Littoral ship plan inches forward, but opposition looms
December 16, 2010
YOKOSUKA NAVAL BASE, Japan — Navy leaders want Congress to authorize a new spending plan for 20 Littoral Combat ships before adjourning this month, or risk higher prices next year to continue a program that has suffered from a history of budgetary overruns.
The plan already has received backing from the House and has been included in the Senate version of an omnibus spending bill that lawmakers hope to pass as soon as possible. However, the roughly $9.8 billion plan to purchase the ships in the next five years could still be derailed by critics, including Sen. John McCain, R.-Ariz., who decry uncertainty over costs and the program’s dismal record of wasted dollars.
Adm. Gary Roughead, the chief of Naval Operations, has often referred to the LCS program as one of his top priorities, and he reiterated his stand during Senate Armed Services Committee testimony Tuesday. The fast ships are designed for anti-submarine, anti-mine and nearshore warfare, which Navy planners see as possible threats from smaller nations and armed groups in coming decades.
“I deployed LCS earlier than any other ship class to assure we were on the right path operationally,” Roughead said Tuesday. “It is clear to me that we are.”
Two littoral ships, the monohull USS Freedom and the trimaran USS Independence have joined the fleet, and two others are in production. The four ships have come at price tags as high as $704 million, despite an original cost cap of $188 million per ship in 2004.
“The story of this ship is one that makes me ashamed and embarrassed, as a former Navy person and as a person who’s responsible to the taxpayers of my state,” McCain said during his opening remarks Tuesday.
Poor procurement decisions and construction difficulties, along with changes made to technical requirements and designs, were largely responsible for the cost overruns, according to a 2010 Government Accountability Office report.
Navy leaders say they have since made adjustments to the procurement process, which have brought costs down. The changes should keep new acquisitions between $440 million and $460 million, which would be below the revised price cap, testified Sean Stackley, assistant secretary of the Navy for research, development and acquisition.
Part of that new plan, which Congress must authorize, would allow the Navy to purchase 10 ships of each hull design and seaframe from two contractors. Currently, the Navy is scheduled to choose one design from one contractor, and then purchase additional ships at a later date.
The revised plan would give the Navy 20 ships for the price of 19, Secretary of the Navy Ray Mabus said Tuesday.
“This authority, which I emphasize requires no additional funding, will enable us to purchase more high-quality ships for less money and get them into service in less time,” Mabus said.
However, lawmakers and other government officials questioned whether deploying two different seaframes would result in higher long-term maintenance costs.
Navy officials contend that they already have training systems in place for both seaframes; meanwhile, forging ahead with both seaframes now will save about $1 billion because of labor costs and elimination of the startup costs they would incur for bidding out future LCS ships.
McCain wants to postpone authorization until the next Congress so government agencies can better gauge the program’s cost, he said Tuesday. Because of bidding rules, agencies such as the Congressional Budget Office do not have all of the information that the Navy has to predict costs.
Stackley warned against further delay on the bids received in May from contractors Lockheed Martin and Australia’s Austal Ltd. A delay could affect the labor force at both shipyards and could also change prices that the project’s subcontractors and vendors are willing to charge.
“I just don’t have confidence that we’d be seeing the same type of pricing coming back in a repricing drill,” Stackley said.