3 firms chosen for new stealth ship

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The Pentagon has narrowed a list of companies vying to build an expensive stealth Navy ship, eliminating the nation's largest shipbuilder from contention and boosting the chances for two local defense contractors.

Bethesda-based Lockheed Martin Corp., Falls Church-based General Dynamics Corp., and Raytheon Corp. of Portsmouth, R.I., won contracts for the design of the ship, which would be one of the first capable of fighting in shallow water and along coastlines.

The contracts for Lockheed Martin and Raytheon were worth $10 million, and General Dynamics' was worth $8.9 million.

The Navy next year will select one or two of the companies to build the ship.

The Pentagon on Thursday rejected a bid from Los Angeles-based Northrop Grumman Corp., the largest military shipbuilder, in a move that some analysts said showed that the Navy was trying to attract new ideas.

"It may have had to do with systems capabilities as opposed to who has the largest shipyard," Merrill Lynch analyst Byron Callan told Bloomberg News. "Building a smaller ship doesn't need a large yard."

A spokesman for the Navy could not be reached for comment.

The new littoral combat ship, or LCS, is expected to give support in battle to larger warships by fighting coastline threats including naval mines, diesel submarines and small surface boats, the Pentagon said.

Analysts said the ship is the Navy's top budget priority, and about $4 billion have been earmarked for the project through 2009. Construction of the first ship could begin as early as 2005, with completion by 2007. Nine ships have been planned for construction, but Bloomberg reported that the Navy could order as many as 60 vessels.

General Dynamics and Northrop Grumman have dominated the shipbuilding industry in recent years. Northrop Grumman bought Newport News Shipbuilding Inc. last year and shipbuilder Litton Industries Inc. in 2001.

Lockheed Martin and Raytheon have limited shipbuilding experience, and neither owns a shipyard. But both have worked extensively with the Navy and have partnered with special naval architects and midsize shipbuilders.

Bath Iron Works of Bath, Maine, will be in charge of the General Dynamics design. The company is General Dynamics' top shipbuilding subsidiary and is best known for producing the Aegis guided-missile destroyer used during Operation Iraqi Freedom.

General Dynamics will work with other companies on the design, including CAE of Canada, Maritime Applied Physics Corp. of Hanover, Md., and Qinetiq of the United Kingdom.

Lockheed Martin, the largest U.S. defense contractor, partnered in April with Gibbs & Cox, a naval architecture firm, for the competition. It also partnered with Marinette Marine and Bollinger Shipyards, which together have built about 190 ships in the past 10 years, including 135 for the Navy and Coast Guard.

Raytheon said it would work with naval engineer John J. Mullen Associates Inc., architecture firm Umoe Mandal and manufacturer Goodrich.

The Pentagon also eliminated Textron's Marine and Land unit, of New Orleans, and San Diego-based Titan Corp.