General Dynamics Gets Shot at $12 Billion U.S. Ship Program

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February 12, 2014

By Kathleen Miller and Jonathan D. Salant

Feb. 12 (Bloomberg) — General Dynamics Corp. has been awarded one of three initial contracts in a $12 billion U.S. Coast Guard ship program, with competitor Huntington Ingalls Industries Inc. shut out.

Huntington, the government’s No. 1 shipbuilder, had bid on the design contracts for the offshore patrol cutters, which will replace older ships. The Coast Guard’s decision is “a significant setback for Huntington Ingalls,” said Loren Thompson, a defense analyst with the Lexington Institute, an Arlington, Virginia-based research organization.

“It is also a significant breakthrough for General Dynamics, which is likely to ultimately build the next Coast Guard ship,” Thompson said in a phone interview. General Dynamics is the No. 2 shipbuilder for the U.S. government, according to Bloomberg Industries.

Huntington Ingalls is “disappointed by the Coast Guard’s decision,” said Bill Glenn, a spokesman for the Newport News, Virginia-based contractor.

The company “offered the Coast Guard a strong, fully compliant proposal to provide a very capable, cost effective offshore patrol cutter design,” Glenn said in an e-mail. “Our proposal offered commonality in many systems and construction processes already proven in the National Security Cutter program.”

A spokeswoman for Falls Church, Virginia-based General Dynamics didn’t immediately respond to an e-mail request for comment on the Coast Guard’s announcement.

General Dynamics was selected along with Bollinger Shipyards Lockport LLC and Eastern Shipbuilding Group Inc., both closely held. Each will receive design contracts valued at between $21 million and $22 million for the offshore patrol cutters.

The new vessels will have increased range and endurance, larger flight decks and improved surveillance capabilities, according to the Coast Guard.

Copyright 2014 Bloomberg.

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