Lawmakers Grill Navy On New LCS Plan

New Littoral Combat Ship (LCS) proposals have cut per-ship costs by a third or more of what the finished vessels have cost the U.S. Navy so far, according to figures provided to lawmakers Dec. 14 by Sean Stackley, assistant secretary of the Navy for research, development and acquisition.

The proposed average costs for the LCS ships are running between $440 million and $460 million per vessel, Stackley testified during a Senate Armed Services Committee hearing in Washington.

Because of the lower costs, the Navy is asking lawmakers to approve a new funding plan for the ship for a dual-award block buy for the contractors instead of a downselect to one shipbuilder between teams led by Lockheed Martin and Austal Shipyards.

But Senate lawmakers, led by Ranking Member John McCain (R-Ariz), said they felt uncomfortable with the request because the Navy has not released any specific proposal figures and the service is — again — making such a proposal change after the Senate has already reviewed the service’s budget plan.

“We’ve seen this movie before,” McCain said. “The Navy has come to us and said, ‘Gee, we’ve got this solved.’”

The Navy says it can’t release exact figures yet because the proposals are still bid-sensitive. Without the figures, though, experts say the Navy either could be saving as much as $700 million with the new proposal or facing cost increases as high as $2 billion.

Congressional Research Service Navy analyst Ronald O’Rourke testified that the Navy had come to the Senate in similar circumstances to promote rapid acquisition for the LCS program and again in 2009 to recommend the downselect plan the service now wants to abandon.

“I cannot think of another shipbuilding program that has had so may changes proposed late in the process,” O’Rourke said.

Despite the changes, McCain said, program costs escalated, leading to cancellations and an overall restructuring. About six years and $8 billion into the program, the Navy only has two ships, two partially completed ships and a raft of cancellations, he said. “The story of this ship makes me ashamed and embarrassed,” McCain said

McCain, O’Rourke and other Navy program procurement experts said it might be better to delay acting on the new Navy proposal and awarding contracts for another month or two to allow CRS and the Congressional Budget Office time to review.

Such a delay, Stackley said, could hurt whatever savings the Navy could realize from the proposals. “These proposals start to come apart,” he said. The contractors’ deals with their vendors start to fray with delays, he said, and there also are concerns over layoffs and hiring freezes.

Further, Stackley said, both the Navy and contractors have a much better handle on costs and programmatic development than they had previously. “This program has done a complete turn-around,” he told the committee.

Thanks to lessons-learned from previous ships — and due also to Congressional guidance — contractors and the Navy have been able to cut costs to the point that the Navy can now make the current proposal, Stackley and other service officials testified.