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March 23, 2009

Navy awards LCS contract

The Navy has awarded the next LCS (Littoral Conbat Ship) contract, but it's not saying what it's paying.

Lockheed Martin (NYSE: LMT) says it's a "fixed price incentive fee contract to construct the Navy's third Littoral Combat Ship (LCS)."

Marinette Marine Corporation in Marinette, Wis, will construct the ship. Marinette Marine is part of the Fincantieri Marine Group

The Pentagon version of the announcement says that Lockheed Martin Corp.--Maritime Systems & Sensors, Baltimore, Md., is being awarded a contract for LCS FY09 Flight 0+ ship construction, class design services, configuration management services, additional crew and shore support, special studies and post delivery support.

"As this award represents Phase I of a competitive two-phased acquisition approach to procure FY09/FY10 LCS, with Phase II including potential award of up to three additional LCS Flight 0+ Class ships, the award amount is considered source selection information [under federal acquisition regulations] and will not be made public at this time," says the Department of Defense.

In a press release welcoming the award, Wisconsin U.S. Congressmen Bart Stupak (D-Menominee) and Steve Kagen (D-Appleton) noted that the LCS-3 contract awarded to Marinette Marine is one of the two LCS contracts the Navy is expected to award this year. Because the cost of building the LCS-3 will be part of the evaluation criteria for ships to be awarded in Fiscal Year 2010, the actual value of the LCS-3 contract is considered source-selection sensitive information and is not being released by the Navy. Stupak and Kagen noted that Congress approved $1.02 billion for the Navy to purchase two Littoral Combat Ships for Fiscal Year 2009.

"The award of the LCS-3 contract is a huge economic boost not just to Marinette Marine and the surrounding communities, but also to the 40 companies across Northern Michigan who provide parts and services for the project," Stupak said. "This contract will help sustain the local workforce and will further strengthen Marinette Marine's position as an integral part of the LCS program, hopefully leading to more contracts and more jobs down the road."

According to Marinette Marine, said the statement from the congressmen, the LCS-3 contract will prevent the more than 200 previously announced layoffs and another 100 that were being considered. The 170 employees laid off in the fall will not be recalled as a result of the contract, but it does open the door to their recall once additional commercial contracts are received by Marinette Marine.


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