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Rep.: Get LCS costs under control

The Navy must shape up management of its over-budget, past-schedule Littoral Combat Ship program or risk it being eliminated in the coming era of budget austerity, lawmakers said Tuesday.

“Everyone should understand that the current situation of these vessels costing in excess of half a billion dollars cannot continue,” said Rep. Gene Taylor, the Mississippi Democrat who chairs the seapower subcommittee of the House Armed Services Committee.

“There are too many other needs and too little resources to pour money into the program that was designed to be affordable. I would also like to remind all of the parties involved that, particularly right now, you don’t want to be the program that is breaking the bank,” Taylor said.

Other members of the seapower subcommittee, including its ranking Republican, Rep. Todd Akin of Missouri, urged the Navy to nail down a strategy for spending less on the LCS fleet it wants.

There has been no official word about cuts to defense programs generally or Navy programs in particular, but Congress and the Obama administration, weary from spending trillions on stimulus and private-sector bailouts, are believed to be eyeing the savings that would come from Pentagon cuts.

LCS was pitched to Congress as a relatively quick, relatively cheap design that could be had for about $220 million per ship. Instead, costs have doubled or more; Taylor said he believes the cost for the still-unfinished second ship, the Independence, is approaching $600 million.

Taylor said he continues to believe that LCS — for which ships are designed to accept interchangeable sets of equipment to take on different missions — is the right ship for the Navy of the 21st century. But he castigated the way the service had managed the program, pointing out that by its own initial schedule, the Navy should have 13 ships delivered or under contract and another six in the fiscal 2010 budget.

Instead, the Navy has commissioned one LCS, the Lockheed Martin-built Freedom, which is undergoing testing at Naval Station Norfolk, Va. It expects to take delivery of its second ship, the General Dynamics-built Independence, in September. The Freedom is expected to make its first fleet deployment around 2012.

Learning process

Rear Adm. Bill Landay, program executive officer for ships, who testified on behalf of the Navy, said that future copies of the Freedom and Independence would stay on budget because the manufacturers had worked out many of the early bugs from building the first two.

Landay acknowledged the Navy had made too many changes in the ships’ designs as they were being built, which led to work being undone or re-done, but that the designs today are mostly complete. He also said he was confident the Navy could strike a deal with both manufacturers in which they built ships within the congressionally imposed cost cap of $460 million per copy.

The Navy originally had hoped to award a contract for two fiscal 2009 ships — one apiece for Lockheed and GD — by the end of January. A deal still hadn’t materialized by the beginning of the month, so the Navy had to issue a contract to Lockheed on March 2 to keep its shipbuilder from laying off workers as they waited to build their next LCS. The value of that contract was withheld as a part of a larger, complex arrangement to award three more ships in fiscal 2010, two to the winner of another competition and one to the loser.

Taylor said he wasn’t satisfied with the performance of either contractor. He asked what it would take for the Navy to bundle its plans for each LCS and award other shipyards so-called “build to print” contracts. Such agreements would mean other yards could bid for the jobs and create more competition, Taylor said, driving down costs.

Landay estimated it would cost about $60 million more per ship and add 18 months to two years to build an LCS at other yards.

In written testimony, he cautioned against trying to award LCS contracts to contractors other than Lockheed and GD because it would require builders to make a flurry of other independent deals for the ships’ various systems. Although the Navy owns the overall design of its ships, it doesn’t own the designs of their major components; for example, it couldn’t license the design of the Freedom’s Rolls-Royce MT-30 gas turbines to another engine manufacturer. The government or the third-party shipbuilder would have to strike its own deal with Rolls-Royce for the engines and many other major components, creating an unnecessary complication, the Navy wrote.

Whatever it takes, Taylor said, the Navy has to force its vendors to be better stewards of public dollars.

“When I walked through the Austal shipyard a few weeks ago I saw absolutely no effort to save the taxpayers’ money,” he said, adding a motorcycle reference: “We’re building Orange County Choppers when we oughta be kicking out Hondas.”