Order Code RS21305
Updated January 30, 2006
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. Section 124 of the conference report on the FY2006 defense authorization bill
(H.R. 1815) limits the cost of the fifth and sixth LCSs to $220 million per ship. The
conference report on the FY2006 defense appropriations bill (H.R. 2863) approves
funding for the procurement of three LCSs in FY2006. For a longer discussion of the
LCS program, see CRS Report RL32109, Navy DD(X), CG(X), and LCS Ship
Acquisition Programs: Oversight Issues and Options for Congress, by Ronald
O’Rourke. This report will be updated as events warrant.
Background
The Navy announced the LCS program 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.1 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 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 For more on the DD(X) and CG(X), see CRS Report RL32109, Navy DD(X), CG(X), and LCS
Ship Acquisition Programs: Oversight Issues and Options for Congress, by Ronald O’Rourke.
Congressional Research Service ˜ The Library of Congress

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December 2005 press reports indicate that the Navy wants to build a total of 55
LCSs.2 The first LCS was procured in FY2005 and the Navy requested funding for the
second in the FY2006 budget.
On May 27, 2004, the Navy awarded contracts to teams led Lockheed Martin and
General Dynamics (GD) for final system design of two “Flight 0” 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 at least a few LCSs to the two Flight 0 designs before deciding whether to
continue building one design, the other, or both. 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 is acquiring the first and second LCSs through the Navy’s research and
development account rather than the Navy’s ship-procurement account. The Navy is
procuring LCS mission modules through the Other Procurement, Navy (OPN) account
rather than the Navy’s ship-procurement account. Table 1 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 $388 million, and that a program of 55 LCSs
might therefore have a total acquisition (i.e., research and development plus procurement)
cost of about $22.1 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.
Issues for Congress
Total Acquisition Cost. Although this CRS report estimates that a 55-ship LCS
program might have a total acquisition cost of about $22.1 billion, Navy officials
acknowledge that the cost of individual LCS mission modules and the ratio of mission
modules to LCSs is not yet clear, and that the potential total acquisition cost of the LCS
program, including mission modules, is therefore uncertain. Supporters could argue that
total program acquisition 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 proceed at full pace until its potential total costs are better
understood.
2 Christopher P. Cavas, “U.S. Ship Plan To Cost 20% More,” Defense News, December 5, 2005:
1, 8; and David S. Cloud, “Navy To Expand Fleet With New Enemies in Mind,” New York Times,
December 5, 2005.

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Table 1. LCS Program Funding, FY2002-FY2009
(millions of then-year dollars; totals may not add due to rounding)
Total thru
03
04
05
06
07
08
09
10
11
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 long-
0
0
16.0
0
0
0
0
0
0
16.0
lead items
Ships 1and 2 outfitting/post
0
0
0
8.7
36.7
36.7
7.1
0
0
89.2
delivery
LCS ship development
35.3
158.3
224.2
117.3
130.8
57.7
37.1
37.9
16.4
815.0
LCS mission package
0
0
0
209.9
131.6
65.3
57.1
80.6
34.3
578.8
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.
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

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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;3
! 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 five 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;4 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). Section 124 of the
conference report on H.R. 1815 limits the cost of the fifth and sixth LCSs to $220 million
per ship, with the limit to become effective with the budget that request funds for the
procurement of the two ships. (This will likely be the FY2007 budget.) The section also
requires an annual report on the content, cost, and number of LCS mission packages, and
states that no funds may be used for procurement of LCSs or LCS mission packages after
the procurement of the first four LCSs until the Navy certifies in writing that stable
designs exist for the LCS.
FY2006 Defense Appropriations Bill (H.R. 2863). The conference report on
H.R. 2863 approves funding for the procurement of three LCSs in FY2006. The report
approves $582.7 million in research and development funding for the LCS program, a
$6.2-million increase over the requested amount. This total includes funding for the
procurement of one LCS, as requested by the Navy. The conference report also includes
an $440 million in the Shipbuilding and Conversion, Navy (SCN) account, not requested
by the Navy, for the procurement of two additional LCSs. Of the $6.2-million increase
in research and development funding, $3.0 million is to be used for remote operation of
active sonar technology (ROAST), $2.2 million is for unmanned surface vehicle concepts
and technology solutions, and $1.0 million is for antisubmarine warfare multistatic sensor
mission planing upgrade and LCS mission package projects.
3 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.

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The conference report states that “The conferees agree to the report on Littoral
Combat Ship (LCS) mission modules proposed by the House, and specify that such report
should include cost estimates for these modules by fiscal year.” The House
Appropriations Committee, in its report (H.Rept. 109-119 of June 10, 2005) on H.R.
2863, stated:
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. (p. 146)
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