Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress

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Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress Ronald O'Rourke Specialist in Naval Affairs February 5, 2014 Congressional Research Service 7-5700 www.crs.gov RL33741 CRS Report for Congress Prepared for Members and Committees of Congress Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress Summary The Littoral Combat Ship (LCS) is a relatively inexpensive Navy surface combatant equipped with modular “plug-and-fight” mission packages for countering mines, small boats, and diesel- electric submarines, particularly in littoral (i.e., near-shore) waters. Navy plans call for fielding a total force of 52 LCSs. Sixteen LCSs have been funded from FY2005 through FY2013. The Navy’s proposed FY2014 budget requested $1,793.0 million for four more LCSs (LCSs 17 through 20), or an average of about $448 million per ship. Two very different LCS designs are being built. One was developed by an industry team led by Lockheed; the other was developed by an industry team that was led by General Dynamics. The Lockheed design is built at the Marinette Marine shipyard at Marinette, WI; the General Dynamics design is built at the Austal USA shipyard at Mobile, AL. LCSs 1, 3, 5, and so on are Marinette Marine-built ships; LCSs 2, 4, 6, and so on are Austal-built ships. The 20 LCSs procured or scheduled for procurement in FY2010-FY2015 (LCSs 5 through 24) are being procured under a pair of 10-ship, fixed-price incentive (FPI) block buy contracts that the Navy awarded to Lockheed and Austal USA on December 29, 2010. The LCS program has become controversial due to past cost growth, design and construction issues with the lead ships built to each design, concerns over the ships’ ability to withstand battle damage, and concerns over whether the ships are sufficiently armed and would be able to perform their stated missions effectively. Some observers, citing one or more of these issues, have proposed truncating the LCS program to either 24 ships (i.e., stopping procurement after procuring all the ships covered under the two block buy contracts) or to some other number well short of 52. Other observers have proposed down selecting to a single LCS design (i.e., continuing production of only one of the two designs) after the 24th ship. In response to criticisms of the LCS program, the Navy has acknowledged certain problems and stated that it was taking action to correct them, disputed other arguments made against the program, and maintained its support for completing the planned program of 52 ships. Reported comments from some Navy officials suggest that the Navy might be open to changing the design of one or both LCS variants after the 24th ship or perhaps down selecting to a single LCS design after the 24th ship. The Office of the Secretary of Defense (OSD) reportedly has directed the Navy to truncate the LCS program to a total of 24 to 32 ships, although the questions of whether to truncate the program, and if so to what new number, reportedly are still under discussion between OSD and the Navy. Issues for Congress concerning the LCS program include the following: • whether to truncate the LCS program to 24 ships, 32 ships, or some other number well short of 52; • the impact on the LCS program of the March 1, 2013, sequester on FY2013 funding and unobligated prior-year funding for the program; • whether procurement of LCS sea frames and mission modules should be slowed until operational testing of the sea frames and mission modules is more complete and other acquisition-process milestones are met; Congressional Research Service Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress • whether to down select to a single LCS design after the 24th ship; • technical risk in the LCS program; and • what defense-acquisition policy lessons, if any, the LCS program may offer to policymakers. Congressional Research Service Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress Contents Introduction ...................................................................................................................................... 1 Background ...................................................................................................................................... 1 The Program in General ............................................................................................................ 1 The LCS in Brief ................................................................................................................. 1 Planned Procurement Quantities ......................................................................................... 2 Two LCS Designs ................................................................................................................ 3 Two LCS Shipyards ............................................................................................................ 3 LCSs in Service ................................................................................................................... 3 Mission Package Deliveries Initial Operational Capability (IOC) Dates ............................ 5 Manning and Deployment Concept ..................................................................................... 5 Unit Procurement Cost Cap ................................................................................................. 6 Acquisition Cost .................................................................................................................. 6 Operation and Support (O&S) Cost .................................................................................... 8 Major Program Developments................................................................................................. 10 Growth in Sea Frame Procurement Costs ......................................................................... 10 2007 Program Restructuring and Ship Cancellations ........................................................ 11 2009 Down Select Acquisition Strategy (Not Implemented) ............................................ 11 2010 Dual-Award Acquisition Strategy (Implemented) .................................................... 12 Changes in Mission Package Equipment .......................................................................... 13 2012 Establishment of LCS Council ................................................................................. 13 Controversy and Proposals to Truncate the Program .............................................................. 14 Overview ........................................................................................................................... 14 OSD Support for Truncating Program to a Total of Between 24 and 32 Ships ................. 15 Reported Potential Navy Openness to Design Changes or Down Selecting to Single Design ................................................................................................................. 17 FY2014 Funding Request ........................................................................................................ 19 Issues for Congress ........................................................................................................................ 20 Should the Program Be Truncated to 24 Ships, 32 Ships, or Some Other Number Well Short of 52? .......................................................................................................................... 20 Arguments in Support of Truncating the Program ............................................................ 20 Arguments Against Truncating the Program ..................................................................... 22 July 2012 Press Report on Internal Navy Reviews of Program ........................................ 24 Executive Summary of Navy “Perez Report” on Program ............................................... 28 June 2013 Navy Blog Post ................................................................................................ 32 Impact of March 1, 2013, Sequester on FY2013 Funding ...................................................... 35 Should Procurement of LCS Sea Frames and Mission Modules Be Slowed Until Operational Testing Is More Complete? ............................................................................... 36 th Should There Be a Down Select to A Single LCS Design After the 24 Ship? ...................... 41 Technical Risk in LCS Program .............................................................................................. 42 Sea Frame .......................................................................................................................... 42 Mission Packages .............................................................................................................. 47 Defense-Acquisition Policy Lessons of LCS Program ............................................................ 50 Legislative Activity for FY2014 .................................................................................................... 51 FY2014 Funding Request ........................................................................................................ 51 FY2014 National Defense Authorization Act (H.R. 3304/P.L. 113-66) .................................. 51 House ................................................................................................................................. 51 Congressional Research Service Navy Littoral Combat Ship (LCS) Program: Background and
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