Agreement Reached on U.S. Destroyer Deal

The three 14,500-ton DDG-1000-class will be among the stealthiest

surface ships ever built. (Huntington-Ingalls Industries)

27 Jul 2011 By CHRISTOPHER P. CAVAS DefenseNews

An agreement to build the second and third DDG 1000 Zumwalt-class destroyers for the U.S. Navy was announced July 26, assuring the continuation of shipbuilding work at Maine's Bath Iron Works (BIW) shipyard and providing for the construction of all three planned ships in the class.

"The Navy has reached an agreement with General Dynamics-Bath Iron Works for pricing, terms and conditions for DDGs 1001 and 1002," Sean Stackley, the Navy's top acquisition official, said in a statement.

"This is an important step in the process to ensure a fixed price contract in line with the Navy's 'should cost' estimates," Stackley said. "While we continue to complete final mechanics of the contract award, we can proceed with funding material and other work to keep 1001 and 1002 on track, until actual contract award before the end of the Fiscal Year."

The announcement was first made by the office of Sen. Susan Collins, R-Maine, who has long championed construction of the ships.

"This is incredibly welcome news for Maine and is a testament to the highly skilled, hard-working men and women at Bath Iron Works," Collins said in a statement. "My goal has always been to help ensure a steady work flow at BIW and a strong industrial base for shipbuilding. That is why, despite repeated efforts in the House to cut funding, I fought hard for full funding for all three DDG-1000 ships, and I am delighted that an agreement has been reached."

The Navy and General Dynamics -- parent company of Bath Iron Works -- had said little about the state of negotiations over the ships' construction. In a June 27 letter to Rep. Chellie Pingree, D-Maine, Navy Secretary Ray Mabus wrote that the parties remained "significantly apart, not only on pricing of the two-ship contract, but also on important contract terms and conditions."

Behind the scenes, however, both sides expressed confidence that an agreement would eventually be reached.

Construction of the Zumwalt (DDG 1000) has been under way at Bath since February 2009. The ship now is about a third complete, and a keel-laying ceremony is scheduled to be held in November.

Major sections of the ships are being built inside a giant "ultra hall" at BIW, specially constructed to build the DDG 1000s. Other significant work is being done by Huntington-Ingalls Industries and by Raytheon.

Work on the second ship, the Michael Monsoor (DDG 1001), has been proceeding with long-lead construction items, but a definitive construction contract is necessary to take construction to the next levels. Procurement of long-lead items for the yet-to-be-named DDG 1002 is also being carried out.

The Navy and General Dynamics had once hoped to reach contract agreements on the ships in early 2010. But a host of factors intervened to delay and extend the negotiations. Chief among the obstacles was a Nunn-McCurdy review brought about by the Navy's decision to build three, rather than seven units of the class, thus increasing the unit cost.

Resolution of the Northrop Grumman shipbuilding situation was also necessary to proceed. Northrop, the original prime contractor for the DDG 1000, announced in early July 2010 its intention to spin off its shipbuilding operations, a process which culminated this spring with the formation of Huntington-Ingalls Industries.

Congress' failure to agree last fall on a 2011 defense spending bill also prevented any new construction starts - another hurdle which was cleared this spring by the passage of the defense appropriations act.