A third shipyard now has production work on the Marine Corps' Landing Ship Medium, and it got there through a contracting model the Navy has never used before. TOTE Services, which manages the program for the Navy, has picked Hanwha Defense USA to build one LSM at Hanwha Philly Shipyard for $269 million, USNI News reported on Friday, Oct. 30. The award carries options for three more ships. It is the first shipyard selection TOTE has made as vessel construction manager (VCM), and it is Hanwha's first contract to build a ship for the U.S. Navy.
The award also tests the Navy's theory that a commercial-style manager can move a warship program faster than the usual government acquisition process. TOTE won the VCM role in July, issued a request for proposals that same month, and picked a builder before the end of October.
How TOTE Picked Hanwha for the $269M LSM Award
TOTE Services won a $2.2 billion contract in July to serve as the LSM vessel construction manager, then put out a request for proposals that month, according to USNI News. TOTE's own release, as quoted by USNI, explains why Hanwha came out ahead: "Hanwha Defense USA (HDUSA) is the first shipbuilder selected through that process, based on its competitive pricing and acceptance of TOTE Services' subcontract terms and conditions."
The release goes on: "The award covers construction of one LSM, valued at $269 million, at Hanwha Philly Shipyard (HPSI), with options for three additional vessels."
Inside Defense reported that TOTE held an industry day on the program in August, and that Hanwha Philly Shipyard and Eastern Shipbuilding Group both attended. Neither outlet said how many bids TOTE received or which firms submitted them.
TOTE Services President Jeff Dixon made speed and terms the selling points. "This award shows the speed at which the VCM model can move from RFP to contract," Dixon said in a statement reported by Inside Defense. "Through a competitive process, we secured strong terms that benefit the government, along with build positions that allow construction to start in the fourth quarter of 2027."
In other words, construction on Hanwha's hull will not begin for about a year. The award locks in a slot in the yard's schedule, not steel cutting next month.
Where Bollinger and Fincantieri Fit in the Eight-Ship LSM Buy
Hanwha joins two shipyards that already had LSM work. Inside Defense reported that the award makes Hanwha the third yard, after Bollinger Shipyards and Fincantieri Marinette Marine, to win a share of production work on the initial eight LSMs that Congress has authorized and funded. TOTE's LSM contract covers as many as eight ships, according to USNI News.
Before TOTE took over as VCM, the Navy had contracted directly with both of the other yards. Gulf Coast-based Bollinger is already on contract for the first LSM. Fincantieri Marinette Marine in Wisconsin won a contract earlier this year for long-lead items for four ships, USNI reported.
Both yards are still in the plan. "TOTE Services continues productive contract discussions with Bollinger Shipyards and Fincantieri Marinette Marine, both directed shipyards under the VCM contract, which are expected to play a meaningful role in building the LSM fleet," the TOTE release reads, as quoted by USNI.
If Hanwha's three options are exercised, it would build four ships, half of the eight TOTE's contract covers. That leaves Bollinger's first hull and Fincantieri's four long-lead sets competing for the rest of the funded buy, and TOTE has not said how it will divide the remaining ships.
Why the Vessel Construction Manager Model Matters for the McClung-Class
USNI News reported that this is the first time the Navy has chosen to use a vessel construction manager, which runs the program on the service's behalf. Under that arrangement, TOTE holds the shipyard subcontracts and sets their terms. TOTE's release made clear that Hanwha's willingness to accept those terms, along with its price, decided the competition.
TOTE already runs a program this way at the same shipyard. It is the VCM for the Maritime Administration's five-ship, $1.6 billion National Security Multimission Vessel program, which is under construction at the yard, according to Inside Defense.
Inside Defense refers to the ships as the McClung-class Landing Ship Medium. The class is based on the Damen LST-100 concept, an export-oriented tank landing ship design in service with the Nigerian Navy and planned for the Royal Australian Navy, USNI reported. The Navy bought the design package for $17 million, according to USNI's earlier reporting.
The program has gone through years of requirements churn as the Navy and Marine Corps argued over the ship's design and survivability, USNI noted. The Marine Corps' strategy for countering China in the Western Pacific depends on the LSM to move small units of Marines between islands and shorelines, where they would set up temporary bases and fire anti-ship missiles.
Hanwha's First Navy Ship Contract and the Korea Shipbuilding Push
For Hanwha Defense USA, the award is a first: Inside Defense reported it is the company's first contract to build a ship for the U.S. Navy. It adds Navy work to a yard that TOTE already manages on a Maritime Administration program.
The timing follows broader U.S.-Korea shipbuilding moves. USNI noted that last year the White House announced the outlines of a trade deal with South Korea after President Donald Trump's visit, and that the deal included a pledge from South Korea to put $150 billion into American shipbuilding.
What It Means for Contractors
The prime is not the Navy. On the LSM, TOTE Services holds the shipbuilding subcontracts. Suppliers chasing propulsion, deck machinery, electrical, HVAC and outfitting packages should expect to deal with TOTE and the shipyards rather than the Navy directly. TOTE has said plainly that price and acceptance of its subcontract terms decided the first award, so vendors should expect commercial-style terms to flow down.
Watch the open ship count. Congress has funded eight initial LSMs. Bollinger holds the first, Fincantieri has long-lead material for four, and Hanwha has one firm ship plus three options. How TOTE splits the remaining hulls, and when it exercises Hanwha's options, will decide which yard's supply chain grows. Firms already supplying any of the three yards are likely well placed to bid.
Plan around the 2027 start. Dixon tied the award to build positions that allow construction to begin in the fourth quarter of 2027. Long-lead buys for the Hanwha hull would likely need to be placed well before then, so suppliers may have a narrow window to get into the yard's bill of materials.
The VCM model may spread. TOTE now runs two federal ship programs at the same yard, and Dixon is pitching the LSM award as proof the model can move from RFP to contract quickly. If the Navy or Maritime Administration uses VCMs on other auxiliary or amphibious programs, mid-tier yards and suppliers should expect more competitions run by commercial managers rather than directly by the government.
