Ottawa Awards Design Contract For $60-Billion Fleet Of Warships To Lockheed Martin

Canada’s federal government has awarded a contract to design its $60-billion fleet of new warships to U.S. defence company Lockheed Martin Corp (NYSE:LMT)

Procurement Minister Carla Qualtrough announced the deal in Halifax, Nova Scotia early Friday morning, saying the Canadian Navy's 15 new warships will be built by Irving Shipbuilding Inc. and based on the British Type 26 frigate.

Lockheed Martin's design had been selected by Ottawa last October, beating out submissions from Alion Science and Technology of Virginia and Spanish firm Navantia to replace Canada's existing frigates and destroyers.

Canada’s Defence Department will now work with Irving Shipbuilding and Lockheed Martin to figure out what changes need to be made to the company's design, along with the navy's requirements to make sure they fit. That process will have a direct impact on how much the ships ultimately cost and how long they take to build.

Ottawa’s announcement comes after difficult negotiations that saw Alion ask the Canadian International Trade Tribunal to quash the decision last fall, saying Lockheed Martin's design did not meet the Navy's requirements and should have been disqualified.

The trade tribunal initially ordered the government not to award a contract to Lockheed Martin until it investigated Alion's claims, but later rescinded that decision and then tossed the case out.