Littoral combat ship comes under heavy budgetary fire

Published 18 January 2007

Lockheed Martin’s effort has increased in cost 87 percent, while General Dynamics sees soaring costs as well; Navy officials decide on a temporary halt while a review gets under way

If you wanted to make a joke about it, you might say controlling costs at the Navy Department is bound to be a littoral failure. But there is no joking about recent cost overruns associated with the Navy’s Littoral Combat Ship (LCS) program, presently in the process of building its third ship (to be called the USS Freedom). The idea is to create a craft capable of taking to the open ocean but also shallow enough to control coastal waters, detect mines, and assist in rescue operations. Much to the chagrin of the Congress, however, a recent review of the Lockheed Martin-led program showed that the estimated cost of the USS Freedom had increased from an estimated $220 million to nearly $410 million.

As a result, Navy officials have called a halt to the entire program pending a full review to “fully understand whether the cost problems are unique to the lead ship or an indicator of increased follow-on ship costs.” The stoppage also applies to the LCS ship currently being constructed by General Dynamics, and it is worth noting that although it has not come under the same criticism as Lockheed, its costs are rising as well, with costs estimated at around $240 million to $250 million. Last year, the Navy increased the projected per-ship cost to about $300 million, and there was an unsuccesful action by some congressmen to kill the program entirely.

Lockheed Martin offered a few explanations for the cost overrun, summarized below by Navy Times:


— The first ship in a new class historically experiences cost increases as shipbuilders learn the best ways to build the ships. Quigley noted that numerous representatives from the Bollinger shipyard have been in Marinette “to learn those lessons so we don’t learn them again.”

— Vendor issues. Quigley noted that mistakes by General Electric in manufacturing the ship’s reduction gears slowed the schedule. It was also tough to get the right kind of steel, which was also being ordered by the Army to up-armoring vehicles in Iraq.

—The Navy’s new Naval Vessel Rules, changed in 2004 to to standardize and strengthen ship construction requirements. Quigley said, “The tightened NVRs will make a tougher ship. But there is an impact on cost. It is particularly relevant when you’re adapting a commercial design to a naval warship.” Lockheed’s hull form is based on a large, commercial, Italian-designed yacht.

—A fast-track acquisition program that puts ships into production while design work still is going on. “The Navy and Lockheed Martin always knew this was going to be an element of moving a ship along this fast,” Quigley said.

- read more in Christopher Cavas’s Navy Times report[/i]]report