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November 2, 2007

Navy scraps BIW contract

The United States Navy yesterday canceled a contract for Bath Iron Works to build a second littoral combat ship.

BIW, which is owned by Virginia-based General Dynamics, is already lead contractor on one design of the LCS that is being built at a shipyard in Alabama, but cost overruns on that project prompted the Navy to try to tie General Dynamics into a fixed-price contract for the second littoral combat ship. Those negotiations were unsuccessful, according to a press release from the Navy.

General Dynamics is competing with Lockheed Martin to build an LCS that will pass Navy muster. Each company was initially given contracts to build two designs. The Navy previously canceled one of Lockheed's contracts because it was over budget. The initial ships have cost 50% to 75% more than the initial budget of about $270 million per ship, according to the Associated Press. The Navy eventually wants to build 55 littoral combat ships.

Jim DeMartini, BIW's spokesman, would not say how the Navy's decision will affect BIW's workload or employment. "We're not talking about the impacts right now," DeMartini told Mainebiz this morning.

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