BATH, Maine — Two years after Bath Iron Works was among five shipyards awarded contracts to craft conceptual designs for a new class of guided-missile frigate for the U.S. Navy, a Wisconsin shipyard has landed the nearly $800 million contract for design and construction of the first ship.
Fincantieri Marinette Marine Corp. was also awarded options for the next nine FFG(X) ships. If all options are exercised, the contract amount will top $5.5 billion.
On Monday, defense industry analysts agreed with a statement by the company that focused on its solid history of building superior Arleigh Burke-class destroyers for the Navy.
"As long as they maintain their position on large destroyers for the U.S. Navy, they're going to have a foundation that will keep them viable," Jay Korman, managing director of The Avascent Group, said of BIW. "The strategic positioning Bath has is not eroding."
Korman said that with the United States' relationships with China and Russia deteriorating, "companies that manufacture the ships that meet the near-peer China threat will do well. Congress is going to fund the big-ticket items."
Congress is unlikely to interfere with the jobs the defense industry provides, he said, adding, "I'd be hard-pressed to see Congress not engaging in the next multi-year procurement [of Arleigh Burkes]."
Despite debate over the future of the Arleigh Burke-class destroyer, analyst Loren Thompson of the Lexington Institute said nothing is certain.
"Bath's biggest hope for the future is that there is [another] multi-ship buy of destroyers," he said. "The Navy has all sorts of new ideas, but they're driven by the Trump strategy. But we're probably going to get a new president in November, so everything's uncertain."
RELATED: BIW not awarded Coast Guard contract
The FFG(X) will be a multi-mission, small surface combatant with the ability to conduct air, anti-submarine, surface and electronic warfare and information operations, according to the Navy.
In statements, BIW and Maine's Congressional delegation expressed disappointment at the decision and said they awaited more information on how it was made.
“BIW’s FFG(X) team -- including Raytheon, Navantia and our supplier base -- produced an exceptional concept design and put forward the best bid possible," BIW said in a release. "We look forward to the Navy’s debrief to us. We will continue to focus our energy on meeting the needs of the U.S. Navy by delivering Lyndon B. Johnson (DDG 1002) and the 11 Arleigh Burke-class destroyers we currently have under contract. The DDG-51 is a proven design that has shown its ability to evolve and deliver increased capabilities to the fleet. We look forward to seeing our workforce prove that they can deliver these ships on schedule and oversee the maintenance and modernization of destroyers currently deployed in the fleet.”
Members of Maine's Congressional delegation either declined or did not respond to requests for an interview on Monday. Instead, they said in a joint statement that the Navy overlooked "the clear strengths and long tradition of excellence at Bath Iron Works."
"For over 130 years, BIW has had a proven record of building the finest surface combatants in the world," the statement said. "We will thoroughly review the details of the award to ensure that the Navy properly applied its decision criteria, and we will continue to do everything in our power to support good jobs at BIW, our extraordinarily skilled shipbuilders, and their vital role in our national defense.”
In February 2018, Bath Iron Works, Marinette Marine, Austal USA, Huntington Ingalls Industries and Lockheed Martin were each awarded $15 million contracts for conceptual designs of the frigates. Lockheed Martin later dropped out of the competition.
The designs were based on existing ships, with BIW's based on a design by Spanish shipbuilder Navantia.
“Throughout this process, the government team and our industry partners have all executed with a sense of urgency and discipline, delivering this contract award three months ahead of schedule," James Geurts, assistant secretary of the Navy for research, development and acquisition, said in a statement. "The team’s intense focus on cost, acquisition, and technical rigor, enabled the government to deliver the best value for our taxpayers as we deliver a highly capable next generation frigate to our warfighters.”
Construction of the ship will begin by April 2022, with the first ship to be delivered by 2026 at a total cost of $1.28 billion, USNI News reported.
Korman said the Navy sent a message to BIW to figure out why they lost the contract.
But Thompson said that message is clear: "If there's a message from the Navy to Bath, it's, 'Control your costs,'" he said.
Craig Hooper, writing for Forbes just prior to the announcement, proposed another possibility:
"The overarching factor that favors Fincantieri's ... offering is politics. It’s simple — if the Trump Administration fails to win Wisconsin in November, then the Trump administration won’t receive a second term. A big new manufacturing contract would help win over this battleground state."
The frigate decision was the second contract for a new class of ship BIW failed to land in less than four years. In September 2016, their bid to build a new class of 25 offshore patrol cutters for the U.S. Coast Guard was bested by Eastern Shipbuilding in Florida.
"When you lose two big competitions in a row, people have to ask, 'Well, why?" he said. "Because this is a first-class shipyard. I think the clearest explanation is probably that Bath's price structure is too high."
Many southern shipyards, for example, are in so-called right-to-work states without unions, and union rules sometimes limit how companies can utilize workers, Thompson said.
With Local S6 of the Machinists Union about to begin negotiations of a new contract, both experts predicted the FFG(X) contract decision to contribute to "tough" negotiations.
Chris Wiers, president of Local S6, did not immediately return a phone call seeking comment on Monday.