Friday evening — the night when the two candidates for president of the U.S. spouted in the broadest of concepts was also a surprise coming out of sorts for the Navy’s littoral combat ship (LCS).
On a night reserved for foreign policy matters, both men, resplendent in dark suits, varying versions of the red tie, and remembrance bracelets, discussed the economic woes of Wall Street and the yet-undecided plan for a hefty federal buyout of mortgage-backed securities. As the moderator, snoozeman Jim Lehrer, pressed both for specific cuts each foresaw in the aftermath of the looming, historic expenditure, Republican hopeful, Arizona senator, and former Navy flyboy John McCain said every agency of government would be examined. He singled out “… defense spending, which is the largest part of our appropriations. … We now have defense systems that the costs are completely out of control.” Maverick Man zeroed in on the LCS, long a personal fave here at “Inside the Headquarters.”
McCain correctly noted the LCS budget has swelled from $140 million to $400 million per ship. He stated, “… We have to do away with cost-plus contracts. … We need to have fixed-cost contracts, but we have to get a lot of the cost overruns under control.” Few would disagree, though his audience probably assumed the “problem” lay with Big Bad Business, though McCain never specified. Few watching could know the LCS budget buster (though, the Navy finally accepted delivery of LCS 1 from Lockheed Martin Corp. has been due in large part to Big Bad Defense. The Navy has yet to meet a contract it did not want to change. When asked about their penchant for change (real change, not rhetoric), officials at Program Executive Office Ships indicated they would continue to alter shipbuilding specifications to produce the best ships possible.
That’s great, but our contact at Lockheed says the sea service is slow to acknowledge that change costs money. (And judging from LCS, lots of it.) Contractors must bid their best price based on best-case scenarios to be competitive. They cannot afford to go fixed-price until DoD has its change agents under control.
“Jim, let me just make a point. I’ve got a bracelet, too …”