The Navy had originally tapped Lockheed Martin Corp. and General Dynamics Corp. to each build two Littoral Combat Ships.

But in April, after Bethesda, Md.-based Lockheed said the first ship would cost $350 million instead of the $270 million estimate, the Navy canceled its order for a second one with that firm.

The cancellation followed strong Congressional criticism on the cost overruns. Lockheed said revised Navy requirements and material delays were to blame.

There is widespread speculation among analysts that Falls Church, Va.-based General Dynamics is also over budget on its first LCS.

Earlier this week at an investor conference n Laguna Niguel, Calif., the company's chief executive Nicholas D. Chabraja declined to offer specifics on the ship's budget. He said he would know more in February when the boat is scheduled to be in the water.

The Navy had originally planned to decide which contractor would build more of these kinds of ships, which can engage in combat in shallow water, after the first four were built.

However, U.S. lawmakers seem to be pushing the Navy to choose a contractor for additional ships based on completing two ships, says Loren Thompson, a defense analyst for the Virginia-based Lexington Institute.

Kendell Pease, a spokesman for the General Dynamics, declined to comment. A spokesman for Lockheed could not be immediately reached for comment.

The cutback represents less than 1 percent of the $459.6 billion fiscal 2008 defense spending bill approved by the Senate Appropriations committee.

Shares of Lockheed fell 7 cents to $97.91 in aftermarket trading, after shares added 48 cents to close at $97.99. General Dynamics shares rose 83 cents to close at $79.53.