2001 Maritime

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September 21, 2001

GAO denies protest of FGH order
Friede Goldman Halter, Inc., says that its Halter Marine, Inc., has been informed by the Government Accounting Office (GAO) that a protest made by a competing shipbuilder was denied. The award of a contract for three Logistic Support Vessels (LSV's) to Halter Marine has been affirmed.

The U.S. Army, Tank and Automotive Command (TACOM) of Warren, Michigan has lifted a stop work notice and work has begun on the detailed design and construction of the first of three LSV's.

The contract also includes the provision of spare parts, technical services, and options to build two additional vessels. The total value of the base contract is $26.9 million; if all possible options are exercised, the total value of the contract could ultimately exceed $78 million.

Engineering of the first ship will begin immediately and construction will follow at Halter Marine's shipyard in Moss Point, Mississippi, with delivery scheduled in 24 months. It is expected that the options for additional vessels will be exercised as Congress incrementally appropriates funds for them. The contract is expected to create approximately 75 new jobs at the Halter Moss Point shipyard.

The LSV class vessels, dubbed ELSV (Enhanced Logistic Support Vessel) by Halter, will have an overall length of 313 feet, a beam of 60 feet and a molded depth of 19 feet. They will be designed and built to the requirements of the American Bureau of Shipping and upon delivery will be classed ABS Maltese Cross A1 Circle E, Maltese Cross AMS, Maltese Cross ACC, Maltese Cross APS, and NIBS. The three ships will be based in Hawaii and Baltimore, Maryland.

Project America sails ahead
Northrop Grumman Corporation and American Classic Voyages Co. today announced they have reached an agreement,that enables the continued and uninterrupted construction of two 1,900-passenger cruise ships. The agreement has been endorsed by the U.S. Maritime Administration with the support of U.S. Secretary of Transportation Norman Y. Mineta,

Following are the major provisions of the agreement:

  • Ship delivery dates will be extended by approximately 12 months, to Feb. 1, 2004, for Project America Ship I and Feb. 1, 2005, for Project America Ship II;
  • The price per ship will be increased by $19 million from the original contract price of $440 million to cover the increased costs of the interior finishing (joiner) package;
  • AMCV has committed $42 million and Northrop Grumman has committed $44 million to acquire through 2005 a new issue of stock in AMCV's subsidiary, Project America. This additional equity in Project America will help offset the price increase and associated costs for the delivery extensions, and will provide additional funding for Ships I and II. In addition to the equity committed as part of this agreement, AMCV has already committed $100 million to fund the construction of Ships I and II;
  • The parties have settled all outstanding disputes; and
  • The agreement does not increase the $1.1 billion loan guarantee original commitment provided by the Maritime Administration for the Project America Ships.

The program to build the first cruise ships in the United States in 40 years, named Project America, is a pilot project to reinvigorate U.S.-flag cruise ship construction and operation.

Today's agreement enables Project America to continue unabated and resolves business issues relating to a delay in the delivery and an increase in the price of the cruise ships currently under construction at Northrop Grumman's Ingalls Operations.

"With these business issues behind us we can again concentrate solely on the business of building these ships,'' said Jerry St. Pe, chief operating officer of Northrop Grumman's Ship Systems sector. "This project is not only important to Northrop Grumman and American Classic, but it has far-reaching benefits for the U.S. economy, creating thousands of American jobs and bolstering the U.S. shipbuilding industrial base.''

Phil Calian, CEO of American Classic, said, "We are extremely pleased to reach an amicable resolution. We look forward to having a state-of-the-art, luxury cruise ship, built in an American shipyard, sailing the Hawaiian Islands in 2004. Despite the current challenging economic environment, American Classic believes that Hawaii is a fantastic growth opportunity for the company as the Hawaiian cruise market is in its infancy.''

More than 1,600 personnel at Northrop Grumman's Ingalls Operations are currently engaged full-time in the cruise ship program. The design of the ships is virtually complete, and the first ship is one-third finished. A total of 142 assemblies have begun fabrication, with more than 48 percent of the assembly blocks erected on the ship.

Northrop Grumman Corporation is a $15 billion, global aerospace and defense company with its worldwide headquarters in Los Angeles. Northrop Grumman provides technologically advanced, innovative products, services and solutions in defense and commercial electronics, systems integration, information technology and non-nuclear shipbuilding and systems. With 80,000 employees and operations in 44 states and 25 countries, Northrop Grumman serves U.S. and international military, government and commercial customers.

American Classic Voyages is the largest U.S. Flag cruise company and markets four distinct products that cruise in Hawaii, along the coasts of North and Central America and on America's inland waterways. United States Lines, American Hawaii Cruises, Delta Queen Coastal Voyages and Delta Queen Steamboat Company operate a total of seven U.S. crewed vessels with a combined 3,480 berths. Three ships, including the Project America ships, with a total of 4,024 berths are on order at U.S. shipyards and scheduled for delivery through 2005.