And then there were two

In the face of significant cost overruns, the Navy has cut the mooring lines to yet another littoral combat ship (LCS) — this time General Dynamics’ (GD) LCS-4, leaving the service with one prototype each from defense behemoths GD and Lockheed Martin. Not unlike the cancellation of Lockheed’s LCS-3 in April (See Budget Breaking), the Navy also skulked out of LCS-4 for convenience because it could not reach a contract agreement with GD following — big surprise — cost overruns on LCS-2 similar to Lockheed’s experience on LCS-1. (Who’s on first?)

Trend? We think so. And it does not bode well for the Navy or the contractors who love the seafaring service.

Cost overruns with GD have been no secret according to a source close to the program, probably stemming from changes made by the client. In an earlier effort to avoid the costly penalties it incurred with the Lockheed stop-work order in January, the Navy asked GD to slow work. A source speculated at that time the Navy ultimately had its eyes another cancellation; this delicate dance with GD would cost the service little if anything.

Or so Navy officials thought.

This fiasco probably has cost the Navy — big time. Lawmakers rightfully might be reluctant to return any of the $910 million cut from the LCS program in FY 2008. (See LCS Déjà-vu) (Would you give these guys a billion dollars?) Some have publicly expressed concern about the program’s future. Worse, lawmakers might be hesitant to fund the 55 ships planned for the class and other programs to grow the fleet from its anemic 280 or so ships to a number well above 300. (Does anyone remember the 600-ship Navy?)

While it certainly will not be smooth sailing for the Navy on the Hill, it might face a second front from defense contractors. Will top-tier contractors leave themselves open for the requisite drama and carnage? (Would you?) Will the smaller guys be able to bankroll the risk?

Would you?

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