The Navy last week awarded six new Arleigh Burke-class DDG-51 destroyers to Huntington Ingalls Industries [HII] and four to General Dynamics [GD] Bath Iron Works (BIW) for a combined value of $9 billion.
Both fixed-price firm target multiyear contracts cover one Flight III DDG-51 destroyer for each company per year from FY 2019 – 2022. HII also won two DDG-51s in FY 2018.
The larger Huntington Ingalls contract is worth $5.1 billion for six destroyers while the General Dynamics contract is worth $3.9 billion for four vessels. The companies were competing to work on this five-year multiyear procurement (MYP) contract that would include at least 10 Flight III destroyers.
The Flight III destroyers particularly include a new and more capable AN/SPY-6 air and missile defense radar (AMDR) plus the modifications required to support the radar. The SPY-6 will be better able to track targets for use in missile defense missions.
“These contract awards are further evidence of the Navy's continued delivery of lethal capacity to the Nation with a sense of urgency while ensuring best value for the taxpayer,” Navy acquisition chief James Geurts said in a statement.
Geurts highlighted the service saved $700 million on the 10 ships by using multiyear procurement contracts opposed to single year awards.
Both contracts include options for engineering change proposals, design budgeting requirements, and post-delivery availabilities on the awarded multiyear ships. If these options are exercised the HII award would rise to $5.25 billion and the GD contract would rise to $4.03 billion.
The contracts also include options to build additional destroyer in fiscal years 2018-2022, if the Navy and/or Congress decide to increase the destroyer build rate over the 10 MYP ship rate from the Navy’s FY ’18 budget request, if appropriated.
The Navy would not disclose how much those options could be worth because they may be subject to future competitive action and “therefore the dollar values are considered source selection sensitive information and will not be made public at this time.”
Geurts noted “we also have options for an additional five DDG 51s to enable us to continue to accelerate delivery of the outstanding DDG 51 Flight III capabilities to our Naval force.”
Capt. Casey Moton, DDG-51 program manager within Program Executive Office (PEO)-Ships, focused on how this procurement will provide integrated air and missile defense capabilities to the future fleet while strengthening the defense industrial base.
“The Navy is proud to be working alongside the dedicated shipbuilders at BIW and Ingalls to continue to deliver these warships to the fleet,” he said in a statement.
In April during the Navy League’s Sea-Air-Space Conference, Moton said this contract is geared to allow the Navy to ramp up destroyer production to three per year for at least five years (Defense Daily, April 10).
HII’s work will largely be done in Pascagoula, Miss., at its shipyard, and is expected to be finished by April 2029. A total of $1.7 billion in FY 2018 shipbuilding and conversion accounts is obligated at award time and will not expire at the end of this fiscal year.
HII is already building the first Flight III DDG-51, the future Jack H. Lucas (DDG-125), and officially started construction in May. It was the last of five destroyers from a June 2013 MYP award (Defense Daily, May 11).
Similarly, GD BIW’s work will primarily occur at its shipyard in Bath, Maine and is expected to be finished by June 2028. In all, $25 million in FY 2018 shipbuilding and conversion funds were obligated to GD at award time.
PEO-Ships said the Navy’s acquisition strategy for this DDG-51 Flight III award was procuring 10 ships from FY 2018-2022 using MYP authority to award the ships among the current Arleigh Burke-class shipbuilders. The ships were competed using “a combination of historically successful competitive strategies, primarily using a Compete for Quantity (CFQ) strategy with one Profit Related to Offer (PRO) outcome also possible.”
Geurts argued the Navy executed the competition on a fast timeline, which “reflects the urgency in which the Navy and our industry partners are operating to ensure we meet the demands of the National Defense Strategy.”