Navy Puts $30 Billion DD 21 Design Contract on Hold

The Navy put off indefinitely Thursday the choice of a winning design in an all-new $30 billion advanced destroyer program pending developments in sweeping Defense Department reviews.

Competing for design and full-service contractor awards for the ship, known as DD 21, are teams led by General Dynamics Corp.'s Bath Iron Works unit and Northrop Grumman Corp.'s Ingalls Shipbuilding subsidiary.

The Navy has been planning to buy 32 of the ships over 35 years at a combined cost of about $30 billion, or $750 million per unit after the fourth ship.

Highly modular in design, the electric-powered DD 21 would be equipped to attack foes hundreds of miles inland as well as fight at sea. Most recently, the selection of a winning design had been expected to take place in June after having been delayed repeatedly since March.

"This is a significant program approaching a significant milestone," Under Secretary of the Navy Robert Pirie said in a statement. "As we continue to look at how the Navy will be shaped in the 21st century by participating in the ongoing strategic reviews, it is only prudent to ensure DD 21 reflects the results of those reviews."

Since taking office in January, the Bush administration has launched sweeping reviews of U.S. military priorities involving strategy, arms programs and spending. Defense Secretary Donald Rumsfeld is now talking about rolling out some of his conclusions in the late summer.

The competing shipbuilding consortia had been eager to head off delays in the DD 21 contract award for fear the program might fall victim to competing military spending priorities.

"If things don't get awarded when they're supposed to be awarded, people with green eye shades in the Pentagon start looking at that money and decide to program it elsewhere," Hubert "Bat" Robinson, vice president for DD 21 at Pascagoula,

Mississippi-based Ingalls, said back in March. The Navy's goal has been to lay the first DD 21's keel in 2005 for the maiden multimission destroyer to enter the fleet in 2010. The Navy wants the destroyer to kick off a new family of warships, including some that could be used in a future ballistic missile defense.

In its announcement, the Navy said the competing DD 21 design teams would continue their system development work under a fiscal 2001 contract. The postponed contract award, valued at $9.9 billion, would cover 10 years of research and development plus the first four ships.

Production of the ships would be split between the winner and the loser to preserve competition in the U.S. defense industrial base. But the winning team would get 85 percent of total operating and support costs booked with subcontractors over the life of the program, valued at up to $70 billion. - (Reuters)