Navy: Lockheed Could Lose LCS Contract

Bethesda, Md.-based Lockheed Martin is on contract to build two ships, dubbed LCS 1 and LCS 3. The first ship is under construction and considerably over budget, which recently prompted the Navy to halt work on LCS 3.

The Navy is on course to decide in the next few weeks "whether to move to termination or to continue the program for LCS 3," Mullen said at a Defense Writers Group breakfast, when asked about the program's status.

Mullen didn't discuss prospects for the other LCS design, made by Falls Church, Va.-based General Dynamics Corp. and also on contract for two ships. Navy officials have said the first General Dynamics ship, dubbed LCS 2, so far hasn't experienced the same degree of cost growth as LCS 1.

The Navy plans to build 55 of the new ships, which are designed to hunt mines, submarines and small enemy boats in coastal waters. The service hasn't yet decided whether it wants to settle on just one design or keep competition through the life of the program.

Thursday's comments mark the first time the Navy has discussed outright termination of Lockheed Martin's second vessel. Previously, the service's focus has been how to get costs under control before starting further construction.

"All options are on the table right now," Mullen said, when asked to gauge the termination outlook.

Mullen said shipbuilding is a big priority for the Navy, but new ships need to be affordable. He welcomed comments from lawmakers like Rep. John Murtha, D-Pa., and Rep. Gene Taylor, D-Miss., in support of adding ships to the Navy's budget. But he said it isn't clear exactly how the Navy could bulk up its fleet without disrupting its current shipbuilding plan and budget outlook.

For example, Mullen said the Navy believes the best course for its Virginia-class submarines is to build just one vessel per year until 2012. Taylor's House Armed Services Committee subcommittee is scheduled to hold a hearing Thursday on whether to build two submarines per year.

General Dynamics and McLean, Va.-based Northrop Grumman Corp. are the lead contractors on the new submarine program.