A few months back, writing about General Dynamics' (NYSE: GD) announcement that it would help build a new "Joint High Speed Vessel" (JHSV) for the Navy, I said some unkind words about the General.
In the spirit of fairness, I also allowed my criticism to extend to General rival Lockheed Martin (NYSE: LMT) for the massive cost overruns both firms amassed as they built the first two Littoral Combat Ships (LCS) for the Navy. (And perhaps I could have gone even further... right, Boeing (NYSE: BA))?
In that same spirit of fairness, I'm back today to distribute kudos to both firms.
General Dynamics
Rank has its privileges, so we'll start with the General, which this morning announced that it has just delivered the Virginia-class nuclear attack submarine New Hampshire (SSN-778) to the Navy -- eight months ahead of schedule. More than just a puff press release, this performance should secure the General's place as one of two contractors splitting the work of building out the anticipated 30-ship Virginia-class fleet. (Northrop Grumman (NYSE: NOC) is the other contractor.)
Oh, and remember what I was saying about cost overruns on the LCS? Well, the General got this one done ahead of time and under budget. So there.
Lockheed Martin
Meanwhile, co-LCS-builder Lockheed was practically blushing at the Navy's lavish praise of its performance on the very first LCS model -- the Freedom. Yesterday, the Navy gushed that it's "capable, well-built and inspection-ready" ... with only 21 "material deficiencies."
Ummm ...
Yeah, I know. Damning with faint praise, it sounds like. But according to Lockheed, prototype vessels at this stage of development generally get delivered with ten times that number of problems. So relatively speaking, this ship is a success story.
Now let's see whether General Dynamics can write a sequel when its own LCS prototype gets put through its paces in March. If it can repeat the New Hampshire feat, the General could become the odds-on favorite to build the next two LCSs scheduled for construction. Failure may win it only a single follow-on contract. With these ships selling for between $460 million and $600 million a pop, and a total of 55 LCSs eventually to be built, the stakes couldn't be higher.
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