"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning" ... of the U.S. Navy's search for a new frigate warship. (With apologies to Winston Churchill.)

Last week, at long last, the U.S. Navy issued its official Request for Proposals (RFP) from defense contractors interested in building it a new frigate. Smaller than a destroyer but larger than a coastal patrol vessel, the Navy is seeking a warship more robust than its much-maligned Littoral Combat Ship (LCS) to fill out its requirement for 52 "small surface combatants" in the fleet.

Here's what we know about it.

Four frigates converging

The Navy is inviting defense contractors to a frigate party. Who will show up? And who will sail away with the win? Image source: Getty Images.

It takes a village to build a frigate

The Navy first released a "request for information" from defense industry participants on July 10, 2017, seeking feedback on what they could produce, how fast, and at what cost; the request called for something along the lines of a frigate to replace the Navy's now-long-departed Oliver Hazard Perry-class frigates. Over the past 16 months, the admirals have presumably been digesting this information, and on Nov. 7 they finally issued their official RFP inviting bids from the industry.

Despite the time that's passed already, the 77 pages (mostly restating the rules of government contracting) contained in this RFP only actually sketch out a few key requirements for the vessel, hereafter known as "FFG(X)":

  • First and foremost, we're now definitely talking about an FFG, or "guided missile frigate," so a vessel packing some real offensive missile punch. This contrasts with the existing LCS design, which lacks a dedicated missile capability.
  • "Aviation integration" is to be part of the design, so this frigate will carry helicopters, or at least drones.
  • The frigate in question is not to be designed from the keel up as a "clean sheet." Rather, defense contractors are to propose using an existing "parent design" vessel that has already "been through production and demonstrated (full scale) at sea," and modify it to suit the Navy's needs.
  • The modifications are to "use ... commercially available, non-developmental and proven technologies," and equipment "common" to other U.S. Navy warships whenever possible.

That sketches out the bare bones of the program -- but still leaves a lot of details floating in the water. How fast must the frigate go? How much armament must it carry? How much damage must it be able to endure? Does it have to -- and this could be key -- produce enough electrical "juice" to power newfangled weapons systems such as railguns and laser cannons?

We just don't know.

Timeline, cost, and bidders

The Navy's RFP doesn't even contain much in the way of a timeline, other than mentioning that construction should begin by 2020. Fortunately, just a couple days after the RFP came out, the Congressional Research Service published a report filling in a few more details that should interest investors.

Production of the first frigate, as the RFP stated, is to begin in 2020, followed by a second in 2021. Construction should then continue through 2030 at the rate of two ships per year, until the Navy receives a full complement of 20 warships.

Price-wise, most frigates should cost approximately $950 million apiece (the prototype can cost a little more) resulting in an overall program cost of perhaps $20 billion for the winning contractor. And only one contractor will win this contract: unlike the LCS program, frigate production will not be split between two different prime contractors.

As for who this contractor might be, production is to take place within the continental United States, a fact which suggests the prime contractor candidates will be limited to the usual suspects: Lockheed Martin (NYSE:LMT), General Dynamics (NYSE:GD), and Huntington Ingalls (NYSE:HII). That being said, the frigate may be based on a "parent design" from either domestic or foreign military shipbuilders. This raises the possibility that, whichever of the Big Three wins the prime contract, it could theoretically end up sharing its revenues with a foreign partner, which could be contributing the hull design.

Before French, British, German, and other military frigate producers get their hopes up too high, though, remember: Lockheed Martin (maker of the Freedom-class LCS), General Dynamics (Independence LCS), and Huntington Ingalls (which builds the National Security Cutter) each already has its own basic hull design in hand. Chances are good that, when bidding, they'll favor these respective "parent" designs so as to keep all the revenues to themselves.

There's always the possibility of a big foreign shipbuilder partnering with a smaller U.S. company as its prime, of course -- sort of like how Embraer partners (successfully) with Sierra Nevada to build Super Tucano fighter planes for the Pentagon, or how Airbus partnered with Northrop Grumman to bid to build the Air Force's new tanker aircraft a few years ago (unsuccessfully).

Still, if I were a betting man, I'd wouldn't put my money on a foreign competitor. When all's said and done, I expect to see Lockheed, General Dynamics, or Huntington Ingalls sail away with the win and collect the $20 billion prize at the end.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Embraer-Empresa Brasileira. The Motley Fool has a disclosure policy.