Pentagon reviewing third DDG 1000 contract

Photo / Courtesy Bath Iron Works A Zumwalt deckhouse is lifted into place at Bath Iron Works. BIW is under contract to bulid all three of the Zumwalt-class of Navy destroyers.

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Pentagon officials are weighing whether to cancel construction of a $7.5 billion Zumwalt-class destroyer under construction at General Dynamics Corp.’s Bath Iron Works shipyard, according to BloombergBusiness.

Bloomberg’s report citeda Defense Department briefing document dated Aug. 25 that indicates the Pentagon’s cost-assessment office would “review in the next few weeks” whether to cancel the future USS Lyndon B. Johnson, the third of three destroyers that is under construction at the Bath shipyard in the $22 billion in the DDG 1000 program to build the Zumwalt-class destroyers and is approximately 40% completed. The review would come as part of planning for the fiscal year 2017 budget.

But Loren Thompson of The Lexington Institute, a nonprofit defense analysis organization based in Arlington, Va., told the Bangor Daily News that despite the Zumwalt program being plagued by delays, rising costs and changing plans, it was unlikely the third and currently final destroyer in that class would be canceled.

“If I had to bet, I would say all three Zumwalts will be built, and eventually the Navy will consider buying additional vessels,” Thompson told the newspaper.

Cmdr. Thurraya Kent, a Navy spokeswoman, told the BDN via email, “it would be inappropriate to discuss business-sensitive information or speculate on budget deliberations.”

Lucy Ryan, a General Dynamics spokeswoman, told the BDN in an email, “We’re not going to speculate” on any future Navy budget action. “This decision is entirely up to the Navy.”

If the Pentagon does cancel remaining work on the third Zumwalt destroyer it would heighten the importance of an already high-stakes competition between BIW and two sourthern shipyards to build up to 25 offshore patrol cutters for the U.S. Coast Guard.

With an estimated total acquisition cost of $12.1 billion, or an average cost of roughly $484 million per ship, that program would help stabilize BIW's workforce in an era of tighter Navy budgets and essentially cancel layoffs that otherwise would occur by the end of the decade once the DDG 1000 program is completed.

"It's a must-win for us," BIW Fred Harris told Mainebiz earlier this year in an exclusive interview about the shipyard’s efforts to land the Coast Guard offshore patrol cutter contract in 2016.