This week a Navy contract update revealed how much the Navy is spending on its latest five year, 10-ship multi-year contract for Flight III Arleigh Burke-class guided-missile destroyers.
A Sept. 6 update to the Defense Department contract announcements disclosed the Navy is spending upward of $14.58 billion for the 10 ships over the next five years.
Last month, the Navy first unveiled the multiyear contract to the two destroyer shipbuilders for at least nine destroyers over fiscal years 2023 to 2027, with options to increase that up to 15 ships total (Defense Daily, Aug. 3).
The original contract split the ships into three for General Dynamics’ Bath Iron Works [GD] in Bath, Maine and six for HII’s [HII] Ingalls Shipbuilding division in Pascagoula, Miss.
GD was set for one ship each in fiscal years 2023, 224 and 2026 while HII won one in 2023, one in 2024, two in 2025 and one in 2027.
Last month Assistant Secretary of the Navy for Research, Development and Acquisition (ASN RDA) Jay Stefany told reporters this structure meant there was an option for a second ship in 2027 and a third ship in every year, 2023 – 2027.
Then on Aug. 11 the Navy awarded HII a modification for a second destroyer in FY 2023, meaning the Navy plans to procure three destroyers total in FY 2023 and 10 over FY 2023 – ‘27.
Originally, Stefany said the Navy did not plan to release the contract cost total due to there being an open competition for all the option vessels.
“The contract allows the Navy to go back and ask the two industry teams to update their pricing at the same or a lower level before we exercise the option. So, until we go through and debrief the companies and lay out those details, it is still source selection sensitive as we go forward, because those options are still in play to be repriced and then evaluated, and the decision made on who gets each of those options as we go forward,” Stefany told reporters.
When competing for an option ship each year, Stefany said the companies could choose to give the same price as 2023 or an updated lower price.
While the Navy declined to break down how the $14.58 billion is divided between the two shipbuilders, when the contract was first announced Stefany said in a statement the contract would help the Navy save $830 million over the original nine-ship order, compared to buying the ships separately.