REUTERS - The U.S. government has approved the sale of four Lockheed Martin Corp multi-mission warships and associated equipment to Saudi Arabia, a deal valued at $11.25 billion, according to a U.S. government official.
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The Pentagon's Defense Security Cooperation Agency, which oversees foreign military sales, notified U.S. lawmakers late Monday about the possible sale, said the source, who was not authorized to speak publicly.
Lawmakers have 30 days to block the sale, although such action is rare since potential deals are carefully vetted before any formal notification takes place.
The approval allows Saudi Arabia and the U.S. government to negotiate a formal contract for the ships, but that process is not expected to be completed before the end of the year, according to a second source who is familiar with the matter.
News of the notification was first reported by Bloomberg.
Reuters reported in September that Saudi Arabia was in advanced discussions with the U.S. government about the purchase of two of the ships and could reach agreement by the end of the year. It was not immediately clear if the Gulf country would buy all four ships approved for sale at once.
The sale is part of a larger modernization of the Royal Saudi Navy's Eastern Fleet, and will replace older U.S.-built ships with new ships based on the Littoral Combat Ships (LCS) that Lockheed currently builds for the U.S. Navy together with its major supplier, Italy's Fincantieri.
The Saudi Naval Expansion Program II, or SNEP II, has been under discussion for years, but U.S. sources say Saudi Arabia's concerns about Iran have accelerated the effort.
The sale marks the first major export of a newly built U.S.-manufactured surface naval vessel in years. It will allow the U.S. military to operate more easily together with those of the Gulf Cooperation Council countries.
"This sale demonstrates the enduring U.S. commitment to building robust diplomatic and security partnerships essential to promoting peace and stability in the Gulf region," said the official.
The sale is expected to include training, radar and sonar systems, and munitions and fire-control systems.
Lockheed and Sikorsky Aircraft, a United Technologies Corp unit, hope to finalize another key part of the modernization effort, a $1.9 billion order of 10 MH-60R helicopters, by the end of the year, said one of the sources. Lockheed expects to complete its takeover of Sikorsky this month.
U.S. lawmakers were notified about the MH-60R deal in May.