Order Code RS21305
Updated May 31, 2005
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 to be a small, fast Navy surface combatant with
modular weapon systems. Two industry teams are developing separate designs for the
LCS. The LCS program has received $646.2 million in FY2003-FY2005, including
$212.5 million in FY2005 to build the first LCS. For FY2006, the Navy has requested
$613.3 million for the program, including $240.5 million in research and development
funding to build the second LCS, $336.0 million in additional research and development
funding, and $36.8 million in procurement funding for LCS mission modules. The
FY2006-FY2011 Future Years Defense Plan (FYDP) includes a total of $8,801.6
million for the program. The Navy may want to build 63 to 82 LCSs. A 63- to 82-ship
program might have a total acquisition cost of about $25.3 billion to $32.7 billion. The
LCS program raises several issues for Congress. 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 and a future CG(X) cruiser.2 The LCS is to 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 (i.e., “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); maritime
intercept; special operations forces (SOF) support; and logistics support for movement of
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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CRS-2
personnel and supplies. Some observers believe the LCS might also be suitable for
homeland defense operations.
A March 2005 Navy report to Congress on potential future Navy force levels showed
potential 260- and 325-ship fleets for FY2035 that include 63 and 82 LCSs, respectively.3
In addition to the first LCS, which was procured in FY2005, the FY2006-FY2011 FYDP
calls for procuring the second LCS in FY2006, another two in FY2007, three more in
FY2008, and five per year in FY2009-FY2011.
On May 27, 2004, the Navy awarded contracts to teams led Lockheed Martin and
General Dynamics (GD) for final system design of two versions of the LCS, with options
for detailed design and construction of up to two LCSs each. Under the Navy’s plan, the
Lockheed team would build the first LCS, while the GD team would build the second.
Lockheed plans to build its LCSs at Marinette Marine of Marinette, WI, and Bollinger
Shipyards of Louisiana and Texas; GD plans to build its LCSs at Austal USA of Mobile,
AL. These yards are not among the six yards that have built the Navy’s major warships
in recent years.
The Navy wants 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
wants to procure LCS mission modules through the Other Procurement, Navy (OPN)
account rather than the Navy’s ship-procurement account.
Table 1 on the next page shows funding for the LCS program through FY2011. The
Navy wants LCSs to have a unit procurement cost of no more than $220 million,
exclusive of their mission modules. Figures from Table 1 for FY2009-FY2011 (when
steady-state production of five ships per year is programmed) suggest that when the cost
of mission modules is added in, the LCS program might have an average ship
procurement cost of about $387 million, and that a program of 63 to 82 LCSs might
therefore have a total acquisition (i.e., research and development plus procurement) cost
of about $25.3 billion to $32.7 billion.
The conference report (H.Rept. 108-622 of July 20, 2004) on the FY2005 defense
appropriations bill (H.R. 4613/P.L. 108-287 of August 5, 2004) approved the Navy’s plan
to build the first two LCSs using research and development funds rather than shipbuilding
funds, funded the first LCS’s construction cost, required the second LCS to be built to the
second LCS design now being developed, prohibited the Navy from requesting funds in
FY2006 to build a third LCS, and required all LCSs built after the lead ships of each
design to be funded in the Navy’s shipbuilding account rather than its research and
development account.
3 U.S. Department of the Navy, An Interim Report to Congress on Annual Long-Range Plan For
The Construction Of Naval Vessels For FY 2006. The report was delivered to the House and
Senate Armed Services Committees on March 23, 2005. Copies of the report were obtained by
defense trade publications and at least one of these publications posted the report on its website.

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CRS-3
Table 1. LCS Program Funding, FY2002-FY2009
(millions of then-year dollars; totals may not add due to rounding)
03
04
05
06
07
08
09
10
11
Total
thru
FY11
Research, Development, Test & Evaluation, Navy (RDT&EN) account
Ship 1
0
0
212.5
0
0
0
0
0
0
212.5
construction
Ship 2
0
0
0
240.5
0
0
0
0
0
240.5
construction
Procurement of
0
0
16.0
0
0
0
0
0
0
16.0
ship long-lead
items
Ships 1and 2
0
0
0
8.7
36.7
36.7
7.1
0
0
89.2
outfitting/post
delivery
LCS ship
35.3
158.3
224.2
117.3
130.8
57.7
37.1
37.9
16.4
815.0
development
LCS mission
0
0
0
209.9
131.6
65.3
57.1
80.6
34.3
578.8
package project
Subtotal
35.3
158.3
452.6
576.5
299.2
159.8
101.3
118.4
50.6
1952.0
RDT&EN
Shipbuilding and Conversion, Navy (SCN) account
Ships 3-22,
0
0
0
0
542.4
779.7 1127.2 1112.3 1110.3
4671.9
(qty)
(2)
(3)
(5)
(5)
(5)
(20)
Subtotal SCN
0
0
0
0
542.4
779.7 1127.2 1112.3 1110.3
4671.9
Other Procurement, Navy (OPN) account (for LCS mission modules)
Subtotal OPN
0
0
0
36.8
108.4
221.5
748.8
738.7
813.7
2667.9
Weapons Procurement, Navy (WPN) account
Subtotal WPN
0
0
0
0
0
0
48.3
48.4
59.3
156.0
TOTAL
35.3
158.3
452.6
613.3
950.0 1161.0 2025.6 2017.8 2033.9
9447.8
Source: Navy FY2006 budget justification books.
Issues for Congress
Force Structure Justification for Program. Although the March 2005 Navy
report to Congress sets forth notional Navy fleets in FY2035 of 260 and 325 ships,
including 63 and 82 LCSs, respectively, the status of these two fleet plans as official DOD
force-structure goals is uncertain. Supporters of the LCS program could argue that a
force-structure plan for the Navy with slots for 63 to 82 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

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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 a
formal cost effectiveness analysis supporting the LCS as the best or most promising
approach raises a question regarding the analytical basis for the program.
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 a formal cost effectiveness
study. 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 study, 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 helicopters or UVs when helicopters or
UVs could also be launched from from larger ships operating further offshore or (in the
case of UVs) from aircraft. 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
analytically validated the cost-effectiveness of the effort, it is quite another thing to
propose a potentially 63- to 82-ship program costing billions of dollars without first
examining through rigorous analysis whether this would be the most cost-effective
approach.
Potential Homeland Defense Mission. As mentioned earlier, some observers
believe the LCS might also be suitable for homeland defense operations. Making this an
additional mission for the LCS could lead to an increase in the total planned LCS
procurement quantity. The Coast Guard, however, could also conduct such operations,
and is currently procuring new cutters and aircraft under its Deepwater acquisition
program to improve its ability to conduct these and other operations in the future.4
Supporters of adding homeland defense as a mission for the LCS could argue that many
of the features that make the LCS suitable for Navy operations in littoral waters overseas
could make it suitable for homeland defense operations in littoral waters close to the
United States. Skeptics could argue that the Coast Guard’s new Deepwater cutters and
aircraft may be more cost effective than the LCS for conducting these operations, and that
a more rigorous examination of potential Navy and Coast Guard methods for performing
such operations should be conducted before adding homeland defense as a mission for the
LCS and possibly increasing the size (and cost) of the LCS program.
Program Cost. Navy officials acknowledge that the total number of LCSs, the
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 uncertain. Supporters could argue that total program cost
will become clearer as the Navy works through the details of the program. Critics could
4 For more on the Deepwater program, see CRS Report RS21019, Coast Guard Deepwater
Program: Background and Issues for Congress, by Ronald O’Rourke.

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argue that a major acquisition program like the LCS program should not be initiated until
its potential total costs are better understood.
Rapid Acquisition Schedule. The Navy’s plan called 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 responded 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 Mission Modules. Table 1 suggests that the Navy’s plan
to procure LCS mission modules in the Other Procurement, Navy (OPN) account may
result in 35% to 40% of the LCS program’s total procurement costs being funded through
this account. Supporters of this plan could argue that procuring LCS mission modules in
the OPN account is consistent with the 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.
Skeptics could argue that the LCS mission modules are not missiles and gun shells, but
rather elements of the ships’ combat systems, and that funding the modules through the
OPN account rather than the ship-procurement account would effectively obscure a
significant portion of total LCS program procurement costs by placing it in a part of the
Navy’s budget that is less visible to Congress.
Industrial Base. Supporters of the current plan to build LCSs in 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 create one
or more additional shipyards with a strong dependence on Navy shipbuilding contracts
and thereby exacerbate the current excess-capacity situation in Navy shipbuilding.
Potential Options for Congress. Potential options for Congress for the LCS
program include the following:
! shift procurement of LCS mission modules to the Navy’s ship-
procurement account to make these costs more visible to Congress;

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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;5
! 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;
! terminate the LCS program (and the DD(X) program) and instead
procure a new-design frigate as a common replacement;6 and
! terminate the LCS program and invest more in other littoral-warfare
improvements.
Legislative Activity for FY2006
FY2006 Defense Authorization Bill (H.R. 1815/S. 1042). H.R. 1815 as
reported by the House Armed Services Committee (H.Rept. 109-89) contains a
provision (Section 124) that limits the procurement cost of each LCS, including its
mission modules, to $400 million. The report recommends increasing the LCS program’s
research and development funding request by $12 million to fund work on high-strength
composite material. (Page 165)
The Senate Armed Services Committee, in its report on S. 1042 (S.Rept. 109-69
of May 17, 2005), expresses concern for the Navy’s plan to limit competition for future
Flight 1 LCSs to the two LCS designs currently being developed, and directs the Navy to
report on its acquisition strategy for Flight 1 LCSs (page 110). The report recommends
increasing the LCS program’s FY2006 procurement funding request by $8.6 million for
a spare marine gas turbine engine (pages 72-73) and approving the program’s research and
development funding request (Page 156).
5 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.
6 For a discussion of this option, see U.S. Congressional Budget Office, Transforming the Navy’s
Surface Combatant Force, Mar. 2003, pp. 4-17.

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