Northrop Grumman [NOC] has won the competition for the Navy’s next generation ship-based tactical network over rival Lockheed Martin [LMT] and will deliver the initial systems to the fleet.

The Pentagon said late yesterday afternoon that Northrop Grumman had won the $36.6-million contract modification for the Consolidated Afloat Networks and Enterprise Services (CANES) program, which is designed to eliminate multiple legacy information technology systems and integrate their functions into a common platform. If all options under the contract are exercised, the total value could reach nearly $638 million.

The Navy expects CANES to provide an adaptable information system to rapidly meet warfighter requirements. Its open architecture (OA) design is meant to allow for easier upgrades while lowering total ownership costs, and to quickly counter emerging cyber or security threats.

The contract calls for Northrop Grumman to provide systems to Navy ships in during the 2012 and 2013 fiscal years on a limited production basis. The first installation of CANES is planned for an Arleigh Burke-class (DDG-51) destroyer later this year.

During the limited production phase, the Navy plans to hold a second competition for the full production run for the rest of the fleet based on the design that won yesterday. Holding another competition is more easily enabled by the government’s control of the data rights.

The Navy’s Space and Warfare Systems Command (SPAWAR), which is the contracting authority, expects to release a request for proposals (RFP) in the third quarter of 2013. Re-competing the program is also seen as a way to promote innovation and curtail costs, a notion of particular importance at a time of reduced defense spending.

CANES is a cornerstone of the Navy’s push to move toward more OA systems, and will effectively merge five stand-alone legacy networks for command, control, computers, communications, and intelligence (C4I) systems into a common shipboard computing environment.

The program is designed to strengthen network infrastructure, improve security, and reduce hardware space. It will also decrease the manpower burden by reducing operations and sustainment workloads through the use of common equipment, training and logistics.

The Navy awarded dueling development contracts to Lockheed Martin and Northrop Grumman in March 2010. For that phase, the two companies beat out entries from Boeing [BA] and BAE Systems. Lockheed Martin and Northrop Grumman cleared Critical Design Reviews (CDR) in July in the most recent competition.

The firms said in November their CANES versions had completed system integration testing and were ready to go into production (Defense Daily, Nov. 21, 2011). SPAWAR had to rework the programmatic schedule last year because of congressional budget squabbling that led to continuing spending resolutions. (Defense Daily, June 29, 2011).