* US Navy exercises option on previous contract
* GD says contract will help it further cut costs
WASHINGTON, Feb 28 (Reuters) - General Dynamics Corp has won a contract worth $663 million to start work on another DDG-51 destroyer for the U.S. Navy, the Pentagon said on Tuesday.
The U.S. Navy is exercising an option included in a contract first won by General Dynamics last fall, the Defense Department said in its daily digest of major weapons contracts.
It said the contract ran through August 2018.
General Dynamics welcomed the contract announcement about DDG 116, which is the fourth ship in the Navy's program to continue building Arleigh Burke-class guided missile destroyers.
Jeff Geiger, president of Bath Iron Works, the General Dynamics unit that will do the work, said the additional work would help the company cut costs and refine its shipbuilding processes.
DDG 51 destroyers operate in support of the Navy's carrier battle groups, surface action groups, amphibious groups and replenishment groups, providing a complete array of anti-submarine, anti-air and anti-surface capabilities.
They carry Aegis combat systems, two embarked SH-60 helicopters, advanced anti-aircraft missiles and Tomahawk anti-ship and land-attack missiles.