Order Code RS21305
Updated June 24, 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. 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 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 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 personnel
and supplies. Some observers believe the LCS might also be suitable for homeland
defense operations.
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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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
Admiral Vernon Clark, the Chief of Naval Operations, has spoken of building 75 to 100.4
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. The Lockheed team is to
build the first LCS, while the GD team is to build the second. The Navy wants to build
a few LCSs to the two designs before deciding whether to continue building one design,
the other, or both. The Navy has also left open the possibility of building follow-on LCSs
to additional designs from submitted by other firms. 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.
4 Dave Ahearn, “CNO Clark Sees LCS Fleet Of 75-100 Ships,” Defense Today, June 3, 2005: 1-3.

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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 construction
0
0
212.5
0
0
0
0
0
0
212.5
Ship 2 construction
0
0
0
240.5
0
0
0
0
0
240.5
Procurement of ship
0
0
16.0
0
0
0
0
0
0
16.0
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 RDT&EN
35.3
158.3
452.6
576.5
299.2
159.8
101.3
118.4
50.6
1952.0
Shipbuilding and Conversion, Navy (SCN) account
Ships 3-22, (qty)
0
0
0
0
542.4
779.7
1127.2
1112.3
1110.3
4671.9
(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 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 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.

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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 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 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.5 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 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
5 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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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 argue that allowing LCS program to proceed
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;
! procure a few LCSs and then evaluate them in exercises before deciding
whether to put the LCS into larger-scale series production;6
6 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.

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! 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;7 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 of May 20, 2005) 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 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).
FY2006 Defense Appropriations Bill (H.R. 2863). The House Appropriations
Committee, in its report (H.Rept. 109-119 of June 10, 2005), recommends approving the
program’s research and development funding request (page 251), which includes funds for
building the second LCS, and adding $440 million in the SCN account for the procurement
of two additional LCSs, for a total FY2006 procurement of three LCSs (page 146). The
report stated:
The Committee remains very supportive of the LCS program, and believes that further
procurement in fiscal year 2006 is prudent and reasonable given the status of the program
at this point in time. The Committee directs that, prior to obligation of SCN funds for the
third and fourth ‘‘flight zero’’ LCS ships, the Navy certify in writing to the congressional
defense committees that the ship designs from each prime contractor are sufficiently
stable to allow further construction. The Committee also believes that, while the LCS
ship itself is of stable and mature design, the mission modules essential to LCS
warfighting capabilities are less mature. A number of these technologies have not been
demonstrated in an operational environment, and cost estimates for the mission modules
appear immature as well. To address this issue, the Committee directs the Navy to
submit, not later than February 1, 2006, a report on the development and procurement
plan for LCS mission modules, including a description of the development status of each
subsystem. (Page 146)
7 For a discussion of this option, see U.S. Congressional Budget Office, Transforming the Navy’s
Surface Combatant Force
, Mar. 2003, pp. 4-17.