5 Things Investors Need to Know About the U.S. Navy's New Frigate

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Just over one year ago, the U.S. Navy dipped its toe in the water with regards to developing a new ship: It awarded five leading defense contractors $15 million each to draw up plans to design a Guided Missile Frigate to be known as "FFG(X)."

Less than one month ago, one of those five -- Lockheed Martin -- dropped out of the competition, saying it would rather build the combat system that would operate the warship than the ship itself. This leaves four contenders:

  • General Dynamics (NYSE: GD), once the prime contractor building Independence-class Littoral Combat Ships.

  • Austal USA (NASDAQOTH: AUTLY), the current prime contractor on the LCS.

  • Huntington Ingalls Industries (NYSE: HII), prime contractor on the U.S. Coast Guard's National Security Cutter (NSC).

  • Italy's Fincantieri Marinette Marine Corp.

One of these companies now stands to win at least $16 billion in Navy contracts to build 20 (or more) frigates at a cost of $800 million (or more) each. And the competition is heating up.

FREMM-class frigate at sea
FREMM-class frigate at sea

The FREMM frigate by Italy's Fincantieri is one leading contender to become America's next U.S. Navy frigate. Image source: Fincantieri.

RFP drops

Last week, the Navy issued its final Request For Proposals (RFP) to the remaining candidates. Each will now submit a bid to build the new frigate -- and unlike the Navy's current littoral combat ships, this frigate is going to be a beast.

The littoral combat ships that General Dynamics, Austal, Huntington, and Lockheed Martin have been building for the Navy, you see, have been criticized for lacking "teeth" -- specifically, offensive weaponry that would make them more than glorified Coast Guard cutters. FFG(X) by contrast, will come armed to the teeth.

5 elements to make a winning frigate

According to the RFP, the new frigate must sport five key elements that will permit it to punch above its weight at sea:

  • At least 32 Mark 41 vertical launch system cells to fire surface-to-air missiles for aerial defense.

  • Anywhere from eight to 16 over-the-horizon anti-ship cruise missiles for naval offense.

  • Lockheed's state-of-the-art, AEGIS-derived, COMBATSS-21 Combat Management System (see above) to tell the crew what to shoot those missiles at.

  • Space aboard to carry both an MH-60R Sikorsky Seahawk naval helicopter, and also a Northrop-built MQ-8C Fire Scout drone helicopter.

  • Room to install a 150-kilowatt laser.

That's right: This boat is going to have laser guns -- or at least the capability to support them as the Navy steps up the power of the laser cannons it's working on.