Order Code RS21305
Updated October 28, 2004
CRS Report for Congress
Received through the CRS Web
Navy Littoral Combat Ship (LCS): Background
and Issues for Congress
Ronald O’Rourke
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Summary
The Littoral Combat Ship (LCS) is a proposed small surface combatant for the
Navy. For FY2005, the Navy is requesting $107.7 million to begin building the first
LCS, and an additional $244.4 million for research and development for the LCS
program. The issue for Congress is whether to approve, modify, or reject the Navy’s
plan for the LCS program. For a longer discussion of the LCS program, see CRS Report
RL32109.1 This report will be updated as events warrant.
Background
The LCS program was announced by the Navy in November 2001 as part of a
proposed family of next-generation Navy surface combatants that also includes the much-
larger DD(X) destroyer (which the Navy also wants to begin building in FY2005) and a
future CG(X) cruiser.2 The Navy has testified that the LCS program is its number one
budget priority. Prior to announcing the LCS program, the Navy had no plans to acquire
a smaller combatant like the LCS and had resisted proposals for such ships.
The LCS would be a small, fast surface combatant that would use modular “plug-
and-fight” mission payload packages, including unmanned vehicles (UVs). The primary
intended missions of the LCS are countering enemy mines, submarines, and fast attack
craft (sometimes called “swarm boats”) in heavily contested littoral (near-shore) waters.
Secondary LCS missions, also to be performed in littoral waters, include intelligence,
surveillance, and reconnaissance (ISR); homeland defense/maritime intercept; special
operations forces (SOF) support; and logistics support for movement of personnel and
1 CRS Report RL32109, Navy DD(X) and LCS Ship Acquisition Programs: Oversight Issues and
Options for Congress, by Ronald O’Rourke.
2 For more on the DD(X) and CG(X), see CRS Report RL32109, op cit, and CRS Report
RS21305, Navy DD(X) Destroyer Program: Background and Issues for Congress, by Ronald
O’Rourke.
Congressional Research Service ˜ The Library of Congress

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supplies. Each LCS would have a core crew size of 15 to 50 people, plus additional
personnel for operating embarked mission modules.
The Navy wants to procure a total of 30 to 60 LCSs. The FY2005-FY2009 Future
Years Defense Plan (FYDP) calls for procuring the first LCS in FY2005, another two in
FY2006, one more in FY2007, and three more in FY2008, and six more in FY2009. A
long-range shipbuilding plan that the Navy submitted to Congress in May 2003 showed
the remaining ships in the program being procured in FY2010 and future years at a rate
of five ships per year.
The Navy wants the first LCS to cost between $150 million and $220 million in
then-year dollars, exclusive of any mission modules, and wants follow-on LCSs to cost
no more than $250 million in then-year dollars, including a representative payload
package. Navy budget figures (see Table 1 on the next page) suggest that individual
mission modules to be procured during the FYDP would cost an average of $82 million
each. Using the $250-million figure for an LCS with a representative payload, the total
procurement cost for a fleet of 30 to 60 LCSs might be $7.5 billion to $15 billion, not
including at least $1.4 billion in general research and development costs for the program.
The Navy intends to procure the first and second LCSs through the Navy’s research
and development account rather than the Navy’s ship-procurement account. The Navy
plans to procure LCS mission modules through the Other Procurement, Navy (OPN)
account rather than the Navy’s ship-procurement account.
On May 27, 2004, the Navy awarded contracts to teams led Lockheed Martin and
General Dynamics (GD) for final system design of the LCS, with options for detailed
design and construction of up to two LCSs each. If Congress approves funding for the
ships, the Lockheed team would build the LCS proposed for FY2005, while the GD team
would build one of the two LCSs proposed for FY2006. Table 1 on the next page shows
funding for the LCS program through FY2009.
Issues for Congress
Force Structure Justification for Program. The last officially approved Navy
force-structure plan — the 310-ship plan from the 2001 Quadrennial Defense Review —
contains no slots for LCSs. The Navy’s recent proposal for a fleet of 375-ships contains
slots for 50 to 60 LCSs but was not approved by the Secretary of Defense. The Navy at
this juncture thus appears to be without an officially approved force-structure plan that
includes slots for any significant number of LCSs. LCS supporters could argue that a plan
for the Navy with slots for 30 to 60 LCSs will eventually be approved. Critics could
argue that, until such a plan is approved, the Navy has no approved force-structure basis
for proposing a program to build any significant number of LCSs.
Analytical Basis For Program. Prior to announcing the LCS program in
November 2001, the Navy apparently did not conduct a formal analysis to demonstrate
that a ship like the LCS would be more cost-effective than potential alternative
approaches for performing the LCS’s stated missions. Potential alternative approaches
include (1) manned aircraft, (2) submarines equipped with UVs, (3) a larger surface
combatant equipped with UVs and operating further offshore, (4) a non-combat littoral
support craft (LSC) equipped with UVs, or (5) some combination. The absence of an

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AMC for the LCS program raises a question regarding the analytical basis for the
program, particularly given the Navy’s resistance to the idea of a small ship like the LCS
prior to November 2001.
Table 1. Funding For LCS Program, FY2002-FY2009
(millions of then-year dollars; totals may not add due to rounding)
2002 2003 2004
2005
2006
2007
2008
2009
Total
thru
2009
Research, Development, Test & Evaluation, Navy (RDT&EN) account
Ship 1 construction
—
—
—
107.7
107.8
—
—
—
215.5*
Ship 2 construction
—
—
—
—
106.7
107.0
—
—
213.7*
All other**
— 35.3
166.2
244.4
288.4
285.9
130.5
207.5
1358.3
Subtotal RDTEN
0 35.3
166.2
352.1
502.9
392.9
130.5
207.5
1787.5
Shipbuilding and Conversion, Navy (SCN) account
Ship 3
—
—
—
—
219.7
—
—
—
219.7
Ship 4
—
—
—
—
—
220.0
—
—
220.0
Ships 5, 6, 7***
—
—
—
—
—
—
625.7
—
625.7
Ships 8 thru 13***
—
—
—
—
—
—
— 1303.6
1303.6
Subtotal SCN
0
0
0
0
219.7
220.0
625.7 1303.6
2369.0
Other Procurement, Navy (OPN) account for procurement of LCS mission modules
(Qty of modules)
—
—
—
—
(2)
(2)
(4)
(15)
(23)
Funding
0
0
0
0
180.0
180.0
351.3 1171.3
1882.6
TOTAL
0 35.3
166.2
352.1
902.6
792.9
1107.5 2682.4
6039.1
Source: Navy data provided to CRS by Navy Office of Legislative Affairs, February 20 and 27, 2004.
* Cost figures for each ship include detailed design/nonrecurring engineering (DD/NRE) costs for that ship.
** Funding for all program RDT&E other than for construction of Ships 1 and 2.
*** Three ships funded in FY2008 at total cost of $625.7 million; six ships funded in FY2009 at total cost
of $1,303.6 million.
Supporters argue that the LCS builds on about four years of analytical work on small,
fast surface combatants done at the Naval War College, responds to the Navy’s need for
forces that can operate in littoral waters against enemy anti-access and area-denial forces,
and is consistent with the concept of network-centric warfare, the growing importance of
UVs, and the need for more affordable Navy ships. They can also argue that the Navy in
the past has built prototype ships without having first done an AMC. Critics could argue
that these arguments may be true but do not demonstrate that the LCS is the best or most
promising approach for performing the LCS’s stated missions. Absent a formal AMC,
they could argue, the Navy has not, for example, shown why it would be necessary or
preferable to send a small and potentially vulnerable manned ship into heavily defended
littoral waters to deploy UVs when UVs could also be launched from aircraft or from
larger ships operating further offshore. The Administration, LCS critics could argue, is
being proposed on the basis of “analysis by assertion.” They can argue that while it may
be acceptable to build one or a few ships as operational prototypes without first having

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analytically validated the cost-effectiveness of the effort, it is quite another thing to
propose a 30- to 60-ship program costing billions of dollars without first examining
through rigorous analysis whether this would be the most cost-effective approach.
Program Cost. Navy officials acknowledge that the total number of LCSs, the
cost of cost of individual LCS mission modules, and the ratio of mission modules to
LCSs, is not yet clear, and that the potential total procurement cost of the LCS program,
including mission modules, is therefore unknown. Supporters could argue that total
program cost will become clearer as the Navy works through the details of the program.
Critics could argue that a major acquisition program like the LCS program should not be
initiated until its potential total costs are better understood. As shown in Table 1, the first
13 LCSs would cost an average of $215 million each, and the first 23 mission modules
would cost an average of $82 million each. Using these figures, the combined average
cost for an LCS equipped with a single mission module would be $297 million, which is
19% more than the Navy’s $250-million target cost for an LCS with a representative
payload package. Navy officials, moreover, have spoken about equipping each LCS with
more than one, and possibly as many as four or five, mission modules. Achieving the
Navy’s $250-million cost goal may therefore require reducing average procurement costs
for LCSs, mission modules, or both, after FY2009.
Rapid Acquisition Schedule. The Navy’s plan calls for Congress to approve
the start of LCS construction in 2004, less than three years after the LCS program was
first announced. Supporters of this rapid schedule could argue that it responds to an
urgent Navy need for improved littoral warfighting capability and is consistent with
defense acquisition streamlining and reform. Skeptics could argue that it is not clear,
based on recent Navy combat operations in Kosovo, Afghanistan, and Iraq, whether the
need for the LCS is urgent, and that the Navy’s rapid acquisition strategy may be
motivated more by other considerations, such as getting the LCS program started before
there is a change in the Administration, or before there is a change in Navy leadership, or
before supporters of the DD(X) destroyer possibly try to end the LCS program, or before
Congress fully understands the details of the LCS program. Skeptics could also argue that
allowing LCS program to proceed as planned could provide DOD with a precedent to
begin other major acquisition programs in a similar rapid manner, which might reduce
Congress’ ability to conduct effective oversight of proposed DOD procurement programs.
Funding Strategy for Lead Ships. The Navy argues that the Navy’s plan to
fund the lead LCSs in the Navy’s research and development account rather than in the
Navy’s ship-procurement account will permit the Navy to mitigate technical risk by
permitting the LCS’s new technologies to be developed in a more R&D-like managerial
environment. Skeptics could argue that it would permit the Navy to blend construction
funding with traditional research and development funding, obscuring the construction
cost of the lead LCSs, and permit the Navy to fund the construction of the ships
incrementally, rather than all at once (as normally required by the full funding policy for
defense procurement), further obscuring the total construction cost of the ship. Both these
things, skeptics could argue, could weaken congressional oversight of the program, which
depends in significant part on making total ship construction costs clear and fully visible.
Lack of Gap Years After Lead Ship. Past Navy shipbuilding programs have
often included a “gap” year between the year that the lead ship is procured and the year
that the second ship in the class is procured, so as to help ensure that design problems

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discovered during the construction of the lead ship are identified and fixed before
construction of follow-on ships begins. Supporters of the Navy’s plan to not have a gap
year between procurement of the lead LCS (in FY2005) and the next ship built to the
same design (the second ship planned for FY2006) could argue that this approach is
consistent with the Navy’s goal to have LCSs enter the fleet quickly. They could also
argue that the technical risks involved in building the LCS are relatively low because the
LCS is similar to other small, fast ships that have already been built for foreign navies and
for non-military uses. Critics could argue that the Navy may be underestimating the
technical risks involved in building the first LCSs, and that the absence of a gap year is
inconsistent with the assertion, implicit in the Navy’s argument, that there is enough
technical risk in the LCS program to warrant building the ship in a research-and-
development environment.
Funding Strategy for Mission Modules. Supporters of the Navy’s plan to
procure LCS mission modules through the OPN account can argue that it is consistent
with the traditional practice of procuring ship weapons (e.g., missiles and gun shells)
through the Weapon Procurement, Navy (WPN) appropriation account or the Procurement
of Ammunition, Navy and Marine Corps (PANMC) appropriation account rather than the
ship-procurement account. Skeptics could argue that the LCS mission modules are not
missiles and gun shells, and that funding the modules through the OPN account would
effectively obscure a significant portion of the total LCS program acquisition cost by
placing them in a part of the Navy’s budget where they might be less visible to Congress.
Industrial Base. Supporters of the idea of building some or all LCSs in a yard or
yards other than the two current surface combatant builders — General Dynamics’ Bath
Iron Works (BIW) and Northrop Grumman’s Ship Systems (NGSS) division — could
argue that this will help constrain LCS construction costs because the yards in question
have lower overhead costs than BIW or NGSS. Skeptics could argue that BIW and NGSS
have considerable unused building capacity, that building LCSs at BIW or NGSS could
reduce the cost of other Navy shipbuilding programs being performed at these yards by
spreading BIW’s or NGSS’ fixed overhead costs over a larger amount of shipbuilding
work, and that building LCSs at yards other than those that already build major ships for
the Navy will exacerbate the current excess-capacity situation in Navy shipbuilding by
creating additional shipyards with a strong dependence on Navy shipbuilding contracts.
Potential Options for Congress. Potential options for Congress for the LCS
program include the following:
! approve the LCS program as proposed by the Navy;
! shift procurement of the lead LCSs to the Navy’s ship-procurement
account;
! shift procurement of LCS mission modules to the Navy’s ship-
procurement account;
! insert a gap year between procurement of the lead LCSs and their
respective follow-on ships;
! defer procurement of the lead LCS to FY2006 or a later year;
! procure LCSs at a rate of up to 10 per year to get LCSs into the fleet
sooner and achieve better production economies of scale;
! procure LCSs at a rate of less than 5 per year so as to reduce annual LCS
funding requirements;

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! procure a few LCSs and then evaluate them in exercises before deciding
whether to put the LCS into larger-scale series production;3
! terminate the LCS program (and the DD(X) program) and instead
procure a new-design frigate as a common replacement;4 and
! terminate the LCS program and invest more in other littoral-warfare
improvements.
Legislative Activity for FY2005
For detailed information on the LCS program in the FY2005 defense authorization
bill (H.R. 4200/S. 2400), see the Legislative Activity section of CRS Report RL32109.
The conference report (H.Rept. 108-622 of July 20, 2004) on the FY2005 defense
appropriations bill (H.R. 4613) includes a provision (Section 8092) that provides $214.7
million in the Navy’s research and development account for construction of the lead LCS.
The provision also states: “None of the funds provided in this act may be obligated to
prepare a FY2006 budget request for a third vessel under the Littoral Combat Ship
program in FY2006: Provided, That funds for the second vessel shall be for a second
source supplier: Provided further, That all subsequent ships shall be purchased with
‘Shipbuilding and Conversion, Navy’ funds beginning in FY2007.” The conference
report stated:
The conferees agree to provide $457,089,000 for the Littoral Combat Ship (LCS)
program instead of $409,089,000 as proposed by the House and $352,089,000 as
requested and proposed by the Senate. The conferees agree with the Senate that all
follow-on ships, beyond one of each prototype design, should be fully funded in the
Shipbuilding and Conversion, Navy appropriation. The conferees also agree that
substantial testing of the LCS and associated mission modules is required to evaluate
each ship design and validate operational requirements. Therefore, the conferees
direct that no funds shall be obligated to prepare a fiscal year 2006 budget request for
construction of a third vessel, as reflected in the conference agreement including
Section 8092 as originally proposed by the Senate. This directive is intended to
provide for a “gap” year between construction of the prototype ships and the
follow-on construction of a second ship of each design, thereby ensuring that design
problems discovered during the prototype phase of each ship design are identified and
corrected before construction of follow-on ships. The conferees also agree with the
Senate that beginning in the fiscal year 2006 budget request, the Navy should identify
LCS mission module funding separately within the Research, Development, Test and
Evaluation, Navy and Other Procurement, Navy appropriations. (Pages 310-311)
3 This option would also provide time to confirm the emergence of projected littoral threats and
an opportunity to conduct an Analysis of Multiple Concepts that would not be tainted by a Navy
commitment to putting the LCS in larger-scale production. For a discussion of this option see
Robert O. Work, Naval Transformation and the Littoral Combat Ship, Center for Strategic and
Budgetary Assessments, Feb. 2004.
4 For a discussion of this option, see U.S. Congressional Budget Office, Transforming the Navy’s
Surface Combatant Force, Mar. 2003, pp. 4-17; and CRS Report 94-343 F, Navy DDG-51
Destroyer Procurement Rate: Issues and Options for Congress, by Ronald O’Rourke, pp. 27-28,
63.

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