Bath Iron Works’ decision earlier this year to end a business partnership appears to have backfired and could exclude the company from building additional coastal warships.

“Bath Iron Works took a risk and it looks like that risk did not pay off,” said Loren Thompson, a military analyst with the Lexington Institute in Arlington, Va.

Until earlier this year, BIW worked with Mobile, Ala.-based Austal USA to build two of the Navy’s three new littoral combat ships — fast and stealthy warships designed to operate in waters near shore.

BIW was the primary contractor, but Austal actually built the ships, which are fitted with multimillion-dollar combat electronics made by BIW’s parent company, General Dynamics.

The third ship, with a competing design, was built by Lockheed Martin and Wisconsin-based Marinette Marine.

The Navy initially planned to buy ships with both designs, but decided later to buy only 10 ships, from the manufacturer of the winning design. An additional five ships would be put out for bids as early as 2012, but only non-winning contractors would be permitted to bid.

Because BIW wanted to bid on the five ships no matter which design was selected, it cut ties with Austal.

“We determined it would be in the best interests of General Dynamics and BIW if we preserved our opportunity to compete to build either version of the ship,” said BIW Manager of Communications Jim DeMartini.

Thompson said General Dynamics was well positioned either way. If Austal’s design won, the company would supply the electronics. If Lockheed Martin’s ship won, the BIW division could bid on the additional five ships.

But on Nov. 4, the Navy announced a change in its procurement plan that appears to shut out BIW. Instead of taking bids on five ships, the Navy now seeks congressional approval to buy 10 ships each from Austal and Marinette.

“This option enables us to buy more ships for the same money and allows us to lock in a lower price for all 20 ships,” Secretary of the Navy Ray Mabus said , in a prepared statement.

The change is a “major blow,” said Jay Wadleigh, vice president of BIW’s local machinists union. “It is one thing we were counting on to help us,” he said.

U.S. Sen. Olympia Snowe of Maine released a statement saying she discussed the issue with Mabus on Monday. “It is vital that we understand the possible effects of the Navy’s new (littoral combat ship) proposal on potential contracts at Bath Iron Works,” she said.

Thompson, the military analyst, said the new procurement plan still benefits General Dynamics, which makes the electronic combat systems.

“The Navy’s new strategy guarantees General Dynamics a lot of business, but it is the electronics part, not the shipbuilding part,” he said.

Wadleigh said he still supports BIW’s decision to sever ties with Austal. “It was the only way we could bid in 2012,” he said, “so at the time it seemed like a wise decision.”

Wadleigh faulted the Navy for giving work to companies that he thinks perform below BIW’s standards. The first few ships, he said, have been delayed and over budget. “We are performing up here and we are not getting any work. The other shipyards are not performing and they are getting work,” he said.

Thompson said it’s all ironic. He said Austal probably wouldn’t have won the initial contract without help from BIW.

“Bath Iron Works is famous for cost discipline. And people in Mobile didn’t have that experience,” Thompson said.

He thinks the impact on BIW will be minimal because littoral combat ships aren’t a prime part of BIW’s business plan. “Bath has quite a bit of business and that will persist for years. It’s not as though this is a blow to the work force, but it would be nice diversification,” he said.

BIW is finishing a production run of Arleigh Burke destroyers and is building the first of three Zumwalt-class destroyers.

Staff Writer Jonathan Hemmerdinger can be reached at 791-6316 or at:

jhemmerdinger@pressherald.com

 

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