Navy Picks Fincantieri in Possible $5.5 Billion Frigate Deal

(Bloomberg) -- The U.S. Navy picked Fincantieri Marinette Marine over three other contenders for the initial phase of its new frigate program -- a potential $5.5 billion contract for a vessel meant to replace the troubled Littoral Combat Ship.

The Wisconsin-based unit of Italy's Fincantieri SpA on Thursday won an initial $795 million fixed-priced, incentive-fee detailed design and construction contract for the first vessel in the new class of guided-missile frigates, according to a statement on the Pentagon's website.

The company beat out competitors including Austal Ltd., General Dynamics Corp. and Huntington Ingalls Industries Inc.

The contract, per the Navy's original plan, has options for another nine vessels that would boost the deal's value to $5.5 billion. The Navy then has the option to seek another contractor for the remaining 10 vessels, or to stick with Fincantieri.

The announcement is a morale booster for a military service that's been immersed in bad publicity all month over the Covid-19 saga of the USS Theodore Roosevelt aircraft carrier.

More broadly, the Navy is counting on a successful frigate program to be a key component of the service's effort to meet President Donald Trump's goal of 355 deployable ships, up from about 299 now.

Parent-Design Approach

The Navy's plan is to build the new frigate based on a modified version of an existing ship design, called the “parent-design approach.” Fincantieri also offered the design for the Italian Navy's frigate.

Over half of the work will be performed at Marinette, but it will also spread to locations including Boston, New Orleans, New York and Crozet, Virginia, according to the Navy. Work is expected to be completed by May 2035 if all options are exercised.

The frigate program was conceived as a better-armed, better-armored follow-on to the problem-plagued LCS.

Fincantieri had teamed with Lockheed Martin to produce the “Freedom” version of the LCS, which as recently as 2017 was experiencing 11-month per-ship delivery delays.

Nevertheless, Fincantieri's win was expected because its design “has the most real-world experience of the contenders and, despite some challenges early on, Marinette has improved its production of LCS during the last several years,” said Bryan Clark, a naval analyst for the Hudson Institute who follows Navy shipbuilding.