Navy Official Warns on Cost Overruns

Thursday, April 05, 2007
A senior Navy official is warning that rising costs in key programs such as Lockheed Martin and General Dynamics' next-generation surface combat ships could derail efforts by the department to modernize its fleet and aircraft.

The Navy has awarded contracts for four ships that initially were estimated to cost $270 million each under the Littoral Combat Ship (LCS) program, two to Bethesda, Md.-based Lockheed Martin Corp. and two to Falls Church, Va.-based General Dynamics Corp. But the cost of Lockheed's first ship - which is roughly 73 percent completed - has already soared to roughly $350 million, according to the Navy. The Navy ordered a halt to work on the Lockheed's second ship in January while it conducted a program review. Last month, Navy Secretary Donald Winter said he would allow Lockheed to resume work on the ship at its Wisconsin shipyard if the company agreed by mid-April to switch to a fixed-price contract. Lockheed hasn't yet agreed to do so and is currently in negotiations with the Navy to restructure its contract for both ships. The first ship had been scheduled to be delivered to the Navy this summer and work on the second was to have started last month.

General Dynamics' shipbuilding unit in Mobile, Ala., is on track to deliver on schedule its first ship, which is roughly 40 percent complete, by spring 2008, said spokesman Kendell Pease. The company has been put on close watch by the Navy to track costs, but has not been asked to restructure its contracts, he said. Lockheed has said cost overruns were due to revised Navy requirements. However, Admiral Mullen said a compressed schedule and the lack of greater oversight were additional factors leading to significant cost increases.

The LCS ships, longer than a football field and carrying up to 75 crew members, have relatively flat hulls that will make them the only large ships in the Navy's fleet able to operate in waters as shallow as 16 feet. They are designed to carry three H-60 helo helicopters and three unmanned drone aircraft, and are planned for multiple types of missions including anti-submarine, mine and surface warfare. Since the Navy's March 15 announcement that it is seeking a fixed-price contract for the LCS program, shares of Lockheed have flattened out. Jefferies & Co. analyst Howard Rubel said the potential impact of the LCS negotiations dwarfs the relatively small percentage of Lockheed's revenues the two ships represent.

Today, the 276 ships in the Navy's battle force fleet is well below the roughly 600 ships during the Reagan years and short of the department's goal of 313 ships. Attack submarines, not including ones with nuclear warheads, have also shrunk by nearly half to 55 from nearly 100 at the time of the Cold War. Large deck aircraft - which are being built at a rate of one new carrier ever five years - could fall to 10 if there is a potential deficit in funds.

The Bush administration's proposed 2008 defense budget requests $38.72 billion for Navy procurement, excluding research and development funding, up from $36.01 billion a year earlier. That includes $12.75 billion for aircraft purchases, compared with $10.84 billion, a year ago; $13.66 billion for ship building, up from $10.53 billion a year before; and $5.8 billion for Marine Corps programs, almost double the $2.99 billion in the previous year. The Navy's goal is to add seven ships in both fiscal years 2007 and 2008, but industry analysts say Congress would need to boost funding levels by $3 billion to $4 billion each year to meet that target. Source: AP

Maritime Reporter August 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Shipbuilding

MN 100: ContainerTug B.V.

The Company: ContainerTug B.V. is a specialized Dutch naval design engineering and construction company with a strong focus on developing workboats and the evaluation

Oman Drydock Company Expands Rapidly

Oman Drydock Company (ODC) is growing fast. In January, the yard hit an important milestone - its 300th drydocking. Harnessing the power of its new $1.8 billion, 1.

NASSCO Invests in Facilities, Equipment and People

General Dynamics NASSCO has invested several hundred million in capital projects as part of its efforts to increase efficiencies via  modular shipbuilding, including:

Navy

Iranian Ship, Crew Escape Captivity off Somali Coast

An Iranian fishing vessel and its crew have escaped after being held captive for five months by Somali fishermen, maritime piracy experts said on Friday, but it

Migrant Boat Sinks off Libya; 200 Feared Dead

A boat packed with mainly African migrants bound for Italy sank off the Libyan coast on Thursday and officials said up to 200 might have died. A security official in the western town of Zuwara,

Russian-Chinese Naval Drills End

The second phase of the Russian-Chinese Joint Sea-2015 naval maneuvers has officially ended outside the port of Vladivostok in Russia’s Far East, says spokesman

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Maritime Standards Naval Architecture Navigation Pod Propulsion Ship Electronics Ship Simulators Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1183 sec (8 req/sec)