Post by ferryfast admin on Sept 28, 2007 11:40:33 GMT -5
Navy pushing for fixed-price Austal LCS contracts
Thursday, September 27, 2007
By SEAN REILLY
Washington Bureau
Mobile Press-Register
www.al.com/
WASHINGTON -- In high-stakes talks kicked off Wednesday, the Navy is seeking to put a lid on the cost of two littoral combat ships under construction at Austal USA's shipyard in Mobile.
Both Austal and the program's lead contractor, Virginia-based General Dynamics Corp., are participating in the negotiations, through which the Navy is seeking to rework existing contracts to set fixed prices -- accompanied by incentives for good performance -- for both of the shore- hugging ships.
Under the existing "cost-plus" deals, the Navy provides full reimbursement for expenses, along with an agreed-upon fee.
The first ship at Austal is more than 60 percent complete, while work in the second is just getting under way. The company employs more than 1,000 people at its
Mobile-area operations.
A competing team led by Lockheed Martin Corp. is building its own version of the LCS. In 2010, the Navy tentatively plans to choose one of the two designs as the basis for billions of dollars worth of future orders. Over time, the Navy hopes to build 55 of the ships, which are intended for submarine-
hunting and other missions.
But both groups have been plagued by cost overruns and schedule delays. In April, the Navy canceled Lockheed's second ship after failing to get an agreement on a fixed-price contract.
A Navy spokesman would not say Wednesday if more meetings with the General Dynamics team are planned this week. But in a Sept. 19 letter to General Dynamics, Navy Contracting Officer Teresa McConahie wrote that "it is imperative" that the two sides strike a deal within 30 days. She asked the company to submit a proposal setting target cost figures that are both realistic and identify potential risks.
"We're going to sit down and talk with them," General Dynamics spokesman Jim DeMartini said Wednesday.
Earlier this month, the Senate Appropriations Committee voted to scuttle the second General Dynamics/Austal ship. Although the full Senate, as well as the House of Representatives, must still second that step, it appeared to reflect deepening frustration with the rising cost of what had been billed as a relatively inexpensive ship. The Navy had thought it could buy the LCS for about
$200 million each, compared to the $1 billion-plus price tag on a new destroyer.