN News / Reuters By Andrea Shalal-Esa
(NSI News Source Info) WASHINGTON,- June 11, 2010: The U.S. Navy expects to award a contract for 10 new coastal warships by the end of July or early August, and should be able to meet its budget goals for the program, a top Navy official said on Thursday.
Dub Summerall, executive director of combatants for the U.S. Navy's program executive office in charge of ships, told a conference that the two teams bidding to build the 10 Littoral Combat Ships, and combat systems for five more ships, submitted "very competitive pricing" with their offers in April.
Summerall declined to make a detailed comment on competing bids by Lockheed Martin Corp (LMT.N) and the U.S. unit of Australia's Austal Ltd (ASB.AX), which is teamed with General Dynamics Corp (GD.N) for a deal valued at well over $5 billion to build more fast, agile coastal warships for the Navy.
Affordability is critical to the future of the warships, which are designed to fight pirates, chase drug-runners, and sweep for mines in shallow coastal waters. The Navy plans to buy 55 of the ships overall, a key part of its plan to increase the number of ships in the fleet to 313 ships over time.
Summerall said both competitors' ships would meet the Navy's needs and he was confident that the Navy would execute the contracts within the five-year plan for the program that was submitted with the fiscal 2011 budget request, despite huge cost spikes while the ships were still in development.
"We can get very competitive pricing," Summerall told a conference hosted by Swiss bank Credit Suisse and Virginia-based defense consultant Jim McAleese.
Rear Admiral Joseph Mulloy, deputy assistant secretary of the Navy for budget, said Navy acquisition chief Sean Stackley had revamped the Navy's acquisition strategy and decided to pick a single winner because he was not satisfied with the pricing initially offered by the companies.
"He is a hard negotiator and he is bound and determined," said Mulloy, noting that the Navy's drive to cut costs was part of a larger drive by Defense Secretary Robert Gates.
Representative Gene Taylor, head of the seapower subcommittee of the House Armed Services Committee, said he fully expected the losing team to file a formal protest, given how important the work was to both bidders.
He said he favored shortening to 60 days the current 100-day deadline for the Government Accountability Office to rule on bid protests, saying the Navy urgently needed to start building the new warships and could not afford further delays.
Under current law the Navy could already cite urgent national security needs and proceed with a contract, even if a protest was filed, said one congressional aide, who was not authorized to speak on the record.
The shorter deadline would also be a hardship for the GAO, which is already saddled with a heavy workload, said the aide.
Lockheed is offering a steel single-hull design, being built in Wisconsin by Marinette Marine, a unit of Italy's Fincantieri. The Mobile, Alabama-based U.S. unit of Austal is offering the Navy an aluminum trimaran design.
Summerall said the Navy is in discussions with both teams, and Navy officials are carefully evaluating the bids before making a decision later this summer.
He underscored the Navy's determination to cut shipbuilding costs so the Navy could buy the number of ships currently in the plan, adding: "We take this very seriously."
The Navy has said it expects to award a single winner a fixed-price contract for 10 of the new warships, buying two in the 2010 fiscal year 2010 that ends Sept. 30, with the rest to follow through fiscal 2014.
(Reporting by Andrea Shalal-Esa; Editing by Gerald E. McCormick, Phil Berlowitz)

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