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

By Dana Hedgpeth
Wednesday, August 4, 2010; A14

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.

The Navy's fleet consists mostly of large, expensive destroyers, cruisers and aircraft carriers that operate in deep waters with crews of about 200 to upward of 3,500, and they can cost as much as $10 billion to build. The littoral ship will have a core crew of 40 people.

Rather than serve as a multi-mission ship like the Navy's bigger vessels, the littoral warship is expected to use "plug-and-play" modules that will be switched out so various pieces of equipment can be used. The littoral ships will have helicopters, sensors, and robots operated with joysticks to help do a variety of things from intercepting drug smugglers and chasing pirates to sending unmanned vehicles to detonate underwater mines and submarine missiles.

One major unknown that could add to the costs, experts say, is whether the modules will work with the ship. A recent report from the Government Accountability Office estimated that operating and maintaining the ships could cost $84 billion in the coming decades -- a cost that the GAO says the Navy has underestimated.

"The Navy wants this ship to sing, dance and make coffee at the same time, but in reality it might turn out to be much more difficult to meet its expectations," said Martin Murphy, an independent naval expert who worked for the Navy. "There's a lot of experimentation once it gets done before it demonstrates whether it is successful."

Two options

The Navy is deciding between two designs for the winner-take-all competition.

One, built by Lockheed, is modeled after an Italian commercial boat. The ship, part of the Freedom class of warships, is 378 feet long and has a high-speed steel hull that allows it to travel about 50 miles per hour. It is being built at Fincantieri Marine Group's shipyard in Marinette, Wis. The software on the ship is similar to that of other Navy cruisers and destroyers.

The Austal team's ship, an Independence-class vessel, is built around an aluminum trimaran design, a triple-hull form used by commercial ferries that has not been employed before on a U.S. warship. The ship is 419 feet long with a 7,300-square-foot flight deck and will be built in Mobile, Ala.

Under the new contract, to be issued in the coming weeks, the Navy plans to pick one of the designs and award a contract for 10 new warships. In 2012, the Navy plans to run another competition for an order of five more ships -- to be based on the winning design, though the work could be awarded to other shipyards. Over the next three decades, the Navy's plans call for increasing the size of its fleet by purchasing 55 of the littoral ships.

"It really isn't about which ship they choose, but it is more a sign that the Pentagon's top-line budget is expected to stay flat and may decline," said Travis Sharp, a defense analyst at the Center for a New American Security. "So the bigger challenge for whoever is chosen is whether they can keep it cheap."

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