The federal government is giving U.S. defence giant Lockheed Martin the first crack at inking a contract to design Canada’s $60-billion fleet of new warships.

Government officials say Lockheed’s proposed design beat out two rival submissions during what has been a long and extremely sensitive competition to design the replacements for the navy’s entire frigate and destroyer fleets.

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However, that doesn’t mean Lockheed executives will be popping champagne, as negotiators for both sides will now have to sit down and iron out details – including the final cost – before an actual contract is awarded.

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The stakes will be high for both sides, with hundreds of millions of dollars in play as well as pressure to make up for lost time even though whatever decisions are taken could have ramifications for the navy – and taxpayers – for decades.

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The government has reserved the right to walk away from the talks – if Lockheed drives too hard a bargain – and negotiate with the second-place bidder, which the government did not identify, though officials are hoping that won’t be necessary and a contract will be signed this winter.

The warships are to be built starting in the early 2020s by Halifax-based Irving Shipbuilding, which worked with the government in identifying Lockheed as the preferred bidder and will also participate in the pending negotiations.