The Navy is taking over management control and reducing Lockheed Martin Corp.’s role in a bid to cut costs on the sea service’s largest missile-launching system. Instead of paying Lockheed to acquire and integrate the components of the Mark 41 Vertical Launching System, as it has since the 1980s, the Navy is buying the mechanical launch platform directly from London-based BAE Systems PLC, formerly a Lockheed subcontractor.
Lockheed, based in Bethesda, will continue to provide and install electronics, which account for about 55 percent of the missile launcher’s production cost, said Toan Nguyen, the Navy’s program manager for the system. BAE’s portion accounts for the other 45 percent.
“We are the system integrator now,” Nguyen said in an interview Sept. 12. “All the work done before by the contractor, now the Navy team will have to do it.”
The Navy spent about $1.5 billion on the system’s production contracts since 2004, said Stephanie Collins, a Navy spokeswoman, in a Sept. 15 email. The system has been ordered for 112 U.S. Navy ships to launch missiles including Tomahawks and Evolved Sea Sparrows, both made by Raytheon Co. of Waltham, Mass., she said.
The shift to in-house integration will result in “significant” savings because the Navy will avoid fees Lockheed charged to acquire equipment and labor costs it billed for overseeing BAE’s work, said Capt. Timothy Batzler, the Navy’s major program manager for surface ship weapons, in a Sept. 12 interview.
The Navy estimates it will save more than $1 million per launch module, Collins said in an email on Monday. The Navy has ordered 1,336 shipboard modules since the system was deployed in 1986, she said.
