The Navy has pulled the plug on one of two Littoral Combat Ships being built by Lockheed Martin.

In January, the Navy announced it was temporarily stopping work on Littoral Combat Ship 3, which had just begun construction.

The move came after Lockheed Martin announced that the first ship that was nearing completion was significantly over budget.

Navy officials said earlier this year that they were trying to reach an agreement with Lockheed Martin on a price for LCS 3. Both sides would have shared the costs if LCS 3 surpassed the agreed upon price.

But on Thursday, Navy Secretary Donald Winter announced that the two sides had failed to reach such an agreement, meaning the contract for LCS 3 has been canceled.

General Dynamics will continue to build two other Littoral Combat Ships, according to a Navy news release.

“If the cost performance becomes unacceptable, then General Dynamics will be subject to similar restructuring requirements,” the news release says.

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