Nov 04 2010

Austal may build 10 more littoral combat ships in Mobile

Mobile Press Register

The U.S. Navy would purchase Littoral Combat Ships from both Austal USA and Lockheed Martin Corp. under a dual buy proposed by Navy Secretary Ray Mabus, according to the Navy and elected officials briefed on the deal.

U.S. Sens. Richard Shelby, R-Tuscaloosa, and Jeff Sessions, R-Mobile, said Wednesday that the proposal would allow Austal to produce 10 of the shallow-water combat ships at its Mobile shipyard, more than doubling its current workforce of 1,800 employees.

Lockheed would produce another 10 at a Wisconsin shipyard operated by Marinette Marine Corp.

The deal, if approved by Congress, would replace an earlier plan by the Navy to pick one of the two competing ships and bid out the winning design to other shipyards. The Navy said the dual buy was preferable because it would deliver new ships faster, support more jobs and sustain competition between the two manufacturers.

The Navy ultimately plans to buy 55 of the new modular warships that will operate close to shore, a key part of its drive to expand the naval fleet to at least 313 ships.

The proposal, expected to be announced by the Navy today, is the latest attempt to stabilize a program that has been dogged by soaring costs and sharp criticism from Congress.

The ships were initially slated to cost just $220 million each, but prices have more than doubled in the early phase of the program, raising concerns about the program’s viability.

Sessions said Mabus called him Wednesday to discuss the dual buy and assured him it could be accomplished under the Navy’s current budget.

"They’ve been able to drive the costs down significantly through competition, and so you’re basically able to get more ships for the same cost," Sessions said. "I believe that this is a good strategy, and I will strongly support it."

Shelby said the LCS program was "extremely important" to the Navy’s ability to respond to future threats and said Austal’s aluminum-hulled trimaran was faster, more fuel efficient and better equipped to meet the Navy’s mission.

But, he said, he "remained concerned ... about this new Navy acquisition strategy, how Secretary Mabus reached this decision and the additional costs this will add to the program. I look forward to learning more about this decision in the coming days."

Both Austal and Lockheed declined to comment, referring questions to the Navy. Capt. Cate Mueller said the Navy likely has until mid-December to convince Congress to allow it to change its acquisition strategy.

If Navy officials determine they can’t get support for the split buy on Capitol Hill, they will go forward under the original plan that was approved by Congress last year, Mueller said.

Naval analyst Jay Korman said he couldn’t fault the Navy for wanting both designs, since the two ships offer significantly different capabilities. He said Lockheed’s steel-hulled warship may perform better in combat situations, while Austal’s sleek, fast-moving trimaran may be superior at hauling troops and cargo and chasing enemy vessels.

But, he said, taxpayers may have reason to be annoyed with the Navy.

"The Navy explored buying two designs years ago, and in my view wasted a lot of time and money taking industry down this revised acquisition path only to change course again," said Korman, an analyst with the Avascent Group in Washington, D.C.

"Acquisition aside, the Navy now has to support both ships with two different infrastructures — one geared to a steel hull, one to aluminum. The long term cost of this alone will be significant."

Mobile Mayor Sam Jones said the decision by Mabus, a former Mississippi governor tapped by President Obama to heading the Gulf Coast’s recovery from the BP oil spill, could have a tremendous impact on Mobile’s economy.

"This is good news for the country and great news for Mobile," said Jones. "We couldn’t have asked for anything better."