The contract is worth $5 billion and was due to be awarded by the end of August. Now, experts say, the contract award for the U.S. Navy's Littoral Combat Ship program isn't expected for at least another three months.

U.S. Navy plans include the construction of as many as 55 Littoral vessels, many of which are expected to be stationed in San Diego where two ships of the same class -- Freedom and Independence -- are already moored.

The U.S. Navy decision comes after fresh talks re-opened with the two bidders: Austal USA, a unit of Australia's Austal Ltd and Lockheed Martin Corp.

In an announcement this week, the Navy said it needed more time to evaluate the companies' proposals. Even so, the delay comes amid looming doubts by experts that the Navy can ill afford extra evaluation time if it is to build all the ships it needs.

"The Navy says it needs an average of $15.9 billion per year for new vessels," reported The San Diego Union Tribune. "But the Congressional Budget Office says the actual cost is $19 billion. And members of Congress have expressed concern that the cost of the individual ships has roughly doubled in recent years."

Navy officials say the ships provide a new breed of vessels that are fast, modular and designed to deploy manned and unmanned vehicles to execute combat missions. It is understood that the ships will be performing Special Operations Forces support, high-speed transit, maritime interdiction, intelligence, surveillance and anti-terrorism force protection.

Under the fresh negotiations Austal and Lockheed must submit answers to the Navy's renewed list of questions this week. The companies will then have the opportunity under federal procurement laws to submit revised proposals.

The Green Bay (Wis.) Gazette reported that the Navy expects those proposals in September, requiring them to remain valid for 90 days thereafter.

In a statement, Lockheed said that it had "put forward a competitive proposal that offers the Navy the lowest-risk, most affordable option to meet the urgent needs." It didn't elaborate.

Experts anticipate the Navy to build as many as 55 Littoral-type ships within a span of 25 to 30 years. Still, program delays could lead the Navy to build fewer ships or slow the production rate.

It may also have a ripple effect on the local economy in San Diego, the Union Tribune reported.

"Sailors assigned to the ships contribute to the economy and local shipyards and other contractors service the vessels," it said.

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