With Littoral Combat Ship (LCS) construction costs under greater control, the Navy is again thinking about splitting the fleet purchase between the contractor teams.
“The Navy wants to split its buy of Littoral Combat Ships between a steel monohull developed by Lockheed Martin and the Marinette shipyard, and an aluminum trimaran developed by the Austal shipbuilding company of Australia,” said Lexington Institute defense analyst Loren Thompson.
The Navy had considered splitting up the business for some of the first ships before, but higher costs forced it to reconsider those plans.
“This acquisition strategy returns the Navy to where it was two years ago, before the high cost on initial ships in the class led it to doubt the affordability of buying both versions of the vessel,” Thompson said.
Under the initial acquisition plan, the Navy bundled together the two LCSs funded in Fiscal 2009—LCSs 3 and 4—with the three LCSs to be requested for Fiscal 2010 into a single, five-ship solicitation, a recent Congressional Research Service (CRS) report noted.
The Navy said each LCS industry team would be awarded a contract for one of the Fiscal 2009 ships, and that the prices that the two teams bid for both the Fiscal 2009 ships and the Fiscal 2010 ships would determine the allocation of the three Fiscal 2010 ships, with the winning team getting two of the Fiscal 2010 ships and the other team getting one Fiscal 2010 ship.
“This strategy was intended to use the carrot of the third Fiscal 2010 ship to generate bidding pressure on the two industry teams for both the Fiscal 2009 ships and the Fiscal 2010 ships,” the CRS report said.
But spiraling ship construction costs have forced the Navy to retreat from its early acquisition plans.
“The Navy originally spoke of building LCS sea frames for about $220 million each in constant Fiscal 2005 dollars,” the CRS said, adding, “Estimated LCS sea frame unit procurement costs have since more than doubled.”
The Fiscal 2011 budget estimates the procurement costs of LCS sea frames to be procured between Fiscal 2011 and Fiscal 2015 at roughly $600 million each in then-year dollars.
The Navy substantially restructured the LCS program in 2007 in response to significant cost growth and delays in constructing the first LCS sea frames, the CRS noted.
Instead of splitting up some of the later ship buys, the service intended to downselect to either the Lockheed design or the Austal one supported by a team lead by General Dynamics.
The service has implemented a cost cap and, Thompson said, now feels comfortable it can afford a split buy.
“The unit cost of warships typically falls after the early vessels in a class are built,” he said.
The Navy wants to deploy a fleet of 55 LCS ships, whose shallower draft, the CRS notes, permits them to operate in certain coastal waters and visit certain ports that are not accessible to Navy cruisers and destroyers.
With Littoral Combat Ship (LCS) construction costs under greater control, the Navy is again thinking about splitting the fleet purchase between the contractor teams.
“The Navy wants to split its buy of Littoral Combat Ships between a steel monohull developed by Lockheed Martin and the Marinette shipyard, and an aluminum trimaran developed by the Austal shipbuilding company of Australia,” said Lexington Institute defense analyst Loren Thompson.
The Navy had considered splitting up the business for some of the first ships before, but higher costs forced it to reconsider those plans.
“This acquisition strategy returns the Navy to where it was two years ago, before the high cost on initial ships in the class led it to doubt the affordability of buying both versions of the vessel,” Thompson said.
Under the initial acquisition plan, the Navy bundled together the two LCSs funded in Fiscal 2009—LCSs 3 and 4—with the three LCSs to be requested for Fiscal 2010 into a single, five-ship solicitation, a recent Congressional Research Service (CRS) report noted.
The Navy said each LCS industry team would be awarded a contract for one of the Fiscal 2009 ships, and that the prices that the two teams bid for both the Fiscal 2009 ships and the Fiscal 2010 ships would determine the allocation of the three Fiscal 2010 ships, with the winning team getting two of the Fiscal 2010 ships and the other team getting one Fiscal 2010 ship.
“This strategy was intended to use the carrot of the third Fiscal 2010 ship to generate bidding pressure on the two industry teams for both the Fiscal 2009 ships and the Fiscal 2010 ships,” the CRS report said.
But spiraling ship construction costs have forced the Navy to retreat from its early acquisition plans.
“The Navy originally spoke of building LCS sea frames for about $220 million each in constant Fiscal 2005 dollars,” the CRS said, adding, “Estimated LCS sea frame unit procurement costs have since more than doubled.”
The Fiscal 2011 budget estimates the procurement costs of LCS sea frames to be procured between Fiscal 2011 and Fiscal 2015 at roughly $600 million each in then-year dollars.
The Navy substantially restructured the LCS program in 2007 in response to significant cost growth and delays in constructing the first LCS sea frames, the CRS noted.
Instead of splitting up some of the later ship buys, the service intended to downselect to either the Lockheed design or the Austal one supported by a team lead by General Dynamics.
The service has implemented a cost cap and, Thompson said, now feels comfortable it can afford a split buy.
“The unit cost of warships typically falls after the early vessels in a class are built,” he said.
The Navy wants to deploy a fleet of 55 LCS ships, whose shallower draft, the CRS notes, permits them to operate in certain coastal waters and visit certain ports that are not accessible to Navy cruisers and destroyers.
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