Lockheed Martin (NYSE:LMT) has been awarded a $3.6 billion contract by the U.S. Navy to build combat ships over the next five years.
The defense contractor received a fixed-price-incentive-fee contract to construct up to 10 Littoral Combat Ships, the first of which will be acquired this year at a contract value of $437 million. The rest will be acquired via options through 2015.
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If all options are exercised, the total value of the ship construction will reach roughly $3.6 billion, according to Bethesda, MD-based Lockheed Martin.
The ships will be constructed by Marinette Marine Corp. in Wisconsin and designed by naval architect Gibbs & Cox.
Lockheed Martin CEO Bob Stevens said the combat ships are designed to confront rapidly changing global threats while at the same time providing cost-effective solutions in an era of tight budgets.
“This team’s strong performance will enable the Navy to deploy a class of affordable, multi-mission combatants to address the nation's needs for decades to come,” he said.
Prior to the current contract, Lockheed Martin’s industry team designed and constructed the nation’s first LCS, USS Freedom, which successfully completed its first deployment and participated in the world’s largest maritime exercise earlier this year.
Lockheed is currently building its second generation LCS and said the program remains on schedule and budget for delivery to the Navy in 2012.