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Costs Ballooning for New Combat Ship

By Renae Merle
Washington Post Staff Writer
Thursday, March 1, 2007

A Navy program to build a new combat ship to patrol coastal waters will face another cost increase, government officials acknowledged yesterday, a hit to the service's attempt to keep expenses under control so it can afford a larger fleet.

The increase is expected to affect a version of the ship being built by General Dynamics and comes as Congress is becoming increasingly critical of rising costs in weapons programs and has questioned the Navy's handling of the combat-ship contract.

The size of the increase is still unclear, but it may be similar in scope to an overrun encountered on another version of the ship being built by Lockheed Martin. That one is now projected to cost $350 million to $375 million, according to Navy officials. The two ships were initially priced at about $220 million each.

Bethesda-based Lockheed and General Dynamics of Falls Church were tapped three years ago to build what would be the first of 55 small, fast-moving ships that would operate close to shore, in littoral waters, hunting submarines and destroying underwater mines. A key part of the program was turning a commercial ship design into a cheap $220 million combat vessel.

But last year, the Navy said its original cost estimate did not factor in some management costs, and it raised the estimate for the first ships to about $270 million. Then this year, the Navy said it had detected further cost increases in Lockheed's version and took the unusual step of ordering the company to stop work for 90 days on the second of its two ships. Yesterday, for the first time, the Navy said the cost of the General Dynamics version will also be higher.

The cost increases reflect a variety of problems, including that the vessels were being designed and built simultaneously while the contractors were also implementing new design standards, said Delores Etter, the Navy acquisition chief. The program was given an ambitious schedule following the Sept. 11, 2001, attacks, and there wasn't enough oversight by the Navy or the contractors, she said. "I think trying to manage a program, that is all billion-dollar programs, is always a challenge," Etter said during a briefing with reporters. Speaking of the cost escalation in the littoral combat ship program, she added, "We should have known it earlier."

Given that only about half of the ship's construction is complete, "it would be premature to estimate what the final construction cost would be," said General Dynamics spokesman Rob Doolittle. The company has said its ship will be 400 feet long and hold a crew of 40.

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