Navy Cancels Combat Ship Contract

Friday, November 02, 2007
Just six months after pulling the plug on a contract to build a combat ship in Lockport, the Navy announced that it canceled a contract to build another ship in Alabama for the same class of vessels. Continued problems with government shipbuilding programs have cost Louisiana shipyards, but there does not appear to be a shortage of other such work to go around, particularly from the private sector. News of the canceled contract follows heavy criticism by Congress in the last year of the Navy's Littoral Combat Ship, or LCS, program, which aims to build a new fleet of ships for close-to-shore combat. The first two LCS ships incurred $603m in cost overruns, 128 percent more than the program's initial budget, according to a July report by the General Accounting Office. The Navy ended contracts to build the third and fourth LCS ships because it could not agree with contractors on a fixed-price to perform the work. This latest announcement concerned the LCS 4, which General Dynamics had a contract to build at Austal USA in Mobile, Ala. The LCS 3 was scheduled to be built at Bollinger Shipyard in Lockport, but the Navy announced in April that it nixed that $197.6m contract with Lockheed Martin Corp. Congress has been pressuring the Navy to rein in spending after contractors have passed on steep price increases for materials and labor. The GAO report recommended that the Navy "improve cost management through increased use of fixed-contracting and comprehensive cost surveillance." The Coast Guard has also cracked down on shipbuilders, pulling from operation eight patrol boats that were retrofitted at Bollinger Shipyard in Lockport. A joint-venture between Northrop Grumman and Lockheed Martin subcontracted the work to the Lockport shipyard. Despite canceling its third and fourth LCS ships, the Navy does plan to shove ahead with the LCS program. [Source: http://blog.nola.com]

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