DoD Buzz

LCS Price Gives Navy Pause

At last week’s Navy League expo, Lockheed Martin’s Paul Lemmo told DoD Buzz he thinks the decision on which of the two Littoral Combat Ship offerings will win the Navy’s down select this summer, his company’s steel mono-hull or General Dynamics’ all aluminum trimaran, is an easy one.

Lockheed Martin’s steel mono-hull LCS can be built in most any shipyard and, more importantly, it can put in for repairs at many more dry-docks than can GD’s trimaran. How many more? There are roughly 10 dry-docks in the Norfolk area, Lemmo said, only two of which could fit the trimaran. Lockheed’s mono-hull fits in all of them. That ease of maintenance will result in lower LCS lifecycle costs, Lemmo says.

The issue of LCS lifecycle costs is a hot one. GD contends that the Navy’s down select criteria doesn’t sufficiently emphasize lifecycle costs. GD says its trimaran will burn much less fuel than Lockheed’s LCS-1 mono-hull over the life of the ships.

At the request of Sen. Jeff Sessions R-Ala, who supports the GD design, the Congressional Budget Office (CBO) examined LCS-1 lifecycle costs and how projected fuel usage will impact those costs. CBO found that LCS-1 fuel costs would be largely insignificant. Fuel costs would account for somewhere between 8 and 18 percent of total costs; whereas the ship’s price tag accounts for up to 66 percent of total costs.

Lockheed’s Lemmo said they’ve been able to bring down LCS-3 production costs about 30 percent compared to LCS-1. LCS-3 is over 40 percent complete and on track for a 2012 delivery. He said much of the work on LCS-1 was done at pier side, versus while it was still on land, a far costlier way to build a ship. Most of the pre-outfitting on LCS-3 will be done on land.

While the two builders argue over competing costs, the cost that is causing the Navy staff heartache is the ship’s price tag. CBO estimates that once the Navy selects a single design, ship costs will come down to about $550 million. Of course that doesn’t include the cost for the mission modules.

As CRS naval analyst Ron O’Rourke points out in a new report on the LCS program, $550 million is a heck of a lot more than the initial cost estimate of $220 million. At $220 million a copy, the Navy’s planned buy of 55 of these “inexpensive” ships made some sense. Now things may be changing.

Navy sources tell DoD Buzz that there is a lot of dissatisfaction on the Navy staff with the LCS. “It's sucking up money better spent on a real warship,” said one source. It's way over-engineered for the missions it will conduct, such as counternarcotics and counter-piracy, said another. Those same sources said they’re hearing not altogether encouraging things about progress with the LCS mission modules, particularly the mine sweeping and the anti-submarine warfare modules.

From what we’re hearing, there’s a good chance the final number may end up being much lower.

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