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Navy poised to pick builder of new Littoral Combat Ship this summer

The Navy has already ordered a total of four littoral combat ships - two from General Dynamics/Austal and two from Lockheed Martin. The first two ships have been delivered to the Navy and are in service. The third and fourth ships are under construction and the Navy is currently running another competition for a winner-take all between the two designs.
By Dana Hedgpeth
Wednesday, August 4, 2010

The Navy plans to pick a winner this summer in the contest to build a new high-speed warship that can prowl close to shorelines, a vital part of future military strategy. But whether the service can live up to its promises to build an inexpensive ship that can do a variety of missions remains a big question, defense industry analysts and congressional leaders say.

Two companies -- Lockheed Martin of Bethesda and Austal USA of Mobile, Ala. -- are competing for the contract to build what is known as the Littoral Combat Ship (LCS), a deal that could be worth as much as $28 billion over several decades. The ship is meant to be smaller, cheaper and more versatile than the Navy's fleet of aircraft carriers and destroyers, and it is seen as crucial to the Navy's plans to increase its fleet to 313 ships. Last week, the House agreed to spend about $1.5 billion in its defense authorization bill on building the LCS.

But the Navy's shipbuilding plans are under heavy scrutiny in a time of budget cuts and changes in military priorities. Defense Secretary Robert M. Gates has questioned whether the U.S. military "can really afford a Navy that relies on $3 billion to $6 billion destroyers, $7 billion submarines and $11 billion carriers" given that the service has a "massive overmatch" compared with others, and the Navy's top admiral recently warned that new ships could face a procurement squeeze. So, more than ever, the program depends on the contractors' ability to hold down costs.

(Photos of the combat ships)

"This is a linchpin of the Navy's future shipbuilding plans," said Maren Leed, a senior fellow at the Center for Strategic and International Studies, a think tank. "Two- to four-billion-dollar ships are increasingly less doable, so if you're going to have ships in numbers, it has to be something like LCS that you can buy for less than a billion dollars a pop."

Delays and overruns

The littoral ship program has a long, troubled history. The concept started more than a decade ago, but it has gone through delays and cost overruns. Last year, the Navy launched a major overhaul of its acquisition plan for the ships after previously ordering four of them -- two to be built by Lockheed and two by General Dynamics, which was working with Austal as a partner.

(Side by Side comparison of the two ships)

Last fall, citing flaws in the competition, the Pentagon reworked the acquisition process on the contract. Austal then took over as lead bidder, with a division of General Dynamics designing the electronics for the vessels.

Some government auditors and analysts worry whether the project will stay within the latest congressionally mandated cost cap of $480 million per vessel. The original price was expected to be $220 million.

"A ship that was supposed to be small and affordable and delivered on time has become anything but that," said Rep. Gene Taylor (D-Miss.), chairman of the sea power subcommittee of the House Armed Services Committee. "It is way late, way over budget. If it is done right, this will be a major component of the Navy's shipbuilding plans over the next 20 to 25 years. But the price has to be right, and the quality has to be right."

A recent report from the Congressional Budget Office warned that the Navy wouldn't be able to afford all the ships it wants in the coming years, even if it continued to receive the same amount of money for shipbuilding -- an average of about $15 billion a year.

The littoral ship also represents a shift in the Navy's strategy. Just as the Army is adjusting its war-fighting capabilities to battle counterinsurgencies in close quarters in cities, so too is the Navy trying to adjust its tactics, experts say, and stay relevant in the U.S. military's operations after the Cold War.

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