UPDATE 1-Northrop, GD win $2.8 bln in warship orders

(Adds details, background, byline)

By Andrea Shalal-Esa

WASHINGTON, Feb 14 (Reuters) - The Pentagon said on Thursday it awarded Northrop Grumman Corp (NOC.N: Quote, Profile, Research) and General Dynamics Corp (GD.N: Quote, Profile, Research) contracts valued at $1.4 billion each to begin construction of the U.S. Navy's new class of DDG-1000 destroyers.

"A strategy for dual lead ships provides great advantages. It keeps the shipbuilding labor force skilled and active, it provides incentives for successful production, and it helps the Defense Department to ensure that we get the best possible value for the taxpayer," the Pentagon's chief weapons buyer, John Young, said in a statement.

When Young was the Navy's acquisition chief he proposed having just one builder, but Congress rejected that approach, worried about losing key jobs at U.S. shipyards.

The new destroyers will be the lead ships in a new "Zumwalt" class of U.S. warships. The Navy plans to build seven of the destroyers, and plans to begin a procurement program soon for a cruiser based on the same basic design.

"The DDG 1000 Class Ship will provide advanced land attack capability in support of the ground campaign and contribute naval, joint, or combined battle-space dominance in littoral operations," the Pentagon said in announcing the contracts.

Funding for long lead materials for the destroyer program was included in the Navy's budget for fiscal 2008, which began on Oct. 1. Its budget request for fiscal 2009 includes $3.2 billion for the destroyer program.

The Pentagon said the Northrop contract, which is a modification of an earlier contract, includes construction of the DDG 1001 destroyer and a hangar under a work share agreement with General Dynamics' Bath Iron Works shipyard in Maine. Work under the contract will be completed by July 2014.