Gentlemen start your engines: The Littoral Combat Ship (LCS) drag race is back on. The shipbuilding program that briefly was derailed because of out-of-control costs (and don’t blame the contractors on this one) apparently is firing up the boilers. The Navy has announced a new request for proposal (RFP) — customary at the beginning of the contracting process. Is this a new beginning? Not really. A March release announced the Navy was lifting its 2007 “stop work” order issued to Lockheed Martin (It canceled General Dynamics’ LCS-4 soon after.) These original contract awardees each have a ship well-underway to completion — LCS-1 and LCS-2 — and are the only companies included in the new RFP. It is our guess that suits at Lockheed Martin and General Dynamics are thinking better of traveling this highway to hell and potential financial ruin. (Back story: Last year, Lockheed Martin declined the Navy’s proposal for a fixed-price bad deal for LCS-1 after Lockheed Martin already had consented to a fixed-price contract on LCS-3. The new RFP calls for a fixed-price incentive fee on three ships, so we’re back where we were last year.)
Confused? You’re not alone.
The new cost cap per ship clocks in at $460 million, and in the past, the Navy has acknowledged its penchant for design dickering that has helped blow costs out the superstructure. But our source says even in the wake of stop-works, cancellations, and tremendous embarrassment for our men and women on Team Blue, during this new RFP the Navy is making yet more costly changes. The Navy has confirmed this, though not as eloquently as we’ve phrased it. Has anything changed?
Check this out: According to our source, the new winner gets to build the next two ships and the second place company (or loser in this case) gets to build one, so everybody wins. But not so fast, this is LCS! Our source says the Navy reserves the right to award all three to one company. (Must be a fine-print thing.) The Navy neither confirmed nor refuted this gem.
And that $460 million cap? “Politics!” is the word in the corporate passageway. It is alleged this is “some arbitrary number” from Northrop Grumman supporters on the Hill in an end-run to build more DDG 51s and DDG 1000s.
Is this how we rebuild the Navy? Stay tuned!