The top Navy weapons buyer expressed confidence in two key procurement programs--the Littoral Combat Ship (LCS) and the V-22 Osprey tilt-rotor aircraft--despite problems that each program has faced recently.

"You can't have complex programs without problems," Delores Etter, assistant secretary of the Navy for research, development and acquisition, said. She was commenting on software glitches that temporarily grounded the Osprey fleet, speaking Wednesday before an Aviation Week conference at the National Press Club.

Etter lauded the LCS, despite costs of the first ship rising from an earlier target of $220 million to a target of $270 million to a current estimate around $400 million for the first ship in the class.

She stressed that the Navy still isn't certain just what the LCS will cost. "We're still working on it," she said. "We think it's going to be somewhere around $400 million."

That last figure is exclusive of its interchangeable mission modules that confer outsized capabilities on the medium-sized (378 to 417 feet long) ship that comes in two versions.

The one with the huge cost overrun is made by Lockheed Martin [LMT] as prime contractor, through its subcontractor shipyards Marinette Marine and Bollinger Shipyards.

A different version is made by General Dynamics [GD] through its subcontractor, Austal USA.

"This is an important part of our fleet," Etter said.

She was asked by Defense Daily whether the Navy would view as success bringing in LCSs for $300 million to $350 million each for the basic ship, or truck, and whether the Navy would view a range of $400 million to $450 million as failure.

Etter made clear that despite cost escalation, this is a good program. "It's what we need," she said of the near-shore, high-speed vessel that can be altered quickly to take on different types of missions.

"The program is successful," she stressed. "Our challenge now is to make them affordable."

Compared to the $400 million estimate for the Lockheed Martin ship, Freedom, "$270 million is what we expected that to come in at," she said.

She indicated that design changes such as beefing up the commercial-ship construction standards, inflation effects and other factors can push up cost totals, which is where the $270 million cost estimate originated. Looking at the actual likely price, "Clearly, it's above that," she said.

While the Navy backs the ship as a needed platform, the task now will be "to get it to an affordable price," she said. The strategy is to first understand how the cost of the first ship by Lockheed Martin soared so high, and then to divine from that just how costs can be reined in on succeeding ships, she said.

The Navy still is on course for an LCS fleet totaling 55 ships, she said, a flotilla aimed at primary missions such as mine hunting, enemy submarine kills and interdiction of tiny terrorist-piloted "swarm boats." She also noted that the Navy is brainstorming other potential missions for LCSs such as humanitarian relief.

Etter was asked by Defense Daily after her appearance if, despite the $400 million price tag of the first ship, the vessel still represents a bargain, given the cost of some other surface ships. For example, the next-generation DDG-1000 destroyer will command a price of perhaps $3 billion each for the first two ships to be built separately by Northrop Grumman [NOC] Ship Systems and General Dynamics [GD] unit Bath Iron Works shipbuilding.

"When you look at the capabilities [of the LCS], absolutely," she said. "We're talking about a lot of capabilities" that, thanks to the interchangeable mission modules, would be crammed into each LCS, at a price a fraction of what some larger, more powerful ships will cost.

The Navy also is examining the likely cost of the General Dynamics version of the LCS, she noted.

Taking a longer view, Etter stressed that the LCS will have a much smaller crew size than many current surface ships such as the DDG-51 Burke-class destroyers, meaning huge personnel savings over the lifespans of the LCSs. They are designed to have a ship's crew of just 50 or so, plus perhaps roughly 20 more to operate the interchangeable mission modules.

She also commented on the Osprey tilt-rotor aircraft.

Those Osprey software problems with the main flight control computer could result in the main system failing and also interfering with the ability of two backup systems to perform.

Etter praised the Osprey as a vast step forward from capabilities of helicopters it is to replace. It is twice as fast, has almost three times higher an altitude ceiling, three times the payload and six times the range without refueling of some helicopters.

"This is a real important part of our fleet," Etter said of the Osprey, a hybrid half-helicopter, half-airplane produced by the Bell-Boeing V-22 Joint Program Office, a joint venture of Bell Helicopter Textron [TXT] and Boeing [BA].

She also commented on the Mine Resistant Ambush Protected (MRAP) vehicle program, where nine contractors are vying for what is expected to be a multi- billion prize for 4,100 vehicles providing a better chance of withstanding blasts from roadside mines, or improvised explosive devices (IED). This is a Marine Corps-led program with Army and Navy participation.

It will be a "real challenge for the acquisition community," she said, to build MRAPs as fast as possible, but also carefully, as replacements for up- armored Humvees that have been damaged severely by the terrorist mines.

MRAPs have v-shaped hulls to better deflect the blasts, and are seen as needed, immediately, for troops in Iraq.

The Marine Corps on Jan. 26 awarded nine indefinite delivery/indefinite quantity contracts to start the movement toward providing U.S. troops with superior protection against IEDs, a leading killer of U.S. forces in Iraq. The initial vehicles are to be provided no later than the end of the year.

Etter said she doesn't expect all nine contractors will wind up getting contracts to build huge numbers of MRAPs. "Do I think that nine will be successful?" she asked. "No."

Elaborating slightly, she said, "I don't think there will be a large number that will go to" full-rate procurement of the armored vehicles.

The nine firms include giants such as General Dynamics, BAE SYSTEMS, Armor Holdings [ah], Oshkosh Truck [OSK] and more, plus some smaller firms.

On a more general level, Etter repeated earlier comments she has made that her preference is to shift more risks in programs to defense contractors and away from the Navy, by negotiating firm fixed-price contracts, rather than cost-plus fixed fee contracts that she said are appropriate only for such procurements as the first-in-a-class ship where there are many unknowns.

Separately, a senior Navy budget officer said the Navy remains committed to the F-35 Joint Strike Fighter Lightning II aircraft, even though there have been several reductions in the planned number of JSFs to be bought since the contract was awarded in late 2001.

The record $200 billion order (now $276 billion) for the multi-service, multi-national plane was awarded to Lockheed Martin as the prime contractor, with leading roles played by Northrop Grumman and BAE.

"We absolutely need the capability" the JSF will provide, said Rear Adm. Stan Bozin, director of the office of budget in the office of the assistant secretary of the Navy for financial management.

"The Navy is not walking away from the" JSF, Bozin told the conference.

The plane would have a conventional version for the Air Force, a short- take-off-and-vertical-landing, or STOVL, version for the Marine Corps, and a carrier version for the Navy. Allied nations also may buy the plane, and are helping to defray its 12-year development costs.