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AN UPDATE ON U.S. NAVY SHIP AND EQUIPMENT PROCUREMENT By Dr. James R. McCaul, President IMA Associates, Inc. The U.S. Navy continues to be the major driver of business for ship- yards and marine equipment sup- pliers in the United States. A status report for shipbuilding programs and a summary of the FY 1990/91 Navy ship procurement budget is provide below. STATUS OF MAJOR PROGRAMS Exhibit 1 shows naval ships on order as of 1 December 1988. Since then contracts for an additional eight ships have been awarded: three DDG-51s (Arleigh Burke Class destroyers) to Bath Iron Works, one SSN-21 (Seawolf Class attack submarine) and one SSN-688 (Los Angeles Class attack submar- ine) to General Dynamics-Electric Boat, one SSN-688 to Newport News Shipbuilding and two DDG- 51s to Ingalls Shipbuilding. Cost growth—The Navy now estimates that 22 of 38 current fixed-price-incentive contracts will exceed contract target costs by a total of $3.2 billion. This is substan- tially greater than the $2 billion cost growth figure estimated last year for these 22 contracts. The Navy ex- pects to absorb approximately $1.4 billion of the cost growth. This leaves $1.8 billion presumably to be absorbed by the industry. SSN-21 (Seawolf Class at- tack submarine)—The construc- tion contract for the lead ship was awarded to GD-Electric Boat in January 1989. A program of 30 ships is planned. Newport News and GD- Electric Boat will compete for fu- ture work. SSN 688 (Los Angeles Class attack submarine)—A total of 63 SSN-688 Class submarines have been ordered by the Navy. GD- Electric Boat has received 34 of these awards. Newport News has been awarded 29 SSN-688s. Forty units have been delivered. The re- maining units will be delivered by the mid-1990s. The two awards last December could mark the end of the program—though at this time two additional ships are included in the FY 1990 budget to complete the program. CVN (Nimitz Class aircraft carriers)—Construction of four nuclear aircraft carriers is in prog- ress at Newport News. The USS Abraham Lincoln (CVN-72) de- livery is scheduled for October 1989. CVNs 74 and 75 are scheduled for delivery in December 1995 and June 1998, respectively. CG 47 (Ticonderoga Class cruiser)—The last of the 27 ship Aegis cruisers were funded in FY 1988. Thirteen have been delivered and the remaining 14 are in various stages of construction at Ingalls and Bath Iron Works. The last ship of this class is scheduled for delivery in 1994. DDG-51 (Arleigh Burke Class destroyer)—Funding for eight DDG-51 Aegis destroyers has been provided. Bath, the lead ship- builder for this class, has been awarded contracts for five Aegis de- stroyers. Ingalls has received awards for three ships. The lead ship is scheduled for delivery in 1991. LSD-41—Nine LSD-41 landing ship docks have been funded. Lock- heed built and delivered the first three ships. The remaining six ships are contracted to Avondale. Avon- dale's last contract (a cargo variant) includes options for four additional ships. LHD-1 (Wasp Class amphi- bious assault ship)—Litton has been awarded contracts for four ships in this class. The USS Wasp (LHD-1) was delivered in March 1989. LHDs 2, 3 and 4 are scheduled for delivery in April 1992, January 1993, and March 1994, respectively. Additional ships in this class are to be competitively procured in three ship lots starting FY 1992. LCAC—Fifteen air cushion land- ing craft were awarded last Decem- ber to Textron Marine Systems and Avondale Gulf Marine. These awards bring the number of craft under contract to TMS to 36 units. Twelve units are under contract to Avondale. A project is underway to perform detailed design of Arctic configured LCACs. MCM—Eleven mine counter- measure ships have been funded. Peterson Builders has received con- tracts for eight units. Three units have been awarded to Marinette Marine. Three units remain to be funded to complete the program ob- jective. MHC—Contracts for two coastal minehunters have been awarded to Intermarine USA. Open competi- tion for the third ship will be con- ducted to select a second source builder. Intermarine and the second source will compete for the remain- (continued) May, 1989 33
