Page 37: of Maritime Reporter Magazine (April 1973)

Blount Marine Signs

Contract To Build 122-Ft. Passenger Ferry

Blount Marine Corporation an- nounces the signing of a contract with Island Commuter Corp., Fal- mouth, Mass., for the construction of a 122-foot passenger ferry to op- erate between Falmouth and Martha's

Vineyard, Mass.

The new 500-passenger vessel is the second Blount vessel to be pur- chased by Island Commuter. They have operated the M/V Island Queen in the same service since 1963.

Delivery is scheduled in the fall of 1973.

Litton Industries

And Navy Disagree

On Unilateral Price

Litton Industries has announced that the U.S. Navy has made a uni- lateral decision to pay a total esti- mated contract price of approximate- ly $948 million for the construction of five Landing Helicopter Assault ships now under construction at

Litton's Ingalls Shipbuilding Di- vision.

Litton Industries' Ingalls Ship- building Division and the Navy are $108 million apart in the negotiation of a final fixed price to produce five

LHA ships. This difference repre- sents the cost of work and schedule delays caused by actions of the Navy and not included in the original scope of the contract.

The Navy has refused to recog- nize these obligations, and has made a unilateral decision of $948 million for the total price of the five ships.

In a statement, Litton president

Fred W. O'Green said: "The Na- vy's unilateral price is unreasonable and unrealistic, and the company in- tends to aggressively seek an equi- table settlement of this continuing dispute through any and all legal remedies, if necessary."

The Navy's unilateral decision on the LHA contract also provides for a revised delivery schedule, and estab- lishes March 1, 1973, as the effective date for converting to progress pay- ments for future compensation. Fail- ure of the unilateral decision to recognize the Navy's responsibility for costs and delays establishes a repayment to the Navy of approxi- mately $55 million during the next 90 days. Litton believes such a re- payment is not due, and will oppose the Navy's claim.

The revised LHA delivery sched- ule ranges from March 14, 1975, for

LHA-1, to December 17, 1976, for

LHA-5.

The unilateral price of $948 mil- lion includes a target and ceiling price of $795.3 million for the five ships, and approximately $153 million in estimated escalation payments for the cost impact of inflation on the pro- gram. "During lengthy negotiations," Mr.

O'Green said, "Litton reviewed all aspects of the LHA program with the Navy, and offered a total fixed price of $1,056 million which includ- ed all estimated escalation payments, costs related to the cancellation of four ships, and all the changes aris- ing from Navy actions and their ex- pected cost impact on the program, which runs through 1976."

It is Litton's belief that the differ- ence between the company's final offer of $1,056 million to complete the

LHA program and the Navy's uni- lateral price of $948 million is the minimum Government obligation which Litton will recover.

The LHA program is one of two

REPAIR major U.S. Navy shipbuilding con- tracts at Litton. "The 30-ship DD-963 destroyer program, which has a ceil- ing price of $2.2 billion plus esca- lation, is currently ahead of schedule and within contract cost projections.

The new LHA schedule will not de- lay the delivery schedule of the DD- 963 destroyer program, which is due for completion in 1978.

In his statement, Mr. O'Green said: "The basic reason an agreement could not be reached was the Navy's unwillingness to recognize its full le- gal obligations under the contract, and the fair price which it must even- tually pay for the ships. "The Navy asked us to accept an unrealistically low price and to give up our rights to pursue compensation for numerous Navy changes and de- lays, which we would not do. "We, of course, will challenge the

Navy's decision in the courts, if nec- essary, to achieve an equitable settle- ment." • Please forward me com- . 1 prehensive information on 1

I Transocean and its services. I ' Name I I

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I Address I

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Transocean Marine Paint Association

Central Office

Delftseplein 37, P.O. Box 456

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Pacific Liaison Office c/o Nippon Paint (Singapore) Co.

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Tel. 64 8411 Telex 21381

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Wherever you ore building you will find

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April 1, 1973 39