The Navy awarded contracts for nine Arleigh Burke-class (DDG-51) destroyers on Monday that are being purchased under a multi-year buy that contains an option for tenth ship.
The contracts were awarded to General Dynamics [GD] and Huntington Ingalls Industries [HII] for a combined value of $6.1 billion. Five of the ships will be built by Huntington Ingalls Industries’ yard in Pascagoula, Miss., and the remaining four by General Dynamics Bath Iron Works in Bath, Maine.
|The USS Michael Murphy (DDG-112) during acceptance trials last year. Photo by General Dynamics.
If the Navy exercises the option for the 10th ship, it will go to General Dynamics and increase that contract from $2.8 billion to $3.5 billion. Both fixed-price incentive contracts also include engineering change and other options that could also increase the combined values to about $7 billion.
Naval Sea Systems Command (NAVSEA) structured the award by allowing the shipbuilder with the lowest bid to receive higher profit margins as well as the guaranteed fifth ship, which in this case was Huntington Ingalls Industries.
“I am proud of the success of the DDG 51 program and appreciate Congress’ continued support and approval of the Navy’s multi-year procurement request,” Navy Secretary Ray Mabus said. “This award enables stability in our industrial base and ensures the Navy and the nation get the most efficient and affordable build plan for these destroyers.”
Congress earlier this year approved the purchase of 10 of the destroyers under the multi-year arrangement, but the Navy has warned that it may not be able to fund the final vessel because of the automatic budget cuts known as sequestration that took effect in March 1. The 10th ship is one of three to be procured in fiscal 2013.
The Navy has said that it is facing a $300 million funding shortfall in the DDG-51 program as a result of sequestration, according to a recent report by the Congressional Research Service. NAVSEA said in a statement that it remains committed to the 10th ship and will work with Congress to resolve the budget issue before contracting that DDG-51.
The contracts issued Monday cover the construction costs of the ship. Once weapons, sensors and other systems and parts are added, the price of each ship exceeds $1 billion.
The Navy plans to move from the Flight IIA version of the Arleigh Burke-class to a Flight III version, mostly centered on a new radar called the Air Missile Defense Radar (AMDR), on the seventh in the multi-year deal–or in fiscal 2016. That timeframe depends on whether the AMDR program meets its development and production goals.
The scalable AMDR S-band radar and radar suite controller is intended to provide significantly increased sensitivity for simultaneous long-range detection and engagement of advanced anti-ship and ballistic missile threats, but its integration onto the destroyers could pose a challenge.
The ships will have to be re-engineered to accommodate AMDR’s larger size and powering and cooling requirements. AMDR is to replace the Lockheed Martin [LMT]-built AN/SPY 1 currently on the DDG-51s. Navy officials have said once the winning design for AMDR is known, the service will proceed with an industry engineering change proposal for the destroyers to move to Flight III.
Lockheed Martin, Raytheon [RTN] and Northrop Grumman [NOC] submitted bids for AMDR last year. A NAVSEA spokesman said the Navy aims to announce the winning bid this summer.