Today, the Navy announced two separate contract awards for Fiscal Year (FY) 2014 destroyers.
The first contract award funds one FY 2014 DDG 51 Arleigh Burke Class destroyer under a previously awarded FY 2013-2017 multiyear procurement (MYP) contract with Huntington Ingalls Industries (HII). The second award is to exercise the option for one DDG 51 Class ship to General Dynamics Bath Iron Works (BIW) under a previously awarded FY 2013-2017 MYP contract.
General Dynamics Bath Iron Works (BIW) is being awarded a $642,583,946 modification to their existing fixed-price incentive firm target (FPIF) contract to exercise options for construction of a DDG 51 Class ship. The modification also provides $79,400,000 in advanced procurement funding for the FY 2016-2017 ships.
Huntington Ingalls Industries (HII) is being provided funding of $601,990,190 for the FY 2014 DDG 51 class ship and exercised options. The modification also provides $79,400,000 in advanced procurement funding for the FY 2016-2017 ships.
These awards bring the total number of awarded ships to 10 across the FY 2013-2017 MYP contracts, stabilizing the industrial base and increasing Economic Order Quantity (EOQ) savings to the Navy. The Navy successfully worked with Congress to resolve funding shortfalls resulting from sequestration reductions before contracting for the option ship.
“These awards demonstrate the Navy’s commitment to instilling the tenants of Better Buying power in our acquisition programs,” said Sean Stackley, assistant secretary of the Navy for research, development and acquisition. “By successfully leveraging competition throughout the DDG 51 shipbuilding program, the Navy was able to apply the cost savings and procure one additional ship, delivering a vital warfighting asset to the Fleet.”
A competitive allocation strategy used in the DDG 51 class shipbuilding program since 1996, known as Profit Related to Offers, or PRO, uses FPIF contracts to ensure reasonable prices while maintaining the industrial base. Congressional approval for the use of MYP contracts facilitated program budget savings of more than $2.2 billion while enabling the shipbuilders and equipment manufacturers to more efficiently plan future workloads.
“The continued support of Congress for the DDG 51 program, including the appropriation of funding required to resolve sequestration shortfalls and allow funding of the option ship, enables critical industrial base stability while ensuring the most efficient and affordable build plan for these destroyers,” said Stackley.
The destroyers are being procured in a Flight IIA configuration, relying on a stable and mature infrastructure while increasing the ship’s air and missile defense capabilities through spiral upgrades to the weapons and sensor suites.
