Pentagon Spending $1.4 Billion on New Warships

Over the past two in-sequester days, the Pentagon has awarded a total of 42 separate contracts to various contractors, worth well over $4 billion in aggregate.

One of the biggest beneficiaries this week is the Littoral Combat Ship (LCS) program that aims to expand America's navy with a fleet of coast-hugging warships capable of providing close-in support at beachheads, combating piracy close to the coast, and performing other missions for which deepwater ocean-going warships are ill-suited. So far this week, the Pentagon has issued three separate LCS awards:

The first two awards go to partners Austal USA (a division of Australia's Austal Ltd. shipbuilder) and General Dynamics' (NYSE: GD  ) Bath Iron Works shipbuilding division. In the first contract, Austal is awarded $681.7 million to continue work under a previously awarded contract two build two Littoral Combat Ships. This latest award funds Austal's work through June 2018.

In the second contract, GD's Bath division wins a much smaller $12.3 million modification to a previously awarded contract. Bath will be providing "post-delivery support" for a fourth LCS vessel built for the Navy, performing previously deferred design changes on the USS Coronado (LCS 4). This contract expires in February 2014.

The Pentagon gave the Littoral Combat Ship's other major builder, Lockheed Martin (NYSE: LMT  ) , the biggest award of all. Lockheed's $696.6 million contract (to build two other Littoral Combat Ships) eclipses the contracts won by its two allied rivals, combined. Lockheed also gets an extra month to complete the work. Its due date is July 2018.


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