Shipbuilding Dispute

Huntington Ingalls Industries President and Chief Executive Officer Mike Petters said today the shipbuilder is disputing the Navy’s decision to limit progress payments on a multimillion-dollar destroyer contract.

During a conference call on corporate earnings, Petters was asked by Citigroup analyst Jason Gursky about Inside the Pentagon's report today that the Navy will withhold 5 percent of progress payments for the $698 million contract awarded in September for the construction of an Arleigh Burke-class destroyer (DDG-114) at Ingalls shipyard in Mississippi. The Navy's decision follows revelations earlier this year that Ingalls was breaking more than half of the Defense Department's rules for delivering weapons on time and on budget.

"In all of our contracts, we usually end up with several kinds of disputes with our customer over various issues," Petters said. "And this particular one, I think, has to do with earned value management systems." He said the company has "engaged with" the Navy on the subject and "will continue" to do so. Petters said he does not expect the Navy's decision to impact the outlook and cash flows for the business.