Abstract:
In 1984, the US Navy began the task of choosing a shipyard to build the first in a new class of guided missile destroyers, the last major surface combatant ships to be constructed for the navy in the 20th century. In an era when the shipbuilding industry was rapidly declining, the Aegis program promised continued navy spending into the 1990s. For one firm in particular, Todd Pacific Shipyards Corporation of Los Angeles, early entry into the destroyer program could mean the difference between bankruptcy and survival. Todd was the last yard on the West Coast with experience in supplying large, war-fighting surface ships; therefore, the company maintained, its continued existence was vital to the nation's security and industrial base. But with Todd's costs certain to be higher than its competitors on the nation's other coasts, the navy would have to abrogate the competitive process and justify spending additional millions to rescue Todd. This case tells the story of Todd's efforts to win the contract, and of the debate within the navy on the merits of Todd's case. It illustrates the difficulty inherent in weighing long-term benefits and short-run costs. The navy's decision--to go with the low bidder--is not disclosed until the epilogue, allowing students to put themselves in the shoes of navy policymakers.
