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June 18, 2002

Navy and Big Two do a shipbuilding shuffle
The U.S. Navy is signing a Memorandum Of Understanding (MOU) with General Dynamics (GD), and Northrop Grumman Ship Systems (NGSS) to transfer ship construction between the two corporations' shipyards.

The MOU outlines the terms and conditions for transferring the construction of four LPD 17-Class amphibious transport dock ships from Bath Iron Works (BIW), a GD shipyard, to NGSS owned-Ingalls and Avondale shipyards in exchange for construction of four additional DDG 51-Class destroyers at Bath Iron Works. Under this plan, DDG 102, which was to have been built at Ingalls, will be transferred to Bath Iron Works. LPD 19, in the initial stages of construction at Bath Iron Works, will be transferred to Northrop Grumman.

As a result of this agreement, the Navy expectsto realize significant net cost savings on these programs. The arrangement is anticipated to provide for increased LPD 17 program stability and cost savings by centralizing production at one shipbuilder, NGSS and improved workload stability at General Dynamics Bath Iron Works, which will build additional DDG's in its new, more efficient, land-level facility.

Speaking about the agreement, Assistant Secretary of the Navy for Research, Development and Acquisition, John J. Young, Jr. said, "The Navy and the shipbuilders have taken a bold step today. This shipbuilding transfer agreement will save the taxpayers money over the life of these two programs by dramatically reducing the cost and schedule risk in the LPD 17 program. The new fiscal year 02-05 DDG multi-year contract pricing and conditions were also negotiated in conjunction with the swap agreement. The signing of this MOU and the new DDG multi-year together stabilize the workload at three shipyards-Ingalls, Bath, and Avondale and provide a solid plan for almost $20 billion of Navy shipbuilding. This agreement is a win-win-win for both shipbuilders and the Navy."

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