U.S. Navy Revamping Proposal for Saudis

The U.S. government is revamping proposals for a multibillion-dollar modernization of Saudi Arabia's navy after leadership changes in the kingdom, but no decisions are expected in the near-term, industry and government officials said this week.

Pat Dewar, executive vice president of Lockheed Martin Corp's international division, said U.S. officials were developing a "matrix of options" to offer Saudi Arabia, rather than the pre-set weapons packages that had been offered before.

"It's a start to try to reengage the discussions," Dewar told Reuters on Monday.

U.S. Navy officials are continuing to work the issue "as hard as we can," said one source familiar with the discussions.

Senior Lockheed officials told Reuters in November they expected news about the program in the next several months..

Those hopes dimmed in recent months after a series of leadership changes in Saudi Arabia, which required a fresh series of briefings, said the source, who was not authorized to speak publicly.

Saudi Arabia has been considering plans to modernize its eastern naval fleet for years, a project valued by analysts at around $20 billion. The U.S. proposals include possible purchases of up to 12 of Lockheed's steel monohull Littoral Combat Ship (LCS) or the larger DDG-51 destroyer built by General Dynamics Corp.

Dale Bennett, the executive vice president who heads the Lockheed mission systems and support division that builds the LCS ships, said the company remained convinced its ship offered the right capability for Saudi Arabia's need.

"We're hopeful that something will move forward and we're supporting both (the U.S. and Saudi Arabian) navies in any way we can, but it's not clear to me that anything's moving soon," Bennett told Reuters.

Lockheed's initial proposal included a modified version of Lockheed's Aegis combat system, an MH-60R helicopter it builds with Sikorsky Aircraft, a unit of United Technologies Corp , a fast missile craft it designed with VT Halter Marine, a unit of ST Engineering.

U.S. Navy officials had no immediate comment on the Saudi naval modernization program.

By Andrea Shalal (C) Reuters 2014.