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U.S. approves $11.25 billion warship sale to Saudi Arabia

Wednesday, Oct 21, 2015

The U.S. government said on Tuesday it has approved the sale of up to four Lockheed Martin Corp multi-mission warships, plus associated equipment, training and logistics to Saudi Arabia, a deal valued at $11.25 billion overall.

The Pentagon's Defense Security Cooperation Agency, which oversees foreign military sales, notified U.S. lawmakers late Monday about the possible sale, and released a statement on its website on Tuesday.

"We stand ready to support that sale," Lockheed Chief Executive Officer Marillyn Hewson told analysts on an earnings call. She said the deal could be completed in 2016.

DSCA said the major defense equipment involved in the deal was worth $4.3 billion, with the rest going to fund extensive engineering, logistics and training required for the program.

Lawmakers have 30 days to block the sale, although such action is rare since potential deals are carefully vetted before formal notification.

Reuters reported in September that Saudi Arabia was in advanced discussions with the U.S. government about buying two of the ships, and could reach agreement by the end of the year. It was not immediately clear if the Gulf country would buy all four ships at once.

The sale is part of a larger modernization of the Royal Saudi Navy's Eastern Fleet, and will replace older U.S.-built ships with new ships based on the Littoral Combat Ships (LCS) that Lockheed currently builds for the U.S. Navy together with its major supplier, Italy's Fincantieri.

The Saudi Naval Expansion Program II, or SNEP II, has been under discussion for years. U.S. sources said Saudi Arabia's concerns about Iran accelerated the effort.

It will be the first major export in years of a newly built U.S.-manufactured surface naval vessel, and will allow the U.S. military to operate more easily with those of the Gulf Cooperation Council countries.

"This sale demonstrates the enduring U.S. commitment to building robust diplomatic and security partnerships essential to promoting peace and stability in the Gulf region," said one U.S. official who was not authorized to speak publicly.

The sale would include equipment such as radar and sonar systems and munitions and fire-control systems.

Lockheed and Sikorsky Aircraft, a United Technologies Corp unit, hope to finalize another key part of the modernization effort by year-end: a $1.9 billion order of 10 MH-60R helicopters, one of the sources said. Lockheed expects to complete its takeover of Sikorsky this year.

U.S. lawmakers were notified in May about the MH-60R deal.

 

reuters.com

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