Austal loses $5.5 billion Navy frigate contract

Alabama News

Analyst: "Catastrophe" for Mobile shipyard

In the first major shipbuilding program it has started in more than a decade, the U.S. Navy announced Thursday it has awarded a $795-million per ship contract to Fincantieri to begin building a new class of guided-missile frigates. Mobile-based Austal USA was one of four finalists and was considered by most analysts as a strong contender for the contract.

Craig Hooper, Senior Contributor for Forbes, says losing the frigate contract could bring “existential catastrophe” to the Mobile shipyard once Austal’s LCS contract runs out.

Austal USA President Craig Perciavalle disagrees.

“Despite our extreme disappointment over this outcome, we have a portfolio of other
opportunities that we continue to pursue in addition to our backlog of… work
that extends through 2024,” Perciavalle said in a statement to News 5.


Austal USA has delivered 11 Independence-variant Littoral Combat Ships (LCS) with six more under construction and two awaiting start of construction. The company has also delivered 11 Expeditionary Fast Transports with two more under construction and one awaiting start of construction.

The frigate contract, however, represented up to a decade of work. The detail design and construction contract with Fincantieri covers one ship in the current Fiscal Year 2020 and options for as many as nine more ships, for a total value of $5.58 billion if all options are exercised.

Fincantieri, which will build its frigate at its Marinette Marine shipyard in Wisconsin, based its design on ships already operated by the French and Italian navies.

“The Navy’s Guided-Missile Frigate will be an important part of our future fleet,” Chief of Naval Operations, Adm. Mike Gilday said in a Navy statement.

The Navy announced in 2017 that a new frigate program was needed. The military wanted a vessel more lethal and survivable than the LCS. Austal builds the Independence-variant of the LCS in Mobile, while Lockheed Martin builds the Freedom-variant at Fincantieri’s shipyard in Wisconsin.

Austal proposed a frigate that was a variant of the LCS and was believed to be the lowest cost option of the four finalists. Traditionalists within the Navy, however, remained concerned that Austal’s aluminum model is too dangerous for close combat.

Analysts who contend politics is always a factor in military procurement note that Wisconsin is a key swing state in this fall’s presidential election.

Austal’s full statement:

Austal USA learned today that it was not awarded the U.S. Navy contract to
construct the Guided-Missile Frigate FFG(X).
“Despite our extreme disappointment over this outcome, we have a portfolio of other
opportunities that we continue to pursue in addition to our backlog of EPF and LCS work
that extends through 2024 including EPF variants and unmanned surface vessels. We have
great facilities and an even greater workforce and we are committed to continuing to build
highly capable and cost effective ships for the U.S. Navy,” Austal USA President Craig
Perciavalle said.
Austal USA has delivered 11 Independence-variant LCS with six more under construction
and two awaiting start of construction. The company has also delivered 11 Expeditionary
Fast Transports with two more under construction and one awaiting start of construction.
With 22 Austal ships delivered, the company’s global services division is growing as it
supports the U.S. Navy’s fleet maintenance and modernization.

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