WASHINGTON — The U.S. State Department on Friday approved a pair of potential deals for frigate construction and modernization with Greece, as the Hellenic Navy navigates a complex effort to upgrade its surface fleet.

Greece has an ongoing competition for a three-part plan: upgrade its four Hydra-class MEKO 200 frigates; obtain an interim capability it can operate while the MEKOs are at the maintenance yard; and buy four new frigates. Additional objectives, as outlined to the U.S. Navy, were to involve the Greek industrial base and to increase interoperability with the U.S. as a NATO ally and frequent collaborator in the Mediterranean Sea and elsewhere.

Lockheed Martin and the U.S. Navy paired to offer one potential solution, in which the defense contractor would upgrade the MEKOs and sell a multi-mission frigate based off its Freedom-variant Littoral Combat Ship, dubbed the Hellenic Future Frigate, and the Navy would provide four decommissioned ships — potentially decommissioned LCSs or cruisers.

The State Department on Dec. 10 announced it had approved a $2.5 billion sale for the modernization piece and had notified Congress about the potential deal. It separately approved a $6.9 billion sale for the four new frigates and submitted congressional notification for that as well.

The modernization deal, if executed, would include upgrading the MEKOs by installing the Close-in Weapon Systems (CIWS) Phalanx BLK 1B Baseline 2, MK 45 five-inch 54 caliber guns, the COMBATSS-21 Combat Management System developed for the Freedom LCSs, the AN/SQS-56 sonar and much more. Raytheon Missiles and Defense, Lockheed Martin, BAE Systems and VSE would be the key contractors.

The new construction deal would include four multi-mission surface combatants with the Aegis-based COMBATSS-21 Combat Management System, 200 Rolling Airframe Missiles (RAM) BLK 2, 32 Vertical Launch Anti-Submarine Rocket (ASROC) missiles, 32 MK-54 All Up Round Lightweight Torpedoes and more — plus support equipment, training, technical support, logistics and more to ensure the new ships fold smoothly into fleet operations.

Two industry sources familiar with the ongoing talks, but unable to comment on the record because the competition is being handled at a government-to-government level, told Defense News Greece formally extended a letter of request to the U.S. outlining its needs. The State Department approval represents the maximum solution that could be signed into agreement. Once a letter of agreement is submitted, the U.S. and Greece would negotiate whether Greece wants the whole package or wants to scale down in any areas.

Still, the fate of this deal is unclear. Greece had been pursuing options from six qualified government/industry teams, asking each separately to submit letters of agreement (LOAs) outlining their bids. For the U.S., this congressional notification is a final step before the LOA can be sent over to Athens — if not in the last week of December, then by the time Greek officials return from holiday on Jan. 7, the industry sources said.

In September, France announced it had struck a deal with Greece: the government approved the sale of three frigates from France’s Naval Group — an industry group majority owned by the state — for 3 billion euros, or about $3.4 billion, with an option down the line for a fourth ship.

The announcement included some specifics, including where these FDIs (frégate de defense et d’intervention) would fit in the ongoing French production line, but did not address other requirements conveyed to the U.S. team, such as business opportunities for the Greek defense industrial base, how the solution would increase interoperability or what an interim solution might be.

The September announcement was coupled with the signing of a strategic defense partnership between French President Emmanuel Macron and Greek Prime Minister Kyriakos Mitsotakis.

Still, it’s still unclear how likely Greece is to execute the deal with France. French Ministry of Defense spokesman Hervé Grandjean said shortly after that a memorandum of understanding had been signed, but that “a contract in due form remains to be signed in the next months. We are opening a period of three months at the end of which the official contract will be signed.” That statement came in late September, meaning the end of the three-month period is coming up in a matter of weeks.

The industry sources told Defense News the U.S. team was specifically asked by Greece to continue work on its own bid despite the announcement from France. The U.S. bid was slowed a bit, as participants tried to understand whether anything in the competition had changed, but the sources said Greece made clear it still wanted the U.S. to submit its comprehensive proposal. They said it’s possible the French deal could not be executed, or that it could be executed in addition to Greece selecting some pieces of the U.S. bid to pursue.

The sources noted that Greece specifically wanted Lockheed Martin to tailor its multi-mission frigate solution in certain ways to bolster anti-air warfare and anti-submarine warfare capabilities, as Defense News previously reported, even though the French frigate is an anti-air frigate, for example.

Megan Eckstein is the naval warfare reporter at Defense News. She has covered military news since 2009, with a focus on U.S. Navy and Marine Corps operations, acquisition programs, and budgets. She has reported from four geographic fleets and is happiest when she’s filing stories from a ship. Megan is a University of Maryland alumna.

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