LCS Back on Course?

After nearly a year adrift, the Navy has reawarding the third of four littoral combat ships contracted, with additional orders a near certainty.

Is LCS back on course? Defense as stimulus?

A bit of background: Defense behemoths Lockheed Martin and General Dynamics won the right to go tête-à-tête in the littoral combat ship design-to-win contract. (The better design gets to build the preponderance of the class. No pressure, though.) Lockheed was slated to build LCS 1 and 3, with General Dynamics building 2 and 4. Each created a unique design — LM crafted a graceful, monohulled beauty, while GD submitted an unusual but exciting trimaran hull with a substantial flight deck. The ships were to clock in around $220 million a piece, but shortly after the award, the drama began. The Navy handed LM new specs. Our source says Lockheed should have raised a flag or two then, but time was short and the changes had put them behind schedule. They already had sunk $14 million in the project, we’re told, so LM needed to make LCS 1 happen. The Chief of Naval Operations and Secretary of the Navy themselves were pushing hard for the ship to be completed. But the changes continued and costs skyrocketed. Finally, in late 2007, the program began to unravel, and by early 2008, the finger pointing began. The Navy renegotiated LCS 3 to a fixed price incentive contract. When it tried to include LCS 1 in the deal, negotiations stalled and LCS 3 was cancelled, sort of.

The General Dynamics saga mirrored Lockheed’s cost overruns, fixed-price contract, and the ultimate cancelation of its second vessel.

Lawmakers were not immune and after requisite political posturing capped the vessels at $460 million per entry. Despite the drama, Lockheed Martin’s Freedom is undergoing acceptance trials. The re-award for LCS 3, the Fort Worth, is another fixed-price vessel and a similar deal with General Dynamics for LCS 4, the Coronado, may not be far behind.

Three additional ships are expected in the 2010 budget. Our Lockheed contact is confident his company will get two of the three, though he admittedly has no official knowledge on this one.

What has changed?

Has the disaster of the not-so-stealthy and really expensive DDG 1000 made its full impact? (The Zumwalt most likely will die with a price tag of $3 billion-$6 billion per entry.) The all-things-to-all-mariners the Arleigh Burke class guided-missile destroyer is no bargain either.

Out in the real word, without additional orders, shipyards and their subcontractors are looking at ill-timed job losses. The workers are in congressional districts. Can you say Republican Sen. Susan Collins of Maine?

This is not a bad deal for the Navy, which wants its 300 ships. Currently LCS seems to be the only channel leading there. Our Lockheed source is quite proud of his ship, but we’re not so sure 50-plus of these oversize jet skies is the way to go. If the Navy still is struggling with its mission, maybe some clarity on strategic issues will help determine if the answer is LCS, the Arleigh Burke, or some other design.

Welcome back, LCS. Lawmakers and black shoes are pleased.

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