US Navy funds Austal-led team to build two ships

Addi­tion­al con­tracts affirm com­mit­ment to the Lit­toral Com­bat Ship (LCS) Pro­gram
Austal’s order back­log has grown by US$691 mil­lion as a result of two addi­tion­al Lit­toral Com­bat Ship (LCS) con­tract options being exer­cised by the Unit­ed States Navy.

The con­tract options fund con­struc­tion of the Gabrielle Gif­fords (LCS 10) and Oma­ha (LCS 12), the third and fourth ships in the 10 ship block buy award made to an Austal-led team in Decem­ber 2010. That 10 ship pro­gram is poten­tial­ly worth over US$3.5 bil­lion.

Reflect­ing Austal’s grow­ing stature in naval ship­build­ing, Austal USA now holds con­firmed con­tracts for 14 U.S. Navy ships while its Aus­tralian oper­a­tion has a con­tract to build and sup­port eight patrol boats for the Aus­tralian Cus­toms and Bor­der Pro­tec­tion Ser­vice.

The U.S. Navy work includes con­tracts for nine Joint High Speed Ves­sels (JHSVs), two of which were con­firmed in Feb­ru­ary. It also includes the Coro­n­a­do (LCS 4) which Austal was con­tract­ed to build as part of a Gen­er­al Dynam­ics Bath Iron Works team pri­or to tak­ing over as the prime con­trac­tor for the 10 ship LCS award. LCS 4 and the first JHSV, USNS Spear­head, are cur­rent­ly being pre­pared for sea tri­als, with three oth­er ships cur­rent­ly under con­struc­tion in Austal’s Mobile, Alaba­ma ship­yard.

Austal’s Chief Exec­u­tive Offi­cer Andrew Bel­lamy said the company’s U.S. Navy pro­grams pro­vide pre­dictable rev­enue and work­load for years to come.

“The LCS and JHSV pro­grams alone are like­ly to gen­er­ate near­ly $900 mil­lion in rev­enue per year for the next few years. With series pro­duc­tion on both ship class­es now under­way, we can focus on achiev­ing high­er pro­duc­tion effi­cien­cy and bring­ing our Navy cus­tomer improved cost and sched­ule per­for­mance,” he said.

“The LCS award called for two ships to be con­tract­ed by the end of March this year, and each of the next three years. While these options were expect­ed, it is still pleas­ing to see the con­tracts exe­cut­ed, par­tic­u­lar­ly in a peri­od when the U.S. gov­ern­ment bud­get is under pres­sure.

“Look­ing ahead, we can now focus on the Defense bud­get request for the next fis­cal year which fore­shad­ows the award of our next two LCSs and our tenth Joint High Speed Ves­sel. The Navy’s effort to con­tin­ue procur­ing these ves­sels demon­strates the val­ue the U.S. mil­i­tary sees in our plat­forms,” he said.

Mr Bel­lamy not­ed that the Sec­re­tary of Defense, Leon E. Panet­ta, had restat­ed the impor­tance of the LCS when announc­ing major Bud­get deci­sions in Jan­u­ary.

“Sec­re­tary Panet­ta said the Navy was pro­tect­ing what he described as its ‘high­est-pri­or­i­ty and most flex­i­ble ships’ and includ­ed Lit­toral Com­bat Ships in that cat­e­go­ry,” he said.

More recent­ly Sec­re­tary of the Navy, Ray Mabus, reaf­firmed the Navy’s inten­tion to acquire 55 LCSs. In tes­ti­mo­ny to the House Appro­pri­a­tions Sub­com­mit­tee on Defense on 1 March SECNAV Mabus stat­ed: “I think the LCS is clear­ly going to be one of the back­bones of the fleet as we go for­ward. We are com­mit­ted to buy­ing over 55 of these very capa­ble ships.”

He reaf­firmed the 55 ship plan to the Sen­ate Appro­pri­a­tions Sub­com­mit­tee on Defense on 7 March, adding that “we’re very pleased with the ship­yards that are build­ing them, we’re very pleased with the prod­uct that’s com­ing out.”

“These are very pos­i­tive signs for the LCS program’s long term future and for Austal’s prospects in secur­ing addi­tion­al work beyond the cur­rent 10 ship award,” Mr Bel­lamy said. “The LCS and JHSV plat­forms will con­tin­ue fuelling com­pa­ny growth for a long time to come.”


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