By Geoff Fein

Under the Navy’s new Littoral Combat Ship (LCS) acquisition strategy, General Dynamics [GD] and Lockheed Martin [LMT] are going to have to make tough decisions on what role that want to play, now that the service has said neither team can be both the shipbuilder and prime contractor for the program going forward.

With the new request for proposal (RFP) to be issued this fall, the Navy will select a single provider and shipyard to build up to 10 LCS through FY ’14. The new plan will have the winning contractor build two ships, with options for eight more between FY ’11 and FY ’14, Sean Stackley, the Navy’s acquisition chief, told reporters at a media briefing Wednesday.

The Navy’s approach will make it possible to further enhance the affordability of LCS, Lockheed Martin said Wednesday in a statement.

“Since the LCS program’s inception, we have focused on meeting the Navy’s stated goals of increasing competition and applying the know-how of the nation’s best mid-tier shipyards to build a superior ship for the Navy and its sailors,” the company said. “We’ve met those goals with LCS-1, are applying lessons learned and best practices to improve affordability of LCS-3, and look forward to participating in the Navy’s new acquisition strategy for this important new class of ship.”

The Navy could award an LCS contract by the end of the second quarter, or into the third quarter of FY ’10, Stackley said.

The new acquisition strategy outlined by Stackley would prohibit the winning prime contractor and shipyard from competing in FY ’12 as a second source shipbuilder.

The idea is to prevent one company from controlling all aspects of LCS construction, he added.

“If they are the prime from the 2010 downselect, they can’t compete,” Stackley said. “We won’t allow the prime to preclude us from competition in the future.”

The details of the competition will be in the FY ’10 RFP, he added.

Currently, Lockheed Martin is teamed with Wisconsin-based Marinette Marine and Bollinger Shipyards in Louisiana. General Dynamics Bath Iron Works is partnered with Alabama-based Austal USA.

Stackley was clear that it is up to each of the prime contractors to determine how they want to approach the LCS acquisition.

The new plan could lead to a variety of different approaches for the prime contractors. One approach, for example, should General Dynamics win the FY ’10 competition to be the prime contractor and build LCS at Austal USA, Austal would be prohibited from competing for the FY ’12 second source competition.

If Austal severed its relationship with General Dynamics, the Alabama shipyard could later compete as a second source. The same would hold true for Lockheed Martin and its partner shipyards.

And there is nothing to preclude the losing industry team from competing for the FY ’12 contract, Stackley noted.

The winner of the second competition will get a contract to build one ship in FY ’12 and options for four additional ships between FY ’13 and FY ’14, for a total of five LCS, Stackley said. This will result in an ongoing competition between the two shipbuilders, beginning in FY ’15, he added.

The five ships will be built to the exact same specifications, and using the exact same combat systems, as the winning FY ’10 design. The combat system, supplied by either Lockheed Martin or General Dynamics, will become government furnished equipment.

The Navy is working out the details of how it will proceed from FY ’15 and out, but one thing is certain. Contracts will be fixed price.

Stackley told reporters that the plan is to procure four ships per year through the future years defense plan.

“We are confident that four per year split between two shipyards will be a sufficient rate,” he said.

Beyond four per year, the Navy will have to figure in the capacity of the shipyards, Stackley added.

As for when the Navy plans to eventually procure the full 55 LCS, Stackley said that information will be in the service’s 30-year shipbuilding plan, due out with the FY ’11 budget.

In the out-years competition, LCS will be built using the original winning combat system. Similar to how the Navy procures upgrades to the Aegis combat system, the FY ’15 and out LCS will receive whatever combat system baseline is in the Navy’s combat system architecture, as describe by the service’s open architecture plans, Stackley said.

The decision to cancel the original FY ’10 buy of three LCS was made following a review of the two teams’ bids.

Stackley told reporters both teams “demonstrated cost savings going from their leads ships to LCS 3 and 4.”

But the Navy “did not see a continuation of that trend” with the current bids, he added.

Lockheed Martin and its team built the lead ship, USS Freedom (LCS-1), which was delivered to the Navy and is currently undergoing testing. Freedom is a semi- planing monohull design and set to deploy in early spring 2010, Stackley said.

Lockheed Martin is also building the Fort Worth (LCS-3).

General Dynamics and its team built the all-aluminum hull trimaran, Independence (LCS-2), which is nearing its delivery date. The team is also building the Coronado (LCS-4).