Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Ronald O'Rourke Specialist in Naval Affairs March 6, 2015 Congressional Research Service 7-5700 www.crs.gov RL33741 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Summary The Navy’s Littoral Combat Ship (LCS)/Frigate program is a program to procure 52 LCSs and frigates. The first LCS was funded in FY2005, and a total of 23 have been funded through FY2015. The Navy’s proposed FY2016 budget requests $1,437.0 million for the procurement of three more LCSs, or an average of $479.0 million each. From 2001 to 2014, the program was known simply as the Littoral Combat Ship (LCS) program, and all 52 planned ships were referred to as LCSs. In 2014, at the direction of Secretary of Defense Chuck Hagel, the program was restructured. As a result of the restructuring, the Navy now wants to build the final 20 ships in the program (ships 33 through 52) to a revised version of the baseline LCS design. The Navy intends to refer to these 20 ships, which the Navy wants to procure in FY2019 and subsequent fiscal years, as frigates rather than LCSs. The Navy has indicated that it may also want to build ships 25 through 32 with at least some of the design changes now intended for the final 20 ships. The Navy wants to procure ships 25 through 32 in FY2016-FY2018. Two very different baseline LCS designs are being built. One was developed by an industry team led by Lockheed; the other was developed by an industry team that was led by General Dynamics. The Lockheed design is built at the Marinette Marine shipyard at Marinette, WI; the General Dynamics design is built at the Austal USA shipyard at Mobile, AL. Ships 5 through 24 in the program are being procured under a pair of 10-ship block buy contracts that were awarded to the two LCS builders in December 2010. The 24th LCS—the first of the three LCSs expected to be requested for procurement in FY2016—is the final ship to be procured under these block buy contracts. The LCS program has been controversial due to past cost growth, design and construction issues with the lead ships built to each design, concerns over the ships’ survivability (i.e., ability to withstand battle damage), concerns over whether the ships are sufficiently armed and would be able to perform their stated missions effectively, and concerns over the development and testing of the ships’ modular mission packages. The Navy’s execution of the program has been a matter of congressional oversight attention for several years. The program’s restructuring in 2014 raises additional oversight issues for Congress. Congressional Research Service Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Contents Introduction...................................................................................................................................... 1 Background ...................................................................................................................................... 1 Program in General.................................................................................................................... 1 Ships .................................................................................................................................... 1 Mission Packages ................................................................................................................ 5 Manning and Deployment ................................................................................................... 6 Procurement Cost ................................................................................................................ 7 Controversy and Proposals to Truncate Program ................................................................ 9 Program’s 2014 Restructuring ................................................................................................. 10 February 2014 DOD Announcement of Restructuring Effort ........................................... 10 Navy Work to Identify Ships to Follow First 32 LCSs ..................................................... 11 December 2010 DOD And Navy Announcement of Restructured Plan............................ 12 FY2016 Funding Request ........................................................................................................ 19 Issues for Congress ........................................................................................................................ 20 Analytical Foundation for Revised Design for Ships 33-52 .................................................... 20 Overview ........................................................................................................................... 20 Three Analyses That Can Strengthen an Analytical Foundation ....................................... 20 Original LCS Program Lacked One of These Analyses Prior to Announcement of Program .......................................................................................................................... 21 Navy’s Restructured Plan for Final 20 Ships Appears to Have Been Announced Without Two of These Analyses..................................................................................... 22 Survivability of Revised Design for Ships 33-52 .................................................................... 23 Acquisition Strategy for Ships 25-32 ...................................................................................... 24 Technical Risk and Issues Relating to Program Execution ..................................................... 25 Sea Frame .......................................................................................................................... 25 Mission Packages .............................................................................................................. 30 Additional Oversight Issues Raised in GAO Reports.............................................................. 34 Legislative Activity for FY2016 .................................................................................................... 35 Figures Figure 1. Lockheed Baseline LCS Design (Top) and General Dynamics Baseline LCS Design (Bottom) ........................................................................................................................... 4 Tables Table 1. Past (FY2005-FY2015) and Projected (FY2016-FY2020) Annual LCS Sea Frame Procurement Quantities ..................................................................................................... 3 Appendixes Appendix A. Some Major Program Developments Prior to Program’s 2014 Restructuring ......... 36 Congressional Research Service Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Appendix B. Defense-Acquisition Policy Lessons of LCS Program............................................. 40 Contacts Author Contact Information........................................................................................................... 41 Congressional Research Service Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Introduction This report provides background information and issues for Congress on the Navy’s Littoral Combat Ship (LCS)/Frigate program, a program to procure 52 LCSs and frigates. The first ship in the program was procured in FY2005, and a total of 23 have been procured through FY2015. The Navy’s proposed FY2016 budget requests $1,437.0 million for the procurement of three more LCSs, or an average of $479.0 million each. The Navy’s execution of the program has been a matter of congressional oversight attention for several years. In 2014, at the direction of Secretary of Defense Chuck Hagel, the program was restructured. The program’s restructuring in 2014 raises additional oversight issues for Congress. Congress’s decisions on the LCS/Frigate program will affect Navy capabilities and funding requirements, and the shipbuilding industrial base. Background Program in General Ships A Program for 52 LCSs and Frigates The Navy’s Littoral Combat Ship (LCS)/Frigate program is a program to procure 52 LCSs and frigates. These 52 ships would account for 17%, or about one-sixth, of the Navy’s planned fleet of about 306 ships of all types.1 The establishment of the program was announced on November 1, 2001.2 From 2001 to 2014, the program was known simply as the Littoral Combat Ship (LCS) program, and all 52 planned ships were referred to as LCSs. In 2014, at the direction of Secretary of Defense Chuck Hagel, the program was restructured. As a result of the restructuring, the Navy now wants to build the final 20 ships in the program (ships 33 through 52) to a revised version of the LCS design. The Navy intends to refer to these 20 ships, which the Navy wants to procure in FY2019 and subsequent fiscal years, as frigates rather than LCSs. 1 For more on the Navy’s planned fleet, see CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress, by Ronald O'Rourke. 2 On November 1, 2001, the Navy announced that it was launching a Future Surface Combatant Program aimed at acquiring a family of next-generation surface combatants. This new family of surface combatants, the Navy stated, would include three new classes of ships: a destroyer called the DD(X)—later redesignated the DDG-1000—for the precision long-range strike and naval gunfire mission; a cruiser called the CG(X) for the air defense and ballistic missile mission, and a smaller combatant called the Littoral Combat Ship (LCS) to counter submarines, small surface attack craft, and mines in heavily contested littoral (near-shore) areas. The DDG-1000 was truncated to a total of three ships in 2009, and the CG(X) program was terminated in 2010. For more on the DDG-1000 program, see CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress, by Ronald O'Rourke. For more on the CG(X) program, see CRS Report RL34179, Navy CG(X) Cruiser Program: Background for Congress, by Ronald O'Rourke. Congressional Research Service 1 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress The Navy has indicated that it may also want to build ships 25 through 32 in the program with at least some of the design changes now intended for the final 20 ships. The Navy wants to procure ships 25 through 32 in FY2016-FY2018. It is also possible that some of the design changes might be backfitted onto some of the first 24 ships in the program sometime after those ships enter service. Accordingly, the Navy has suggested that, eventually, it might refer to not just the final 20 ships in the program, but to some or all of the first 32 ships as well, as frigates. Baseline LCS Design for First 24 to 32 Ships in the Program The baseline LCS design, to be used for the first 24 to 32 ships in the program, is known as the Flight 0+ design.3 The baseline LCS is a relatively inexpensive Navy surface combatant that is to be equipped with modular “plug-and-fight” mission packages, including unmanned vehicles (UVs). Rather than being a multimission ship like the Navy’s larger surface combatants, the baseline LCS is to be a focused-mission ship, meaning a ship equipped to perform one primary mission at any given time. The ship’s mission orientation can be changed by changing out its mission packages. The baseline LCS design, without any mission packages, is referred to as the LCS sea frame. The baseline LCS’s primary missions are antisubmarine warfare (ASW), mine countermeasures (MCM), and surface warfare (SUW) against small boats (including so-called “swarm boats”), particularly in littoral (i.e., near-shore) waters. The LCS/Frigate program includes the development and procurement of ASW, MCM, and SUW mission packages for use by LCS sea frames. These three primary missions appear oriented toward countering, among other things, some of the littoral anti-access/area-denial (A2/AD) capabilities that have been fielded in recent years by Iran,4 although they could also be used to counter similar A2/AD capabilities that might be fielded by other countries. Additional potential missions for baseline LCSs include peacetime engagement and partnershipbuilding operations; intelligence, surveillance, and reconnaissance (ISR) operations; maritime security and intercept operations (including anti-piracy operations); support of Marines or special operations forces; and homeland defense operations. An LCS might perform these missions at any time, regardless of its installed mission module, although an installed mission module might enhance an LCS’s ability to perform some of these missions. The LCS displaces about 3,000 tons, making it about the size of a corvette (i.e., a light frigate) or a Coast Guard cutter. It has a maximum speed of more than 40 knots, compared to something more than 30 knots for the Navy cruisers and destroyers. The LCS has a shallower draft than Navy cruisers and destroyers, permitting it to operate in certain coastal waters and visit certain shallow-draft ports that are not accessible to Navy cruisers and destroyers. Revised Design for Final 20 Ships (Ships 33 Through 52) The revised design that the Navy wants to use for the final 20 ships in the program includes additional or improved built-in equipment for SUW, ASW, and anti-air warfare (AAW), as well as 3 The first two ships in the program were built to an earlier and slightly different design known as the Flight 0 design. For a discussion of Iran’s littoral A2/AD capabilities, including submarines, mines, and small boats, see CRS Report R42335, Iran’s Threat to the Strait of Hormuz, coordinated by Kenneth Katzman. 4 Congressional Research Service 2 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress changes to make the ship harder for adversaries to detect and changes to improve the ship’s ability to withstand battle damage. These ships would be a little heavier than the baseline LCS design, and would have a slightly lower maximum sustained speed. They would have less capacity than the baseline LCS design for accepting LCS mission packages. The Navy does not intend to use the final 20 ships as MCM platforms; their primary missions would be SUW and ASW. The final 20 ships could also perform the additional potential missions listed above for the baseline LCS design. Procurement Quantities Table 1 shows past (FY2005-FY2015) and projected (FY2016-FY2019) annual procurement quantities for LCS sea frames under the Navy’s FY2015 budget submission. As shown in the table, a total of 23 baseline LCSs have been procured through FY2015. Table 1. Past (FY2005-FY2015) and Projected (FY2016-FY2020) Annual LCS Sea Frame Procurement Quantities (As shown in the Navy’s FY2015 budget submission) FY05 1 FY14 4 FY06 1 FY15 3 FY07 0 FY16 3 FY08 0 FY17 3 FY09 2 FY18 3 FY10 2 FY19 2 FY11 2 FY20 3 FY12 4 FY13 4 Source: Prepared by CRS based on FY2016 Navy budget submission. Notes: (1) The two ships shown in FY2005 and FY2006 were funded through Navy’s research and development account rather than the Navy’s shipbuilding account. (2) The figures for FY2006-FY2008 do not include five LCSs (two in FY2006, two in FY2007, and one in FY2008) that were funded in those years but later canceled by the Navy. Two Baseline LCS Designs Built By Two LCS Shipyards On May 27, 2004, the Navy awarded contracts to two industry teams—one led by Lockheed Martin, the other by General Dynamics (GD)—to design two baseline versions of the LCS, with options for each team to build up to two LCSs each. The baseline LCS designs developed by the two teams are quite different—the Lockheed team’s design is based on a steel semi-planing monohull (with an aluminum superstructure), while the GD team’s design is based on an allaluminum trimaran hull (see Figure 1). The two ships also use different built-in combat systems (i.e., different collections of built-in sensors, computers, software, and tactical displays) that were designed by each industry team. The Navy states that both baseline LCS designs meet the Key Performance Parameters (KPPs) for the first 24 to 32 ships in the program. Congressional Research Service 3 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Figure 1. Lockheed Baseline LCS Design (Top) and General Dynamics Baseline LCS Design (Bottom) Source: U.S. Navy file photo accessed by CRS at http://www.navy.mil/list_all.asp?id=57917 on January 6, 2010. The Lockheed baseline LCS design is built at the Marinette Marine shipyard at Marinette, WI.5 The GD baseline LCS design is built at the Austal USA shipyard at Mobile, AL.6 Odd-numbered 5 Marinette Marine is a division of the Fincantieri Marine Group, an Italian shipbuilding firm. In 2009, Fincantieri purchased Manitowoc Marine Group, the owner of Marinette Marine and two other shipyards. Lockheed is a minority (continued...) Congressional Research Service 4 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress LCSs (i.e., LCS-1, LCS-3, LCS-5, and so on) use the Lockheed design; even-numbered LCSs (i.e., LCS-2, LCS-4, LCS-6, and so on) use the GD design. Two Block Buy Contracts for Procuring Ships 5-24 Ships 1 through 4 in the program were procured with single-ship contracts. The next 20 ships in the program (ships 5 through 24) have been procured under two 10-ship block buy contracts that the Navy awarded to the two LCS builders in December 2010. The Navy sought and received legislative authority from Congress to award these block buy contracts.7 Under the contracts, each builder is to build 10 ships to be procured during the six-year period FY2010-FY2015, in annual quantities of 1-1-2-2-2-2. Thus, the Navy’s combined procurement quantities across both builders for FY2010-FY2015 were to be 2-2-4-4-4-4. These annual procurement quantities were realized until FY2015. For FY2015, the Navy requested, and Congress funded, three ships rather than four. Consequently, 23 (rather than 24) LCSs have been funded through FY2015, and the final ship to be procured under the two block buy contracts—the 24th ship in the program—has been deferred from FY2015 to FY2016. LCSs in Service As of early 2015, the first four LCSs had entered service—LCS-1 on November 8, 2008; LCS-2 on January 16, 2010; LCS-3 on August 6, 2012; and LCS-4 on January 27, 2014. Mission Packages Planned Procurement Quantities The Navy prior to the program’s 2014 restructuring had planned to procure 64 LCS mission packages (16 ASW, 24 MCM, and 24 SUW) for the 52 LCSs. As of January 2015, the Navy had not announced how, if at all, the program’s 2014 restructuring might change one or more of those figures. Deliveries and Initial Operational Capability (IOC) Dates Initial increments (i.e., versions) of LCS mission packages are undergoing testing. The Navy stated in its FY2015 budget submission that Increments I and II of the SUW mission package are scheduled to achieve IOC in the fourth quarter of FY2014, that Increment I of the MCM mission package is scheduled to achieve IOC in the fourth quarter of FY2015, and that Increment II of the (...continued) investor in Marinette Marine. 6 Austal USA was created in 1999 as a joint venture between Austal Limited of Henderson, Western Australia, and Bender Shipbuilding & Repair Company of Mobile, AL, with Austal Limited as the majority owner. 7 Congress granted the authority for the block buy contracts in Section 150 of H.R. 3082/P.L. 111-322 of December 22, 2010, an act that, among other things, funded federal government operations through March 4, 2011. For more on block buy contracts, see CRS Report R41909, Multiyear Procurement (MYP) and Block Buy Contracting in Defense Acquisition: Background and Issues for Congress, by Ronald O'Rourke and Moshe Schwartz. Congressional Research Service 5 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress ASW mission package is scheduled to achieve IOC in the fourth quarter of FY2016.8 At a February 25, 2015, hearing on Department of the Navy acquisition programs before the Seapower and Projection Forces subcommittee of the House Armed Services Committee, Department of the Navy officials testified that In November 2014, the program declared Initial Operational Capability (IOC) for the Surface Warfare (SUW) MP after successful testing onboard USS Fort Worth (LCS 3) in April 2014. The Mine Countermeasure (MCM) MP completed its final Increment 1 Developmental Test event in October 2014. The MCM MP is currently scheduled for Technical Evaluation and Initial Operational Test & Evaluation (IOT&E) in 2015. The ASW MP successfully completed its initial integration test onboard USS Freedom (LCS 1) in September 2014, with operational testing scheduled to begin in 2016. This early operational test event will reduce integration risk through real-world, at-sea testing of the Advanced Development Model (ADM). A subsequent early deployment of the ASW MP ADM aboard USS Freedom (LCS 1) in 2016 will further prove out the capabilities of the ASW MP. Operational testing will culminate in IOT&E in 2017. Significant developmental and operational testing has already been accomplished on both variants, with embarked ASW, MCM and SUW MPs. The LCS and ASW MP performed as predicted and marked the first time an LCS has tracked a submarine with variable depth sonar and a multi-function towed array. USS Freedom (LCS 1) also served as the test platform for the Surface Electronic Warfare Improvement Program Block Two-Lite engineering development model (EDM) installation and testing. The FY 2016 President’s Budget requests funding for five MPs (two MCM, two SUW, and one EDM for ASW.) The LCS, with a MP, provides capability that is equal to or exceeds the current capability of the ships that it is replacing.9 Manning and Deployment Reduced-Size Crew The baseline LCS employs automation to achieve a reduced-sized core crew (i.e., sea frame crew). The aim was to achieve a core crew of 40 sailors; the Navy has now decided to increase that number to about 50. Another 38 or so additional sailors are to operate the ship’s embarked aircraft (about 23 sailors) and its embarked mission package (about 15 sailors in the case of the MCM package), which would make for a total crew of about 88 sailors (for a baseline LCS equipped with an MCM mission package), compared to more than 200 for the Navy’s frigates and about 300 (or more) for the Navy’s current cruisers and destroyers.10 The crew size for the final 20 ships in the program may differ from that of the baseline LCS design. 8 Department of Defense, Department of Defense Fiscal Year (FY) 2015 Budget Estimates, Navy Justification Book Volume 2, Research, Development, Test & Evaluation, Navy, Budget Activity 4, March 2014, pages 405-406 (pdf pages 467-468 of 770). See also pages 403-404 (pdf pages 465-466 of 770). 9 Statement of the Honorable Sean J. Stackley, Assistant Secretary of the Navy (Research, Development and Acquisition) and Vice Admiral Joseph P. Mulloy, Deputy Chief of Naval Operations for Integration of Capabilities and Resources and Lieutenant General Kenneth J. Glueck, Jr., Deputy Commandant, Combat Development and Integration & Commanding General, Marine Corps Combat Development Command, Before the Subcommittee on Seapower and Projection Forces of the House Armed Services Committee on Department of the Navy Seapower and Projection Forces Capabilities, February 25, 2015, p. 11. 10 See Report to Congress, Littoral Combat Ship Manning Concepts, Prepared by OPNAV—Surface Warfare, July 2013 (with cover letters dated August 1, 2013), posted at USNI News on September 24, 2013, at http://news.usni.org/ 2013/09/24/document-littoral-combat-ship-manning-concepts. Congressional Research Service 6 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress “3-2-1” Plan The Navy plans to maintain three crews for each two baseline LCSs, and to keep one of those two baseline LCSs continuously underway—a plan Navy officials refer to as “3-2-1.” Under the 3-2-1 plan, baseline LCSs are to be deployed for 16 months at a time, and crews are to rotate on and off deployed ships at 4-month intervals.11 The 3-2-1 plan will permit the Navy to maintain a greater percentage of the baseline LCS force in deployed status at any given time than would be possible under the traditional approach of maintaining one crew for each baseline LCS and deploying baseline LCSs for six to eight months at a time. The Navy plans to forward-station up to four LCSs in the Western Pacific at Singapore, and up to eight LCSs in the Persian Gulf at Bahrain. The Navy might also apply the 3-2-1 plan to the final 20 ships in the program. Procurement Cost Unit Procurement Cost Cap LCS sea frames procured in FY2010 and subsequent years are subject to a unit procurement cost cap that can be adjusted to take inflation into account.12 The Navy states that after taking inflation into account, the unit procurement cost cap as of December 2010 was $538 million per ship. In awarding the two LCS block buy contracts in December 2010, the Navy stated that LCSs to be 11 See, for example, Grace Jean, “Buying Two Littoral Combat Ship Designs Saves the Navy $600 Million, Official Says,” NationalDefenseMagazine.org, January 12, 2011. 12 The legislative history of the cost cap is as follows: • The cost cap was originally established by Section 124 of the FY2006 National Defense Authorization act (H.R. 1815/P.L. 109-163 of January 6, 2006). Under this provision, the fifth and sixth ships in the class were to cost no more than $220 million each, plus adjustments for inflation and other factors. • The cost cap was amended by Section 125 of the FY2008 National Defense Authorization Act (H.R. 4986/P.L. 110-181 of January 28, 2008). This provision amended the cost cap to $460 million per ship, with no adjustments for inflation, and applied the cap to all LCSs procured in FY2008 and subsequent years. • The cost cap was amended again by Section 122 of the FY2009 Duncan Hunter National Defense Authorization Act (S. 3001/P.L. 110-417 of October 14, 2008). This provision deferred the implementation of the cost cap by two years, applying it to all LCSs procured in FY2010 and subsequent years. • The cost cap was amended again by Section 121(c) and (d) of the FY2010 National Defense Authorization Act (H.R. 2647/P.L. 111-84 of October 28, 2009). The provision adjusted the cost cap to $480 million per ship, excluded certain costs from being counted against the $480 million cap, included provisions for adjusting the $480 million figure over time to take inflation and other events into account, and permitted the Secretary of the Navy to waive the cost cap under certain conditions. The Navy states that after taking inflation into account, the $480 million figure equates, as of December 2010, to $538 million. Section 121(d)(1) states that the Secretary of the Navy may waive the cost cap if: (A) the Secretary provides supporting data and certifies in writing to the congressional defense committees that— (i) the total amount obligated or expended for procurement of the vessel(I) is in the best interest of the United States; and (II) is affordable, within the context of the annual naval vessel construction plan required by section 231 of title 10, United States Code; and (ii) the total amount obligated or expended for procurement of at least one other vessel authorized by subsection (a) has been or is expected to be less than $480,000,000; and (B) a period of not less than 30 days has expired following the date on which such certification and data are submitted to the congressional defense committees. Congressional Research Service 7 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress acquired under the two contracts are to have an average unit cost of about $440 million, a figure well below this $538 million figure.13 Program Procurement Costs Sea Frames The Navy’s proposed FY2016 budget requests $1,437.0 million for the procurement of three more LCSs, or an average of $479.0 million each. Mission Packages A March 2014 GAO report states that for a January 2014 Milestone B acquisition event, the LCS program office estimated the total acquisition cost of the LCS program’s mission packages at $7.24 billion.14 This figure does not account for any changes in planned LCS mission package procurement that might result from the program’s 2014 restructuring. In August 2013, the Navy had stated that The estimated Average Production Unit Cost (APUC) for all 59 OPN-funded mission packages [the other five mission packages were funded through the Navy’s research, development, test and evaluation (RDT&E) account] is $69.8M in Constant Year (CY) Fiscal Year 2010 dollars. This is the most accurate answer for “How much does it cost to buy a mission package?” These mission packages are production-representative assets for Operational Test and deployment. The LCS Mission Modules program will use OPN to procure 23 MCM mission packages, 21 SUW mission packages, 15 ASW mission packages, and 59 sets of common mission package equipment. 13 Source: Contract-award information provided to CRS by navy office of Legislative Affairs, December 29, 2010. The 20 ships to be acquired under the two contracts have a target cost and a higher ceiling cost. Any cost growth above the target cost and up to the ceiling cost would be shared between the contractor and the Navy according to an agreed apportionment (i.e., a “share line”). Any cost growth above the ceiling cost would be borne entirely by the contractor. The Navy states that, as a worst case, if the costs of the 20 ships under the two FPI contracts grew to the ceiling figure and all change orders were expended, the average cost of the ships would increase by about $20 million, to about $460 million, a figure still well below the adjusted cost cap figure of $538 million. 14 Government Accountability Office, Defense Acquisitions[:] Assessments of Selected Weapon Programs, GAO-14340SP, March 2013, p. 96. See also Jason Sherman, “Navy Sets $7.2B Price Tag For Littoral Combat Ship Mission Modules,” Inside the Navy, March 31, 2014. The December 31, 2012, SAR for the sea frame portion of the LCS program does not contain estimated acquisition costs for the planned total of 64 LCS mission packages. The December 31, 2010, SAR for the LCS program stated: On February 18, 2011, USD(AT&L) [the Under Secretary of Defense (Acquisition, Technology, and Logistics)—DOD’s acquisition executive] conducted a Milestone B (MS B) Defense Acquisition Board (DAB) for the seaframe portion of the LCS program. The decision of the DAB was to separate the program into two separate and distinct programs with separate reporting requirements. The Seaframe portion of the program is reported in this SAR as approved at MS B. The Mission Module portion of the program will begin reporting when it receives its Milestone B decision. (Department of Defense, Selected Acquisition Report (SAR), LCS, as of December 31, 2010, p. 4.) Congressional Research Service 8 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress The APUC can be broken down into the estimated average initial procurement cost of the three types of mission packages and common mission package equipment. None of the figures in this paper represent budget values. — Mine Countermeasures (MCM) Mission Packages (23): $97.7M — Surface Warfare (SUW) Mission Packages (21): $32.6M — Anti-Submarine Warfare (ASW) Mission Packages (15): $20.9M — Sets of Common Mission Package Equipment (59): $14.8M... These estimates do not include the RDT&E expenditures that are associated with mission package development, integration, and test. These RDT&E expenditures include the five RDT&E-funded mission packages intended for use as development, training, and testing assets. Those five mission packages are not production-representative items. Including all prior RDT&E expenditures results in an average Program Acquisition Unit Cost of $99.7M for all 64 mission packages. This not an accurate answer for “How much does it cost to buy a mission package?” as past RDT&E expenditures are not relevant to the purchase price of a mission package today.15 Controversy and Proposals to Truncate Program The LCS program has been controversial due to past cost growth, design and construction issues with the lead ships built to each design, concerns over the ships’ survivability (i.e., ability to withstand battle damage), concerns over whether the ships are sufficiently armed and would be able to perform their stated missions effectively, and concerns over the development and testing of the ships’ modular mission packages. Prior to the program’s restructuring in 2014, some observers, citing one or more of these issues, had proposed truncating the LCS program to either 24 ships (i.e., stopping procurement after procuring all the ships covered under the two block buy contracts) or to some other number well short of 52.16 In response to criticisms of the LCS program, the Navy prior to the program’s 2014 restructuring acknowledged certain problems and stated that it was taking action to correct them, and disputed other arguments made against the program. The LCS is by no means the only Navy shipbuilding program to have encountered controversy over the years; several others have experienced controversy for one reason or another. 15 Navy information paper on LCS program dated August 26, 2013, and provided to CRS and CBO on August 29, 2013. 16 For example, a May 2012 report by the Center for a New American Security (CNAS) recommended stopping the LCS program in FY2017 after procuring a total of 27 ships (David W. Barno, et al., Sustainable Pre-eminence[:] Reforming the U.S. Military at a Time of Strategic Change, Center for a New American Security, May 2012, pp. 35, 67), and an April 2011 report by the Heritage Foundation recommended a future Navy fleet with a total of 28 small surface combatants—a category that appears to include both Oliver Hazard Perry (FFG-7) frigates (which are being phased out of service) and LCSs (A Strong National Defense[:] The Armed Forces America Needs and What They Will Cost, Heritage Foundation, April 5, 2011, pp. 25-26). CNAS made a similar recommendation in a report it published in October 2011 (David W. Barno, et al., Hard Choices[:] Responsible Defense in an Age of Austerity, Center for a New American Security, October 2011, pp. 13, 14, 15, 16, 18, 20, 21, 34, 35. The report recommends procuring a total of 27 LCSs under three DOD budget scenarios, or a total of 12 LCSs under a fourth DOD budget scenario). Congressional Research Service 9 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Program’s 2014 Restructuring February 2014 DOD Announcement of Restructuring Effort February 24, 2014, Secretary of Defense Address and DOD Background Briefing On February 24, 2014, in an address previewing certain decisions incorporated into DOD’s FY2015 budget submission, Secretary of Defense Chuck Hagel stated: Regarding the Navy’s littoral combat ship [LCS], I am concerned that the Navy is relying too heavily on the LCS to achieve its long-term goals for ship numbers. Therefore, no new contract negotiations beyond 32 ships will go forward. With this decision, the LCS line will continue beyond our five-year budget plan with no interruptions. The LCS was designed to perform certain missions—such as mine sweeping and antisubmarine warfare—in a relatively permissive environment. But we need to closely examine whether the LCS has the independent protection and firepower to operate and survive against a more advanced military adversary and emerging new technologies, especially in the Asia Pacific. If we were to build out the LCS program to 52 ships, as previously planned, it would represent one- sixth of our future 300-ship Navy. Given continued fiscal restraints, we must direct shipbuilding resources toward platforms that can operate in every region and along the full spectrum of conflict. Additionally, at my direction, the Navy will submit alternative proposals to procure a capable and lethal small surface combatant, generally consistent with the capabilities of a frigate. I've directed the Navy to consider a completely new design, existing ship designs, and a modified LCS. These proposals are due to me later this year in time to inform next year’s budget submission.17 Also on February 24, 2014, in a background briefing associated with Hagel’s address, a senior defense official stated: On the LCS, we clearly do need the LCS capabilities of the minesweeps, the ASW [AntiSubmarine Warfare] module for example is looking very promising, and we absolutely need those capabilities. But as we look at our adversary growing capabilities, we also need to make certain that our fleet has enough capabilities, enough survivability and lethality that they can go up against those adversaries, so we want to look at what—what is out there for the future of the small surface combatants beyond LCS? And we—and we want to start that now.18 17 DOD News Transcript, “Remarks by Secretary Hagel and Gen. Dempsey on the fiscal year 2015 budget preview in the Pentagon Briefing Room,” February 24, 2014, accessed February 25, 2014, at http://www.defense.gov/transcripts/ transcript.aspx?transcriptid=5377. Brackets as in original. 18 DOD News Transcript, “Background Briefing on Fiscal 2015 Budget Recommendations,” February 24, 2014, accessed February 25, 2014, at http://www.defense.gov/transcripts/transcript.aspx?transcriptid=5376. Brackets as in original. Congressional Research Service 10 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress February 24, 2014, Secretary of Defense Memorandum to Navy Leadership A February 24, 2014, memorandum from Secretary of Defense Hagel to Secretary of the Navy Ray Mabus and Chief of Naval Operations Admiral Jonathan Greenert stated: I have given careful consideration to the Littoral Combat Ship (LCS) program, and I wanted to get back to you on my decision. I have consulted with Naval Surface Commanders, acquisition officials, policy and evaluation experts and reviewed preliminary assessments and evaluations of the LCS. If we build out the LCS program to 52 ships it would represent one-sixth of our future 300ship Navy. Given the emerging threat environment of the future, I have considerable reservations as to whether that is what our Navy will require over the next few decades. I recognize the importance of presence, which is tied to the number of ships. But I also believe that capability and power projection is the foundation of our Navy’s effectiveness. Therefore, no new contract negotiations beyond 32 ships will go forward. The Department of the Navy is directed to provide me the following information: — Provide regular updates on LCS performance based on test results and experience from recent deployments. These assessments should consider survivability, performance, sustainment cost, materiel readiness, lethality and growth potential. — Submit to me, in time to inform the PB 2016 [President’s Budget for FY2016] budget deliberations, alternative proposals to procure a capable and lethal small surface combatant, generally consistent with the capabilities of a frigate. Options considered should include a completely new design, existing ship designs (including the LCS), and a modified LCS. Include target cost, mission requirements, sensors and weapon requirements and required delivery date. If a modified LCS is an acceptable option for a more capable small surface combatant, negotiations for LCS beyond the 24 ships currently on contract should seek to incorporate the upgraded LCS as soon as possible. Should the aforementioned assessments provide dispositive against the LCS, I retain the right to modify the program. As we both agree, smart investments in our future ships will be required as we continue to face limited resources over the next few years. We need to focus on what the Navy will require in the years ahead to meet our Nation’s security needs and future missions.19 Navy Work to Identify Ships to Follow First 32 LCSs Following Secretary Hagel’s February 24, 2014, announcement, the Navy conducted an internal study of options for small surface combatants to be procured following the first 32 LCSs.20 The 19 Memorandum dated February 24, 2014, from the Office of the Secretary of Defense to the Secretary of the Navy and Chief of Naval Operations on Littoral Combat Ship (LCS) program, posted at InsideDefense.com (subscription required) February 28, 2014. 20 For more on the Navy’s internal study, see Statement of The Honorable Sean J. Stackley, Assistant Secretary of the Navy (Research, Development and Acquisition) and Vice Admiral Joseph P. Mulloy, Deputy Chief of Naval Operations for Integration of Capabilities and Resources and Vice Admiral William H. Hilarides, Commander, Naval Sea Systems Command, Before the Subcommittee on Seapower of the Senate Armed Services Committee on Department of the Navy Shipbuilding Programs, April 10, 2014, pp. 11-12; joint letter dated March 13, 2014, from the Chief of Naval Operations and the Assistant Secretary of the Navy (Research, Development, and Acquisition) on Small (continued...) Congressional Research Service 11 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress study was completed on July 31, 2014, as required. The results of the study were then reviewed for several months within the Office of the Secretary of Defense. December 2010 DOD And Navy Announcement of Restructured Plan December 10, 2014, Secretary of Defense Memo A December 10, 2014, memorandum from Secretary of Defense Chuck Hagel to Secretary of the Navy Ray Mabus and Chief of Naval Operations Jonathan Greenert on the subject of “Littoral Combat Ship Program Way Ahead” states: I want to thank you and your staff for the timely, thorough, and professional work conducted in response to my memorandum from February 24, 2014, which directed you to submit to me alternate proposals for a capable small surface combatant that is more lethal and survivable than the current Flight 0+ Littoral Combat Ship (LCS) now in serial production. After giving careful thought to your briefing on options, I approve your plan to procure a small surface combatant (SSC) based on an upgraded Flight 0+ LCS, and direct the following actions to be taken: — Develop an Acquisition Strategy to support design and procurement of new SSCs no later than Fiscal Year 2019 (FY 19), and sooner if possible. Provide this Acquisition Strategy to the USD(AT&L) for review and approval no later than May 1, 2015. As this strategy is developed, the Navy should continue to identify further opportunities to increase ship survivability and lethality as it proceeds to the next phase of SSC design. Competition for the SSC should be sustained to the maximum extent possible within available resources. — Provide the Director, CAPE and USD(AT&L) with a Service Cost Position in support of the FY17 POM submission and provide the USD(AT &L) with your plan for controlling overall program cost. Cost control should be a major emphasis of the program. I am particularly interested in ensuring that the Navy addresses operations and support (O&S) cost projections, and takes actions to reduce them. — Provide to me no later than May 1, 2015, an assessment of the cost and feasibility of back-fitting SSC survivability and lethality enhancements on earlier Flight 0+ LCSs already under contract, as well as those built before production of new SSCs commences. The intent should be to improve the lethality and survivability of Flight 0+ ships as much as practical. (...continued) Surface Combatant Task Force, posted at InisideDefense.com (subscription required) March 18, 2014; Kris Osborn, “Navy Starts Study to Re-Examine LCS Mission,” DoD Buzz (www.dodbuzz.com), March 7, 2014; Christopher P. Cavas, “CNO: Group Will Study New LCS Designs,” DefenseNews.com, March 10, 2014; Olga Belogolova, “Top Navy Official: New Design For A Small Surface Combatant Unlikely,” Inside the Navy, April 14, 2014; Christopher P. Cavas, “Ship Study Should Favor Existing Designs,” DefenseNews.com, April 19, 2014; Michael Fabey, “LCS Template Colors Small Surface Combatant Development,” Aerospace Daily & Defense Report, May 2, 2014: 1-2; Philip Ewing, “CNO: Navy Could’ve Been Clearer About LCS,” Politico Pro Defense, May 21, 2014; Sandra Erwin, “Navy Chief: We Will Lay Out Clear Plan for Littoral Combat Ship,” National Defense (www.nationaldefensemagazine.org), May 21, 2014; Mike McCarthy, “Up-gunned LCSs, Coast Guard’s Cutter Among Ideas Proposed For Navy’s Small Surface Combatant,” Defense Daily, May 23, 2014: 2-3; Mike McCarthy, “LCS Follow-On Will Have To Be ‘Very Close’ In Price, Admiral Says,” Defense Daily, June 2, 1014: 4-5; Michael Fabey, “Robust Air Defense Not Needed In New Frigates, Studies Show,” Aerospace Daily & Defense Report, January 30, 2015: 4; Mike McCarthy, “Modifying An LCS And Calling It A Frigate—How The Navy Got There,” Defense Daily, February 2, 2015: 4-7. Congressional Research Service 12 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Your assessment should be coordinated with Deputy Secretary Work, USD (AT&L), and Director, CAPE. Your strategy, plans, and assessments should assume a total buy of up to 52 Flight 0+ LCSs and SSCs, with the final number and mix procured dependent on future fleet requirements, final procurement and O&S costs, and overall Department of the Navy resources. By executing the above guidance, I am confident we will procure the most lethal, survivable and capable small surface combatant given our available resources. Thank you and the men and women of the world’s finest Navy for your daily efforts to defend this Nation.21 December 11, 2014, DOD News Release A December 11, 2014, DOD news release stated: Statement by Secretary Hagel on the Littoral Combat Ship Earlier this year, expressing concern that the U.S. Navy was relying too heavily on the littoral combat ship (LCS) to meet long-term targets for the size of its fleet, I announced that the Defense Department would not undertake new contract negotiations beyond 32 littoral combat ships, and directed the Navy to submit alternative proposals to identify and procure a more lethal and survivable small surface combatant, with capabilities generally consistent with those of a frigate. I specifically asked the Navy to consider completely new designs, existing ship designs, and modified LCS designs; and to provide their recommendations to me in time to inform the president’s fiscal year 2016 defense budget. After rigorous review and analysis, today I accepted the Navy’s recommendation to build a new small surface combatant (SSC) ship based on upgraded variants of the LCS. The new SSC will offer improvements in ship lethality and survivability, delivering enhanced naval combat performance at an affordable price. The LCS was designed to be a modular and focused-mission platform individually tailored for mine-sweeping, surface warfare, and anti-submarine warfare. Given today’s fiscal climate and an increasingly volatile security environment, I concluded the Navy must direct its future shipbuilding resources toward more multi-mission platforms that can operate in every region and across the full spectrum of conflict. My decision today follows consultations with DoD’s senior leadership and careful review of the Navy’s recommendation and underlying analysis, which included detailed evaluation of 192 design concepts as well as consultation with fleet commanders, industry, surface warfare officers, engineers, program managers, and analysts. The more lethal and survivable SSC will meet a broader set of missions across the range of military operations, and addresses the Navy’s top war-fighting priorities. It will feature an improved air defense radar; air defense decoys; a new, more effective electronic warfare system; an over-the-horizon anti-ship missile; multi-function towed array sonar; torpedo defenses; and additional armor protection. 21 Memorandum dated December 10, 2014, from the Secretary of Defense to the Secretary of the Navy and the Chief of Naval Operations on Littoral Combat Ship Program Way Ahead, accessed December 24, 2014, at http://www.defense.gov/pubs/SD%20Signed%20Memo%20to%20SECNAV%20&%20CNO%2010DEC2014.pdf. Congressional Research Service 13 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress I have directed the Navy to assume a total buy of 52 LSCs and SSCs, with the final number and mix dependent on future fleet requirements, final procurement costs, and overall Navy resources. Production of the new SSC will begin no later than fiscal year 2019, and there will be no gap between production of the last LCS and the first SSC. A significant advantage to this approach is the ability to enhance naval combat performance by back-fitting select SSC improvements to the LCS fleet. The Navy’s new proposal, like the LCS, will continue to have its critics, but considering the context of our broader naval battle force and the current strategic and fiscal environment, I believe it represents our best and most cost effective option. By avoiding a new class of ships and new system design costs, it also represents the most responsible use of our industrial base investment while expanding the commonality of the Navy’s fleet. Going forward, I have issued three directives to the Navy. First, by next May, the Navy will provide the secretary of defense with an acquisition strategy to support design and procurement of the SSC no later than fiscal year 2019, while continuing to identify further opportunities to enhance the new ship’s survivability and lethality. Second, also by next May, the Navy will provide a detailed assessment of the cost and feasibility of back-fitting the SSCs enhancements onto LCSs already under contract. Finally, in advance of fiscal year 2017 budget preparations, the Navy will provide the undersecretary of defense for acquisition, technology, and logistics and the director of cost analysis and program evaluation with detailed cost estimates as well as a plan for controlling those costs. I want to thank the Navy for its rigorous analysis, as well as Deputy Secretary of Defense Bob Work; Vice Chairman of the Joint Chiefs of Staff Admiral Sandy Winnefeld; Undersecretary of Defense for Acquisition, Technology, and Logistics Frank Kendall; Director of Cost Assessment and Program Evaluation Jamie Morin; and Director of Operational Test and Evaluation Michael Gilmore for leading a task force to analyze the Navy’s recommendations. We look forward to working with Congress to ensure that our nation’s fleet remains unrivaled for many decades to come.22 December 11, 2014, Navy News Story A December 11, 2014, Navy News story reprinting a statement from the office of the Secretary of the Navy stated: Secretary of Defense Chuck Hagel has directed the Navy “to move forward with a multimission small surface combatant based on modified Littoral Combat Ship (LCS) hull designs.” Consistent with the Fleet’s views on the most valued capabilities delivered by a small surface combatant, the modified LCS ship will be more lethal and survivable. It will provide multimission anti-surface warfare (SUW) and anti-submarine warfare capabilities (ASW), as well as continuous and effective air, surface and underwater self-defense. Adding to current LCS Flight 0+ baseline configurations, which include the 57mm gun and SeaRAM missile system, this ship will be equipped with over-the-horizon surface-to-surface missiles, air defense upgrades (sensors and weapons), an advanced electronic warfare system; advanced decoys; a towed array system for submarine detection and torpedo defense, two 25mm guns, 22 DOD news release, “Statement by Secretary Hagel on the Littoral Combat Ship,” December 11, 2014, accessed December 24, 2014, at http://www.defense.gov/Releases/Release.aspx?ReleaseID=17073. Congressional Research Service 14 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress an armed helicopter capable of engaging with either Hellfire missiles or MK-54 torpedoes, and an unmanned FireScout helicopter for surveillance, reconnaissance, and targeting. Modularity design features will also be retained to augment SUW and ASW capabilities as directed by the Fleet Commanders. Available mission modules include Longbow Surface toSurface Missiles (Hellfire), two MK46 30mm guns, and two 11M RHIBs for Surface Warfare, or a variable depth sonar for submarine warfare which, when added to the ship’s organic multi-function towed array and embarked helicopter, make this an extremely effective anti-submarine warfare platform. In addition to the improved weapon systems capabilities for this ship, which reduce its susceptibility to being hit by a threat weapon, the small surface combatant will also include improved passive measures - measures that will reduce the ship’s signature against mine threats, and measures that will harden certain vital spaces and systems against potential damage caused by weapon impact - to further enhance its overall survivability. From an operational perspective, the sum of these improvements will increase the ship’s capability and availability to participate in SUW Surface Action Groups, ASW Search and Attack Units; escort of High Value Units, and support of Carrier Strike Group (CSG) SUW and ASW operations. With increased lethality and survivability, the modified LCS will provide the flexibility to operate both independently and as a part of an aggregated force. This decision allows the Navy to add organic multi-mission capabilities to the small surface combatant force while leveraging the benefits and affordability of the LCS program. The modified LCS ships will complement the planned 32 LCS ships, resulting in a 52 ship Small Surface Combatant Fleet in keeping with the Navy’s Force Structure Analysis. The 32 LCS ships, with their full modular capability, will allow the Navy to deploy assets to meet the Navy’s mine warfare, SUW, and ASW demands.23 December 11, 2014, Navy Fact Sheet A December 11 Navy fact sheet on “The Modified Littoral Combat Ship (LCS)” stated: The modified LCS will be multi-missioned, with increased lethality and enhanced survivability at the most affordable cost. — The modified LCS is multi-mission focused and expands Surface Warfare (SUW) and Anti-Submarine Warfare (ASW) capabilities. — The ships will be based upon on existing LCS designs with modifications that will include additional capabilities. — Over-the-horizon surface to surface missile and additional weapon systems and combat system upgrades improves lethality. — Increased survivability will be achieved by incorporating additional selfdefense capabilities and increased hardening vital systems and vital spaces. 23 “Navy Moving Forward With LCS,” Navy News, December 11, 2014, accessed December 24, 2014, at http://www.navy.mil/submit/display.asp?story_id=84849. Congressional Research Service 15 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress — The ship will retain certain aspects of modularity but will maintain a baseline of surface and subsurface warfare capabilities. — Provides lethality, survivability and multi-mission capabilities in accordance with fleet priorities. — Requirements are based on estimated theater threat environment for the 2025 timeframe. — Fulfills the remaining 20 ships of our 52 small surface combatant requirement. — Both LCS variants remain a valuable addition to the fleet. — Our procurement strategy of 32 LCS continues, and we intend to provide incremental upgrades to these ships beginning in FY17. — The 32 LCS, with their full modular capability, will allow the Navy to deploy assets to meet the Navy’s Mine Warfare, Surface Warfare, and Anti-Submarine Warfare demands. — Small surface combatants enable the Navy to execute Defense Strategic Guidance (DSG). — The Navy has a validated requirement for 52 small surface combatants — Innovative, low-cost, and small footprint approach to achieve security objectives — Offers flexibility to Combatant Commanders for Theater Security Cooperation — Frees large surface combatants to conduct their primary missions — Builds and strengthens maritime partnerships by being able to train and operate with smaller, regional navies and to enter previously inaccessible, shallow-water foreign ports. — Procurement of this multi-mission ship supports industrial base schedule and is fiscally responsible. — The modified LCS helps maintain industrial infrastructure with no breaks in production. — The Navy balanced design alternatives with consideration for cost, risk, and other capabilities currently in the fleet. — Ship and combat systems design funding is included in our FY16 President’s Budget Request to support procurement starting in FY19. — By leveraging the current LCS design, total ownership cost is optimized. Congressional Research Service 16 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress — This increased capability is achieved at less than 20% more cost than the current LCS.24 The fact sheet goes on to say that specific modifications to the existing LCS design include the following: • an improved three-dimensional air surveillance radar; • an upgrade of the ship’s air defense capability to include a system called SeaRAM; • an over-the-horizon (OTH) surface warfare (SUW) missile; • an improved electronic warfare (EW) capability; • improved decoy systems; • improved signature management; • a multifunction towed-array sonar system; • torpedo defense and countermeasures equipment; • increased armor; • 25mm guns; and • actions elsewhere to reduce the weight of the ship, so as to help accommodate the above additions. Additional Information in Press Reports In interviews with the press about the modified LCS designs, the Navy provided some information in addition to what is presented above, including a Navy estimate that the modifications to the LCS design are expected to increase the procurement cost of each LCS by $60 million to $75 million.25 Regarding the acquisition strategy for the 20 ships, a December 15, 2014, trade press article stated: The Navy will continue to build both Lockheed’s Freedom and Austal’s Independence-class LCS surface variants, Sean Stackley, the service’s top acquisition official, stressed during a Dec. 11 roundtable at the Pentagon. The service’s plan is to continue to dual-source the new SSC program in order to increase competition and drive down costs, he said. However, as to how the last 20 out of a planned 52 LCS-type ships would be split between those two shipbuilders, Stackley said it is too soon to tell.26 24 Navy fact sheet entitled “The Modified Littoral Combat Ship,” December 11, 2014, posted at InsideDefense.com (subscription required) December 11, 2014. 25 See, for example, Andrea Shalal, “Pentagon Opts to Upgrade Current LCS Ship Design, Reuters (www.reuters.com), December 11, 2014; Sam LaGrone, “Up Gunned LCS Hulls Picked for Navy’s Next Small Combatant,” USNI News (http://news.usni.org), December 11, 2014; Mike McCarthy, “Navy Weighs Acquisition, Competition Strategies For New, Upgraded LCS,” Defense Daily, December 15, 2014: 3-5. 26 Lara Seligman, “Stackley: Navy Will Continue Dual-Source Approach For Modified LCS Hull,” Inside the Navy, December 15, 2014. Congressional Research Service 17 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Another December 15, 2014, trade press article stated: Throughout the LCS program, the Navy has asked both firms to compete for the ship contracts, a formula [Navy acquisition chief Sean] Stackley said the Navy plans on keeping for the final 20 ships. “Absolutely there will be competition. This program has been based on the benefits of competition. That’s how we have been able to bring the price down,” Stackley said, adding the Navy will continue to employ the “duel source” approach. Stackley said the Navy is still looking at how it will structure a competition, and would not say whether the remaining 20 ships will be evenly split between Lockheed Martin and Austal USA. So far that’s been the case with the LCS program, with each company producing 12 of the 24 ships under contract or already delivered. “The details in terms of ‘are you going to split it 50/50 etcetera?’—[it’s] too early to make those calls,” he said. Stackley said the Navy does not plan to compete on a “ship to ship” basis, and wants the savings associated with the multi-year block buy awards currently used on LCS.... Going forward, Stackley said, the Navy will sort through which new capabilities should be competed among industry, which can be leveraged from other programs and transferred to the new small surface combatants, or in other cases will work with the prime contractors to determine solutions. “It’s going to be a case by case basis,” Stackley said. “So the answer might be for a particular system that we know what capability we want. Rather than go out with a fresh competition we are going to use a system that is already common to other Navy ships. In that case what we are going to do is leverage those other contracts and not go out with a fresh contract.” “In other cases we might determine … there are some other alternatives out there that are very attractive, and for other right reasons, we are going to run a competition for this program, for those systems, and that would be a separate, standalone competition,” Stackley added. In additional instances, Stackley said, the Navy will look to the prime contractors to come up with solutions, such as for an improved degaussing system designed to minimize the hull’s magnetic field and thereby reduce radar detectability.27 A January 21, 2015, press report stated: Navy Secretary Ray Mabus thinks one of the reasons the ship is misunderstood is the nontraditional LCS designator. He directed an effort to find a more traditional and appropriate designation for the LCS and several other recent ship types, such as the Joint High Speed Vessel (JHSV), the Mobile Landing Platform (MLP) and the Afloat Forward Staging Base (AFSB). 27 Mike McCarthy, “Navy Weighs Acquisition, Competition Strategies For New, Upgraded LCS,” Defense Daily, December 15, 2014: 3-5. See also Mike McCarthy, “Calling Them Frigates, Navy Aims For Upgraded Version Of LCSs Sooner, Defense Daily, January 16, 2015: 1-2; Sydney J. Freedberg Jr., “What’s In A Name? Making The LCS ‘Frigate’ Reality,” Breaking Defense, January 16, 2015. Congressional Research Service 18 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress The first of the types to be redesignated is the LCS. “If it’s like a frigate, why don't we call it a frigate?” he said Jan. 14 to a roomful of surface warfare sailors at the Surface Navy Association’s annual symposium just outside Washington. “We are going to change the hull designation of the LCS class ships to FF,” Mabus said, citing the traditional hull designation for frigates. “It will still be the same ship, the same program of record, just with an appropriate and traditional name.”... Redesignating the ships as FF puts the ship squarely back in the surface combatant category, and is appropriate, since the Pentagon direction in developing the modified LCS was to make it more “frigate-like.” Navy sources said it was intended to designate only the modified LCS as frigates, but many of the upgrades intended for those ships are to be backfitted into earlier LCS hulls, blending the types. Mabus said the designation definitely will apply to the modified ships, and will likely be extended to all LCSs.28 A January 23, 2015, press report stated: The Navy is working to iron out the details of a plan to backfit upgrades planned for its future fleet of small surface combatants onto earlier Littoral Combat Ships, according to information from top service officials. The Navy’s overarching plan is to buy 32 LCSs of the current design, and then 20 modified LCSs starting in fiscal year 2019. But the Navy wants to incorporate some, if not all, of the planned improvements onto LCSs built before FY-19.29 FY2016 Funding Request The Navy’s proposed FY2016 budget requests $1,437.0 million for the procurement of three more LCSs, or an average of $479.0 million each, and $143.9 million dollars for LCS common mission modules equipment and LCS MCM and SUW mission modules (lines 33, 34, and 35 in the Navy’s Other Procurement, Navy, or OPN, appropriation account). 28 Christopher P. Cavas, “LCS Now Officially Called A Frigate,” Defense News, January 21, 2015. See also Sam LaGrone, “SNA: Modified Littoral Combat Ships to be Designated Frigates,” USNI News, January 15, 2015; Mike McCarthy, “Calling Them Frigates, Navy Aims For Upgraded Version Of LCSs Sooner, Defense Daily, January 16, 2015: 1-2; Sydney J. Freedberg Jr., “What’s In A Name? Making The LCS ‘Frigate’ Reality,” Breaking Defense, January 16, 2015. 29 Lara Seligman, “Navy Working To Iron Out Details Of Plan For Backfitting LCS Upgrades,” Inside the Navy, January 23, 2015. See also Sydney J. Freedberg Jr., “What’s In A Name? Making The LCS ‘Frigate’ Reality,” Breaking Defense, January 16, 2015. Congressional Research Service 19 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Issues for Congress Analytical Foundation for Revised Design for Ships 33-52 Overview One oversight issue for Congress concerns the analytical foundation for the Navy’s proposed design for the final 20 ships in the program (ships 33-52). Programs with weak analytical foundations can, other things held equal, be at increased risk for experiencing program-execution challenges in later years. The original LCS program arguably had a weakness in its analytical foundation due to a formal, rigorous analysis that was not conducted prior to the announcement of the program’s establishment on November 1, 2001. This weakness may have led to some of the controversy that the program experienced in subsequent years, which in turn formed the backdrop for Secretary of Defense Hagel’s February 24, 2014, announcement of the program’s restructuring. The Navy’s restructured plan for the final 20 ships in the program may similarly have a weakness in its analytical foundation due to two formal, rigorous analyses that do not appear to have been conducted prior to the announcement of the program’s restructuring. Three Analyses That Can Strengthen an Analytical Foundation The analytical foundation for an acquisition program can be strengthened by performing three formal, rigorous analyses prior to the start of the program: • an analysis to identify capability gaps and mission needs;30 • an analysis to compare potential general approaches for filling those capability gaps or mission needs, so as to identify the best or most promising approach;31 and • an analysis to refine the approach selected as the best or most promising.32 30 Such a study might be referred to under the defense acquisition system as a Capabilities-Based Assessment (CBA), as referenced, for example, on page A-1 of Chairman of the Joint Chiefs of Staff Instruction (CJCSI) 3170.01H of January 10, 2012, entitled “Joint Capabilities Integration and Development System.” Such analysis might lead to a “validated capability requirements document” or “equivalent requirements document” as referenced on page 5 of DOD Instruction (DODI) 5000.02 of January 7, 2015, entitled “Operation of the Defense Acquisition System.” An example of such a requirements document is an Initial Capabilities Document (ICD), which is also mentioned on page 5, although that might not be the correct term to use in this instance, which concerns an effort to acquire ships 33-52 of a planned total of 52 ships. For additional background discussion on the defense acquisition system, see CRS Report RL34026, Defense Acquisitions: How DOD Acquires Weapon Systems and Recent Efforts to Reform the Process, by Moshe Schwartz. 31 Such a study, like the third study listed above, might be referred to under the defense acquisition system as an Analysis of Alternatives (AoA). (In earlier years, a study like the second of the three studies listed above might have been referred to as an Analysis of Multiple Concepts, or AMC.) In discussing the AOA for a new acquisition program, it can be helpful to understand whether the AoA was more like the second or third of the studies listed here. 32 Such a study, like the second study listed above, might be referred to under the defense acquisition system as an Analysis of Alternatives (AoA). In discussing the AOA for a new acquisition program, it can be helpful to understand whether the AoA was more like the second or third of the studies listed here. Congressional Research Service 20 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Original LCS Program Lacked One of These Analyses Prior to Announcement of Program As discussed in CRS reports covering the LCS program going back a decade, the Navy, prior to announcing the establishment of the LCS program on November 2001, performed the first and third studies listed above, but it did not perform the second. In other words, the Navy, prior to announcing the establishment of the LCS program on November 1, 2001, did not perform a formal, rigorous analysis to show that a small, fast modular ship was not simply one way, but rather the best or most promising way, to fill the three littoral warfare capability gaps (for countering mines, small boats, and diesel-electric submarines) that the Navy had identified. Instead of performing such an analysis, which at the time might have been called an analysis of multiple concepts, the Navy selected the concept of a small, fast, modular ship based on the judgment of senior Navy leaders.33 In testimony to the House Armed Services Committee in April 2003, the Navy acknowledged that, on the question of what would be the best approach to perform the LCS’s stated missions, “The more rigorous analysis occurred after the decision to move to LCS.”34 This issue may have led to some of the controversy that the program experienced in subsequent years,35 which in turn formed the backdrop for Secretary of Defense Chuck Hagel’s February 24, 2014, announcement of the program’s restructuring. 33 For example, the October 28, 2004, version of a CRS report covering the DD(X) (aka, DDG-100) and LCS programs stated: In contrast to the DD(X), which reflects the outcome of a formal analysis intended to identify the best or most promising way to perform certain surface combatant missions (the SC-21 COEA of 1995-1997), the Navy prior to announcing the start of the LCS program in November 2001 did not conduct a formal analysis—which would now be called an analysis of multiple concepts (AMC)— 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 for performing the LCS’s stated missions include (1) manned aircraft, (2) submarines equipped with UVs, (3) a larger (perhaps frigate-sized) surface combatant equipped with UVs and operating further offshore, (4) a noncombat littoral support craft (LSC) equipped with UVs, or (5) some combination. An AMC is often performed before a service starts a major acquisition program. The absence of an AMC raises a question regarding the analytical basis for the Navy’s assertion that the LCS is the most cost-effective approach for performing the LCS’s stated missions, particularly given the Navy’s pre-November 2001 resistance to the idea of a smaller combatant. As a result, the issue of whether a ship like the LCS represents the best or most promising approach has become a subject of some debate. (CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress, by Ronald O'Rourke, p. 35. 34 Spoken testimony of Vice Admiral John Nathman, Deputy Chief of Naval Operations (Warfare Requirements and Programs), at an April 3, 2003 hearing on Navy programs before the Projection Forces subcommittee of the House Armed Services Committee. At this hearing, the chairman of the subcommittee, Representative Roscoe Bartlett, asked the Navy witnesses about the Navy’s analytical basis for the LCS program. The witnesses defended the analytical basis of the LCS program but acknowledged that “The more rigorous analysis occurred after the decision to move to LCS.” See U.S. Congress, House Committee on Armed Services, Subcommittee on Projection Forces, Hearing on National Defense Authorization Act for Fiscal Year 2004—H.R. 1588, and Oversight of Previously Authorized Programs. 108th Cong., 1st sess., Mar. 27, and Apr. 3, 2003, (Washington: GPO, 2003), p. 126. For an article discussing the exchange, see Jason Ma, “Admiral: Most LCS Requirement Analysis Done After Decision To Build,” Inside the Navy, April 14, 2003. 35 A January 2015 journal article on the lessons of the LCS program stated: As Ronald O’Rourke of the Congressional Research Service described it early on [at a presentation at the Surface Navy Association annual symposium in January 2003], the LCS had come about through an “analytical virgin birth… that is going to be a problem for this program down the road.” This can be argued to be the root cause of the subsequent LCS woes. One hopes that the new (continued...) Congressional Research Service 21 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Navy’s Restructured Plan for Final 20 Ships Appears to Have Been Announced Without Two of These Analyses The Navy’s restructured plan for the final 20 ships in the program may have a weakness in its analytical foundation due to two formal, rigorous analyses that do not appear to have been conducted prior to Secretary of Defense Chuck Hagel’s announcement on February 24, 2014, of the effort to restructure the program. Specifically, neither the Office of the Secretary of Defense nor the Navy has presented • a formal, rigorous analysis to identify capability gaps and/or mission needs that was done prior to the Secretary of Defense Hagel’s February 24, 2014, announcement, or • a formal, rigorous analysis that identified “a capable and lethal small surface combatant, generally consistent with the capabilities of a frigate” as not simply one way, but rather the best or most promising way, to fill those capability gaps or mission needs that was done prior to the February 24, 2014, announcement. Given a July 31, 23014, deadline for the Navy to complete its work, the Navy’s Small Surface Combatant Task Force (SSCTF) charged with analyzing options for “a capable and lethal small surface combatant, generally consistent with the capabilities of a frigate” apparently did not have enough time to conduct either of the two above analyses. Instead, the task force surveyed Navy fleet commanders to collect their judgments on capability gaps and mission needs, and to get their judgments on what capabilities would be the best to have in “a capable and lethal small surface combatant, generally consistent with the capabilities of a frigate.”36 In addition to permitting the task force to complete its work by July 31, 2014, surveying fleet commanders offered the advantage of collecting the “wisdom of the crowd” on the issues of capability gaps/mission needs and what features “a capable and lethal small surface combatant, (...continued) surface combatant [i.e., the Navy’s design for the final 20 ships in the program] won’t suffer the same problem. (Gregory V. Cox, “Lessons Learned from the LCS,” U.S. Naval Institute Proceedings, January 2015: 37-38 (ellipse as in original), citing (for the quoted remark) Hunter Keeter, “O’Rourke: Lack Of Pedigree May Haunt LCS Program,” Defense Daily, January 16, 2003.) 36 A January 8, 2014, press report, for example, states that “The task force canvassed fleet commanders for ways to improve” the baseline LCS design. (Tony Capaccio, “Navy Fixes Won’t Much Help Littoral Ship, Tester Says,” Bloomberg News, January 8, 2015. A January 16, 2015, press report similarly states: Fleet commanders told Navy officials over the past year that they see anti-submarine warfare, surface warfare and ship self-defense as the most important capabilities for a new small surface combatant, Surface Warfare Director Rear Adm. Peter Fanta said Jan. 13 during the Surface Navy Association’s annual symposium. This feedback led the Navy to its decision to move to a modified LCS that will have enhanced weapons, sensors and armor—along with increased weight and a slower top speed. “What we did first was we went and asked all the warfighters ... what do you want most?” [said] Fanta, who served as one of the co-chairs of the small surface combatant task force that was stood up last year to provide the defense secretary with alternatives for a more lethal and survivable LCS. “They said ‘well, we'd like a small surface combatant that does a lot of ASW work, covers our mine mission and still does a lot of surface engagements depending on different parts of the world.” (Lara Seligman, “Upgunned LCS Will Trade Speed, Wight For Offensive Capabilities,” Inside the Navy, January 16, 2015 [with additional reporting by Lee Hudson] Ellipse as in original.) Congressional Research Service 22 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress generally consistent with the capabilities of a frigate” should have. One potential disadvantage of this approach is that it deprived the Navy of a chance to uncover the kind of counter-intuitive results that a formal analysis can uncover. (Indeed, this is a key reason why formal, rigorous analyses are done.) Another potential disadvantage is that fleet commanders can be focused on what they see the Navy needing today, based on current Navy operations, which might not be the same in all respects as what the Navy will need in the future, given the evolving international security environment, potential changes in technology, and resulting potential changes in the nature of warfare and operational concepts. The risk, in other words, is of fielding in 2023 (when the 33rd ship in the program is scheduled to enter service) the best possible improved LCS for the world of 2014. Using the results it had gathered from surveying fleet commanders, the SSCTF then performed the third of the three above-listed studies—a formal, rigorous analysis to refine the concept for “a capable and lethal small surface combatant, generally consistent with the capabilities of a frigate.” A question for Congress is whether the analytical foundation for the final 20 ships in the program will provide sufficient stability for acquiring those ships in coming years. Navy officials have stated that, having refined the design concept for the final 20 ships in the program, the Navy will now define and seek approval for the operational requirements for the ship.37 Skeptics might argue that definition and approval of operational requirements should come first, and conceptual design should follow, not the other way around. One possible alternative to the Navy’s approach would be to put the announced design concept for the final 20 ships on hold, and perform both a formal, rigorous analysis of capability gaps/ mission needs and a formal, rigorous analysis of general approaches for meeting those identified capability gaps/mission needs, and be prepared to follow the results of those analyses, whether they lead back to the announced design concept for the final 20 ships, or to some other solution (which might still be a design of some kind for a modified LCS). Survivability of Revised Design for Ships 33-52 Another oversight issue for Congress concerns the survivability of the Navy’s proposed design for the final 20 ships in the program (ships 33-52). A January 2015 report from DOD’s Director, Operational Test and Evaluation (DOT&E)—DOT&E’s annual report for FY2014—states: SSC Study 37 A January 11, 2014, press report, for example, quotes Sean Stackley, the Assistant Secretary of the Navy for Research, Development, and Acquisition (i.e., the Navy’s acquisition executive) as stating “We’ve gone from ‘here’s the concept,’ now we have to go through the formal requirements review board... to define requirements in terms of updating the capabilities document.” (As quoted in Christopher Cavas, “Small Combatant Effort Cranks Up,” Defense News, January 11, 2015. [Ellipse as in original.]) A January 16, 2015, press report similarly states: “The Navy needs to take all the task force’s conepts for capabilities and translate them into specific, formal requirements, Stackley explained. Those requirements then need approval by a Resources and Requirements Review Board (R3B).” (Sydney J. Freedberg Jr., “What’s In A name? Making The LCS ‘Frigate’ Reality,” Breaking Defense, January 16, 2015.) A January 26, 2015, press report similarly states that “the Navy needs to firm up the concept for the new ship’s capabilities and translate them into formal requirements, Stackley explained. Those requirements then need to each be approved by a Resources and Requirements Review Board, which is set to occur in the spring.” (Lara Seligman, “Navy Working To Iron Out Details Of Plan For Backfitting LCS Upgrade,” Inside the Navy, January 26, 2015.) Congressional Research Service 23 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress • In February 2014, the Secretary of Defense directed the Secretary of the Navy and the Chief of Naval Operations to “Submit to me, in time to inform the PB 2016 budget deliberations, alternative proposals to procure a capable and lethal small surface combatant, generally consistent with the capabilities of a frigate.” In October 2014, the Secretary of Defense requested DOT&E provide an independent assessment of the work done by the SSC Task Force established by the Navy pursuant to the Secretary’s direction. In response, DOT&E provided a written classified assessment report to the Secretary. • In its report, DOT&E concluded that the Navy’s SSC Task Force’s results indicate, of the alternatives it considered, the multi-mission combat capabilities and survivability design features of a modern frigate could be provided only by a new ship design or a major modification to the LCS design—the so-called large plug insertion developed by the Task Force. While offering some improvements in combat capability and survivability (primarily via reduced susceptibility) relative to LCS, the minor modifications to LCS considered by the Task Force and recommended by the Navy Leadership do not satisfy significant elements of a capability concept developed by the Task Force for a modern frigate. (The Task Force developed a number of capability concepts incorporating various mixes of capabilities consistent with a frigate. After consulting with the Task Force’s lead, DOT&E’s assessment used one particular concept as representative of a modern frigate’s capabilities. Also, “major modification to LCS” and “minor modification to LCS” are the characterizations used by the Task Force of its alternatives.) Notwithstanding potential reductions to its susceptibility relative to LCS, DOT&E’s assessment is that minor modifications to LCS will not yield a ship that is significantly more survivable than LCS. • DOT&E also noted in its report provided to the Secretary that DOT&E’s assessment was based on results that might subsequently change, because the Task Force’s report remained unfinished at the time of DOT&E’s report.38 Acquisition Strategy for Ships 25-32 Another oversight issue for Congress concerns the acquisition strategy for ships 25-32 in the program, which are to be procured in FY2016-FY2018. At a February 25, 2015, hearing on Department of the Navy acquisition programs before the Seapower and Projection Forces subcommittee of the House Armed Services Committee, Department of the Navy officials testified that the Navy plans to extend the current block buy contracts to include the 25th and 26th ships in the program (i.e., the second and third of the three ships requested for procurement in FY2016), and “use the competitive pricing from the block buy [contracts] to obtain option prices” for those two ships.39 The Navy has not yet announced an acquisition strategy for ships 27-32 (i.e., the six ships scheduled for procurement in FY2017 and FY2018). At a March 4, 2015, hearing before the Defense subcommittee of the Senate Appropriations Committee on the Department of the Navy’s proposed FY2016 budget, the following exchange occurred: 38 Department of Defense, Director, Operational Test & Evaluation, FY 2014 Annual Report, January 2015, p. 203. Statement of the Honorable Sean J. Stackley, Assistant Secretary of the Navy (Research, Development and Acquisition) and Vice Admiral Joseph P. Mulloy, Deputy Chief of Naval Operations for Integration of Capabilities and Resources and Lieutenant General Kenneth J. Glueck, Jr., Deputy Commandant, Combat Development and Integration & Commanding General, Marine Corps Combat Development Command, Before the Subcommittee on Seapower and Projection Forces of the House Armed Services Committee on Department of the Navy Seapower and Projection Forces Capabilities, February 25, 2015, p. 11. 39 Congressional Research Service 24 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress SENATOR RICHARD SHELBY: Secretary Mabus, it's my hope that the Navy will continue to equitably—whatever that means—for sometimes distribute work between the two LCS shipyards. Could you describe to the Committee the Navy's acquisition strategies through 2019 for the remaining LCS ships number 25 and 32? SECRETARY OF THE NAVY RAY MABUS: Yes, Senator. We have found that having two shipyards and having two variants of the littoral combat ship has been very helpful in a number of ways. One, it keeps competition in the program and it has driven cost down considerably. Two is it gives us different capabilities. Each ship brings some unique capabilities and capacities that the one doesn't. And third, we are able to train our Sailors pretty much on common systems for these two ships without duplicating effort. So, for the ships through 2019, we plan to continue the 50/50 split between the two yards. And the Small Surface Combatant Task Force, which we chartered and which came through, and which recommended some upgrades in lethality and survivability for ships past 2019 for ships through [number] '52, we are hopeful that we can move that up some that we won't wait until 2019 because it's a modification, not a new built. And it is our plan to keep procuring both variants again competitively, but variants through the entire '52 bus (ph). SHELBY: This is a top priority for the Navy, is it not? MABUS: It's a very high priority.40 Technical Risk and Issues Relating to Program Execution Another oversight issue for Congress concerns the amount of technical risk in the LCS program and issues relating to program execution. The discussion below addresses this issue first with respect to the LCS sea frame, and then with respect to LCS mission packages. Sea Frame March 2014 GAO Report A March 2014 GAO report assessing DOD weapon acquisition programs stated: Technology Maturity 40 Transcript of hearing. Congressional Research Service 25 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Sixteen of the 18 critical technologies for both LCS designs are mature and have been demonstrated in a realistic environment. The two remaining technologies—LCS 1’s overhead launch and retrieval system and LCS 2’s aluminum structure are nearing maturity—according to our best practice standards. Though program officials believe that LCS 2’s aluminum structure hull is mature as the ship is operational, there are still unknowns related to the hull structure. As a result, full maturity will not be demonstrated until the completion of shock and survivability trials to validate survivability and the ship’s ability to achieve a 20-year service life. These tests are not expected to begin until August 2015. Design and Production Maturity The Navy started construction of LCS 1 and 2 without a stable design and has had to incorporate design changes on follow-on seaframes. LCS 1 and LCS 2 are still undergoing testing, and the Navy is incorporating design fixes for identified deficiencies into the designs of follow-on ships. In addition, a series of additional design changes for both variants have been approved by the LCS Council for fiscal year 2015; including bridge wings and a sevenmeter rigid hull inflatable boat for the Independence variant and stronger stern ramp for the Freedom variant. LCS 4 experienced delays and was delivered six months after its expected contract delivery date of March 2013. LCS 5 through LCS 12 are currently in various stages of construction. The Navy is concerned about both contractors’ ability to meet construction schedules without impacting follow-on hulls. LCS 1 completed a ten-month deployment to the western pacific in December 2013 where it operated out of Singapore. During this deployment it encountered two significant engineering issues that significantly curtailed its ability to get underway: the lubrication cooling system ruptured and the ship service diesel engine generator had reliability issues. In addition to these engineering issues, LCS 1 had a number of combat system and other material failures; including radar underperformance and the combat system unexpectedly rebooting during operations. Other Program Issues The Navy added 20 permanent berths to LCS 1 to support additional manning for its deployment to Singapore in 2013. In May 2013, the Navy determined that additional permanent accommodations for a total crew size of 98 should be incorporated in all LCS class ships. The LCS program executive office has been directed to add these permanent accommodations through either forward -or back-fitting the ships. Although the habitability modification installed on LCS 1 in support of its deployment did not include the addition of increased storage and water supplies, the forward fit installs will address the required services and auxiliary system modifications associated with the installation of the additional berthing. Following LCS 1’s 2013 deployment, the Navy will evaluate lessons learned and future manning options. The Navy expects to complete this evaluation in fiscal year 2014 and incorporate any proposed manning changes beginning in fiscal year 2015 ahead of the next block buy decision in 2016, when 24 seaframes will already be delivered, constructed, or under contract. Program Office Comments In commenting on a draft of this assessment, the program office noted that LCS 4 showed significant improvement from LCS 2 in level of completeness and number of high priority trial cards deficiencies at delivery. Twelve block buy ships are funded on the block buy contract and are in pre-production or construction, following thorough production readiness reviews. LCS 5 and 6 launched in December 2013. LCS 1 deployment successfully validated major portions of the LCS concept of operations for crew rotation and contracted overseas maintenance. Ship service diesel generator and seawater cooler reliability issues were Congressional Research Service 26 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress satisfactorily addressed during deployment. Engineering changes have been incorporated to prevent and mitigate those issues in the future. Material failures of the radar were a result of a procedural error causing the system to reboot, however the radar performed to design specifications. The program office also provided technical comments, which were incorporated where deemed appropriate.41 January 2015 DOT&E Report Regarding technical risk in the LCS sea frame, a January 2015 report from DOD’s Director, Operational Test and Evaluation (DOT&E)—DOT&E’s annual report for FY2014—states: Seaframes • While both seaframe variants are fast and highly maneuverable, they are lightly armed and possess no significant offensive capability without the planned Increment 4 SUW Mission Package or the Increment 2 ASW Mission Package. —In comparison to other Navy ships, the LCS seaframes have relatively modest air defense capabilities; however, their air defense capabilities cannot be characterized fully until tests on LCS 5 and LCS 6 (the production‑representative seaframes) and the Navy’s unmanned Self-Defense Test Ship provide data for the Navy Probability of Raid Annihilation highfidelity modeling and simulation analyses in FY18. The Navy plans to test the Independence class variant’s capability to defeat unmanned aerial vehicles and slow-flying aircraft in FY15. —The Freedom class seaframe’s surface self-defense capability was operationally tested in FY14 (see below) and the Independence class seaframe’s capability is scheduled to be tested in FY15 aboard USS Coronado (LCS 4). —The seaframes include no systems designed to detect torpedo attacks or mines without the appropriately configured mission packages installed. • Crew size can limit the mission capabilities, combat endurance, and recoverability of the ships. The Navy continues to review manning to determine appropriate levels, and is adding 20 berths to all seaframes. The increased berthing supports small increases in the size of the core crew, mission package detachments, and the aviation detachment. • Freedom Class Variant (LCS 1 and 3): —Although not all aspects of operational effectiveness and operational suitability could be examined during the 2014 operational testing, that testing identified shortcomings in air defense, reliability, and endurance, and significant vulnerabilities in cybersecurity. —Cybersecurity testing conducted during operational testing aboard LCS 3 uncovered significant vulnerabilities in the ship’s capability to protect the security of information and prevent malicious intrusion. Limited cybersecurity testing conducted during a 2012 Quick Reaction Assessment aboard LCS 1 also found vulnerabilities. 41 Government Accountability Office, Defense Acquisitions[:] Assessments of Selected Weapon Programs, GAO-14340SP, March 2014, p. 94. Congressional Research Service 27 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress —Tracking events conducted during operational testing aboard LCS 3 demonstrated that in some scenarios the SPS-75 (TRS-3D) air search radar is unable to detect and track some types of air threats in operationally realistic environments. Tracking performance improved significantly when the LCS received tracking information via datalink from a nearby Aegis destroyer. The lack of an integrated electronic support measures system limits the ship’s capability to make best use of its inventory of RAM surface-to-air missiles. —Critical equipment required to support ship operations, core mission functions, and mission package operations is unreliable. The ship’s crew does not have adequate training and technical documentation to troubleshoot equipment failures; the Navy lacks repair parts for some critical systems; and the Navy’s plan for distribution of the maintenance workload among the ship’s crew, shore-based Navy support organizations, and technical experts from other organizations is immature. The operational availability of shipboard systems in 10 of 12 categories examined met or exceeded Navy requirements, however, failures of critical propulsion and maneuvering and Total Ship Computing Environment systems forced the ship to return to port for repairs that, respectively, caused 42 and 36 days of downtime during the period of data collection during operational testing. Excluding scheduled maintenance periods, LCS 3 was fully mission capable less than 25 percent of the time during that period. —During operational testing, LCS 3 did not demonstrate that it could achieve the Navy requirement for fuel endurance (operating range) at the prescribed transit speed or at sprint speed. Information provided by the Navy indicated that between 91 and 92 percent of the ship’s total diesel fuel (F-76) tank capacity would actually be available for use since some room must be left for expansion when the tanks are filled, a portion of the tanks’ volume is filled with piping and structural members, and a small amount of fuel remains inaccessible when the tanks are emptied. Based on fuel consumption data collected during the test, the ship’s operating range at 14.4 knots is estimated to be approximately 1,961 nautical miles (Navy requirement: 3,500 nautical miles at 14 knots) and the operating range at 43.6 knots is approximately 855 nautical miles (Navy requirement: 1,000 nautical miles at 40 knots). In an emergency, the ship could use its aviation fuel (F-44) to extend the transit and sprint ranges by 360 and 157 nautical miles, respectively. The shortfall in endurance may limit the flexibility of the ship’s operations in the Pacific and place a heavier than anticipated demand on fleet logistics. —Operational testing confirmed earlier observations that, except for the ships’ lack of endurance, the Freedom class variant is well-suited for Maritime Security Operations. LCS 3 readily demonstrated the capability to position, launch, and recover the 11-meter boats included in the SUW Mission Package when the launch, recovery, and handling system is operational. —The ship’s Mk 110 57 mm gun system performed reliably during operational testing, and the ship was able to demonstrate the core capability for self-defense against a small boat in two valid trials. The Navy attempted to collect additional data from swarm presentations, but the data were invalid. The 57 mm gun failed to achieve a mission kill during one swarm presentation, and the target killed by the 57 mm gun during a second swarm presentation had previously been engaged by 30 mm guns. —The Freedom class LCS has sufficient aviation facilities and meets Navy requirements to safely launch, recover, and handle all appropriate aircraft while operating in Sea State 4 conditions. However, the ship frequently experienced difficulty with establishing and maintaining a Tactical Common Data Link with the aircraft during the FY14 operational test. The crew’s efforts were hampered by an antenna failure and the total lack of technical documentation on the operation and maintenance of the datalink. Congressional Research Service 28 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress —The LCS 3 anchoring system could not securely anchor the ship in an area with a bottom composed of sand and shells. Despite repeated efforts, the ship was unable to set the anchor. It appears that the anchor and chain are too light and there are too many friction points along the anchor chain’s internal path from the chain locker to the hawse pipe to allow the anchor and chain to pay out smoothly. —The fenders designed to guide the 11-meter Rigid Hull Inflatable Boats included in the SUW Mission Package during launch and recovery are fragile and occasionally sheared off when impacted by the boats during operational testing. Although the fenders have undergone several redesigns, they are not yet strong enough to sustain such impacts. • Independence Class Variant (LCS 2): —DOT&E still has no data to assess the core mission capabilities of the Independence class variant seaframe. —The USS Independence (LCS 2) crew encountered multiple problems with the twin-boom extensible crane (TBEC) and other mission package support systems during initial developmental testing of the MCM Mission Package. Since then, the vendor has improved the TBEC, and the Navy has made changes to the RMMV launch and recovery hardware. Developmental testing in August 2013, May 2014, and October 2014 demonstrated that the ship’s capability to launch and recover the RMMV has improved because of crew training, but it is not yet clear that launch and recovery can be completed routinely without problems. —In the past, availability of the USS Independence (LCS 2) to support testing has been degraded by equipment failures, including problems with operator consoles, power generation equipment, components of the ship’s computing and networking equipment, propulsion drive train components, and communications systems. DOT&E is unable to evaluate the success of Navy efforts to improve the reliability of these systems. In September and October 2014, the start of developmental testing of the MCM Mission Package was delayed by LCS air conditioning and propulsion system failures. During at-sea testing, observers noted that LCS sometimes experienced difficulties when communicating with a simulated Mine Warfare Commander operating from a shore-based command center.... LFT&E [Live Fire Test & Evaluation] • LCS is not expected to be survivable in high-intensity combat because the design requirements accept the risk the ship must be abandoned under circumstances that would not require such an action on other surface combatants. Although the ship incorporates capabilities to reduce susceptibility to attack, previous testing of analogous capabilities demonstrates it cannot be assumed LCS will not be hit in high-intensity combat. • During the TSST on LCS 3, the Machinery Plant Control and Monitoring System (MPCMS) appeared to be improperly controlling the ventilation system for the highest of three material conditions of damage control readiness known as “Condition ZEBRA.” This could allow smoke to spread through fire boundaries. Pressure differentials were observed in several spaces that made hatches and doors difficult to operate. • There is a problem with the MPCMS that caused every fire alarm on the ship to activate during shot 1 of the TSST on LCS 3, even though the fire was limited to the 01 Level. Based on discussions with system experts, this is a known problem with the MPCMS.42 42 Department of Defense, Director, Operational Test & Evaluation, FY 2014 Annual Report, January 2015, pp. 199(continued...) Congressional Research Service 29 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Mission Packages March 2014 GAO Report The March 2014 GAO report assessing DOD weapon acquisition programs stated: Mine Countermeasures (MCM) The Navy has accepted four packages without demonstrating that they meet requirements and plans to accept two more in fiscal 2014. The package will be fielded in four increments: the first intends to remove sailors from the minefield and improve mine detection, classification, and destruction over legacy vessels. Although DOD states that all systems in increment one are fully mature, developmental testing has shown performance problems that led to changes in planned tactics, removal of systems, and lowered testing requirements. For example, corrections to the mine-hunting sonar’s reliability have yet to be validated in operational testing, and two systems, intended to sweep for and neutralize mines, had to be removed for safety and performance issues. Also, the Navy now requires multiple searches to identify mines, adding time to the process, and has lowered increment one testing requirements for mine clearance rates. If operational testing proves successful, this package will not be able to replace all legacy capability until increment three completion in fiscal 2017. Surface Warfare (SUW) The Navy has taken delivery of four packages, each comprised of two 30 millimeter guns, as well as a rigid hull inflatable boat prototype, boarding gear, and armed helicopters. Following the cancellation of the non-line-of-sight launch system, the Navy planned to field the Griffin missile in 2015 as an initial capability. However, program officials stated that the Navy is rethinking this and a solution is not yet known. Antisubmarine Warfare (ASW) The Navy restarted development of an ASW package with new requirements as the initial package was not going to deliver enough capability over legacy assets. The Navy is assessing a replacement, with initial delivery planned in 2016, that is expected to include, among other technologies, a variable-depth sonar—which, according to officials, performed well in initial tests—and a towed array. The maturity of these technologies has not yet been independently assessed. Other Program Issues The Navy held a preliminary design review in 2004, but the packages have substantively changed. The program held a milestone B event in January 2014 with an estimated acquisition cost of $7.24 billion. Tests for increment one and two of the SUW and increment one of the MCM package are scheduled for fiscal 2014 and 2015 respectively. These assessments evaluate progress in achieving baseline performance capability, which includes all planned increments for each package. The Navy plans to purchase 32 LCS seaframes and take delivery of at least 24 by the time the baseline performance capabilities of the MCM and SUW packages are proven and fielded. (...continued) 200, 203. Congressional Research Service 30 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Program Office Comments The Navy states that our assessment of program cost growth incorrectly compares the acquisition program baseline against a fiscal 2008 baseline, which does not reflect the total acquisition. Further, the Navy states that this assessment disregards near term operational requirements as the data presented indicates that the program should be delayed. The Navy also states that our assertion of excessive program risk, due to concurrency, is unfounded because developmental testing, combined with capability proven during early deployments, has significantly reduced technical risk. This is evidence, according to the Navy, that the LCS will successfully complete operational testing. Lastly, the current missile procurement was delayed due to sequestration; the Navy states that the program is on track to deliver a capability in late 2016. GAO Response In comparing the 2007 estimate with the acquisition program baseline, we used the Navy’s 2007 data, which included full procurement costs but only five years of development cost. The Navy has acquired eight packages without proving capability through operational testing. In the absence of a defined increment-based approach for the full baseline capability to sequentially gain knowledge and meet these requirements, the Navy’s acquisition approach is not in accordance with best practices or DOD guidance in place at the time of our review.43 January 2015 DOT&E Report Regarding technical risk in LCS mission packages, the January 2015 DOT&E report states: SUW Mission Package • LCS 3 equipped with the Increment 2 SUW Mission Package demonstrated the capability to defeat a small swarm of Fast Inshore Attack Craft under the conditions specified in the Navy requirement; however, the crew received extensive hands-on training that might not be available to crews on other ships. Testing conducted to date has not been sufficient to demonstrate LCS capabilities in more stressing scenarios consistent with existing threats. • The SUW Mission Package has not yet been tested aboard an Independence class LCS. • The 30 mm Gun Mission Modules (GMM) remain prone to jams caused by separation of ammunition links and accumulation of spent cartridges in the ejection path; however, LCS 3 experienced fewer jams during operational testing than had been observed in past developmental testing. While the Navy has made a concerted effort to improve ammunition belts, the problem was not entirely eliminated. Ammunition jams interrupt firing but can typically be cleared in a few minutes; however, they are still sufficiently disruptive to cause the ship to maneuver to bring the other 30 mm GMM to bear on the target. MCM Mission Package • During developmental testing, attempts to demonstrate the sequence of events necessary for an LCS to complete end-to-end mine clearance operations have been limited by low operator 43 Government Accountability Office, Defense Acquisitions[:] Assessments of Selected Weapon Programs, GAO-14340SP, March 2013, p. 96. Congressional Research Service 31 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress proficiency, software immaturity, system integration problems, and poor reliability of MCM components including RMS/RMMV. In the most recent period of developmental testing in 1QFY15, fleet operators using mission package tools such as the Organic Post Mission Analysis (OPMA) and the new Contact Management Tool (CMT) failed to convey some mine targets, correctly detected by the RMS in an initial search pass, to the AMNS for neutralization. As a result, fleet operators were unable to execute operationally-realistic, endto-end mine reconnaissance and clearance without intervention by testers with knowledge of ground truth target positions. The Navy continues to investigate the root cause of target position errors and incorrectly dropped contacts; unless corrected, these problems will limit LCS MCM mission effectiveness. • During developmental testing, the operational availability of MCM Mission Package systems has been degraded by low reliability, the LCS crew’s limited capacity for corrective maintenance, and the ship’s constrained inventory of repair parts. Testing has often been delayed to obtain the assistance of shore-based technicians and repair parts not available onboard LCS. Left uncorrected, these problems will severely limit LCS’s operational capability for mine reconnaissance and clearance. • Mission package minehunting systems (AN/AQS-20A and ALMDS) have not demonstrated the detection and localization capabilities needed for an LCS equipped with an Increment 1 MCM Mission Package to meet its required sustained area coverage rate. During developmental testing and a shore-based operational assessment, AN/ AQS-20A contact depth (vertical localization) errors have exceeded Navy limits in all operating modes. A shore-based operational assessment of ALMDS showed that the system does not meet Navy detection requirements. Both systems generate a large number of false classifications (objects erroneously classified as mine-like). Unless eliminated from the contact list, these false classifications require identification and neutralization effort, result in the expenditure of limited neutralizer assets, and substantially reduce the LCS sustained area coverage rate. As an alternative, the Navy has implemented tactics that require multiple search passes over the same area to minimize the number of false classifications conveyed for identification / neutralization. Although multiple search passes also reduce the LCS sustained area coverage rate relative to single pass systems, Navy modeling suggests this approach is less detrimental to MCM timelines. Whether LCS can meet the already-reduced low area clearance requirement for the Increment 1 Mission Package remains in question. Furthermore, testing has not yet shown whether the goal of minimizing AN/AQS-20A false classifications can be accomplished without also eliminating correct classifications from the contact list and degrading minehunting performance. —The Navy expected to correct AN/AQS-20A deficiencies prior to the first phase of operational testing in FY15 by implementing pre-planned product improvements (the AN/AQS-20B version of the sonar) and integrating the improved sensor into the MCM Mission Package. Delays in the delivery of AN/AQS-20B prototypes and problems discovered in early characterization testing in FY14 leave little time to complete necessary developmental and operational testing of the AN/AQS-20B prior to the planned operational test of LCS equipped with the first increment of the MCM Mission Package in FY15. —The Navy is working on pre-planned product improvements to improve ALMDS detection performance and reduce the frequency of receiver failures, but does not expect to integrate these changes into the first increment of the MCM Mission Package. Frequent receiver failures continued to affect ALMDS performance during an experimental deployment to the Navy’s 5th fleet and recent developmental testing aboard LCS 2. During LCS developmental testing, the MH-60S aircrew was also unable to assess ALMDS achieved search/clearance level during post-mission analysis. Observations from 5th fleet operators also indicate mission planning and evaluation tools do not adequately support ALMDS mission planning and post-mission clearance estimates. Congressional Research Service 32 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress • During a shore-based operational assessment of the AMNS in FY14, AMNS was unable to achieve the Navy’s requirement for mine neutralization success except under limited conditions not generally expected during combat. Failures of the host MH-60S aircraft’s systems and its associated AMCM Mission Kit limited AMNS mission availability. Frequent loss of fiber-optic communications between the aircraft and the neutralizer was the primary cause of unsuccessful attack runs. Although the Navy attributed the failures to the bottom composition (sand and shells), the root cause of these failures has not yet been determined, and the bottom compositions used in testing are representative of realistic operating areas. Both problems negatively affect the timeliness of LCS-based AMNS operations and will likely reduce the ship’s sustained area coverage rate. • As noted earlier, the Independence class LCS has had difficulty launching and recovering the RMMV because of the vehicle’s erratic motion in the ship’s wake. In past developmental testing, violent RMMV yaw and roll motions have overstressed and damaged the launch and recovery hardware and resulted in damage to the RMMV, causing the Navy to limit handling operations to when sea state is less than 3. Following changes to launch and recovery hardware, procedures, training, and RMMV hardware, the Navy demonstrated 16 RMMV launches and 14 RMMV recoveries during 23 days at sea in developmental testing during favorable sea state conditions in 1QFY15. Nonetheless, the most recent period of developmental testing witnessed several instances of equipment damage that delayed or prevented recovery of an off-board RMMV. Because of the cracks in the welds at the base of support stanchions located in the mission bay, during this phase of testing, launch and recovery operations could be conducted only when wave-induced loading on the recovery system (a function of wave height and period) did not exceed 32,000 pounds-force. For example, a wave height of 2 feet coupled with a wave period of 2 seconds, which could occur in a Sea State 2, would have precluded RMMV recovery until calmer sea conditions developed. The Navy revealed they are making design changes to LCS 6 and later seaframes to correct the problem and remove the weight limit. LCS 2 and LCS 4 will be corrected during the next shipyard availability. This problem must be corrected to ensure safe and sustained RMS operations. —No RMMV launch and recovery operations have been conducted aboard a Freedom class LCS at sea. —Although the RMMV can search autonomously while operating over the horizon from the LCS, it can currently only conduct operations to reacquire and identify bottom mines within the range of Ultra High Frequency communications. This limitation will complicate MCM operations in long shipping channels, and may make it necessary to clear a series of LCS operating areas to allow MCM operations to progress along the channel. The cleared operating areas will be needed to keep the LCS and its crew out of mined waters. The additional effort required to clear these LCS operating areas would increase the demand for mine clearance and delay attainment of strategic objectives. This issue is not new to RMS; however, it did not become operationally significant until the Navy decertified the MH-60S helicopter for towing MCM devices, including the AN/AQS-20A/B sensor. The RMS communication range limitation was not an operational concern when the option existed for the helicopter with towed sensor to conduct identification operations beyond the horizon. The Navy has not yet identified a solution. —RMS reliability problems persisted in the recent phase of developmental testing (1QFY15) evidenced in part by fewer vehicle recoveries than vehicle launches. Problems observed include the inability to align the system’s inertial navigational unit, intermittent communications, a lube oil pump failure that caused a mission abort, capture latch impairment that precluded shipboard recovery of the RMMV, degraded electro-optic identification resulting in a mission abort to replace the AN/AQS-20A towed body, tow cable damage following an apparent snag that rendered the system inoperable in the assigned Congressional Research Service 33 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress mission until a replacement tow cable could be installed with the assistance of shore-based support, and multiple incidents of AN/AQS-20A stuck fins or fin actuation faults. Although the Navy demonstrated more frequent RMMV launches during this period of testing, continued RMS reliability problems limited system minehunting to less than 50 hours during the 3 weeks of most intensive testing (approximately 16 hours per week). ▪ LCS reliability problems also forced the ship to remain in port for repairs instead of conducting at-sea RMS testing as planned. Including an additional week spent in port for LCS repairs, RMS averaged approximately 12 hours of minehunting per week. This result is consistent with the assessment of RMS capability DOT&E provided to members of the Defense Acquisition Board following RMMV v4.2 and AN/AQS-20A testing to indicate that the Navy had not yet demonstrated that it could sustain operations of more than one 14-hour RMMV sortie per week (i.e., 10 to 12 hours of RMS minehunting per week). Unless greater minehunting operating tempo is achieved, the Navy will not meet its interim area clearance rate requirements. ▪ The Navy reports that the RMS operated for approximately 140 hours during LCS developmental testing in 1QFY15. DOT&E’s preliminary assessment of test data identified at least seven RMS failures that precluded vehicle recovery, required sensor replacement, or required assistance from shore‑based support contractors to restore system availability. In operational testing, these failures would be assessed as operational mission failures. Thus, by operational criteria, RMS demonstrated reliability was no more than 20 hours Mean Time Between Operational Mission Failure during this phase of testing. Because much of the operating time cited by the Navy was not devoted to minehunting activities, this estimate should be considered an upper bound for current RMS operational reliability Moreover, statistical analysis of all existing data does not yet support the Navy’s assertions of improving RMS reliability. • Since RMS is critical to achieving the Navy’s sustained area coverage rate requirement, this Annual Report includes a separate article on the RMS that provides additional detail.44 Additional Oversight Issues Raised in GAO Reports Additional oversight issues raised in recent GAO reports include LCS operation and support (O&S) costs,45 weight management on the LCS sea frames—an issue that can affect the ability of LCSs to accept new systems and equipment over their expected life cycles46—and construction quality on the lead ships in the LCS program.47 44 Department of Defense, Director, Operational Test & Evaluation, FY 2014Annual Report, January 2015, pp. 201203. 45 Government Accountability Office, Littoral Combat Ship[:] Deployment of USS Freedom Revealed Risks in Implementing Operational Concepts and Uncertain Costs, GAO 14-447, July 2014, 57 pp. 46 Government Accountability Office, Littoral Combat Ship[:] Additional Testing and Improved Weight Management Needed Prior to Further Investments, GAO-14-749, July 2014, 54 pp. 47 Government Accountability Office, Littoral Combat Ship[:]Navy Complied with Regulations in Accepting Two Lead Ships, but Quality Problems Persisted after Delivery, GAO-14-827, September 2014, 35 pp. Congressional Research Service 34 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Legislative Activity for FY2016 The Navy’s proposed FY2016 budget was submitted to Congress on February 2, 2015. The budget requests $1,437.0 million for the procurement of three more LCSs, or an average of $479.0 million each, and $143.9 million dollars for LCS common mission modules equipment and LCS MCM and SUW mission modules (lines 33, 34, and 35 in the Navy’s Other Procurement, Navy, or OPN, appropriation account). Congressional Research Service 35 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Appendix A. Some Major Program Developments Prior to Program’s 2014 Restructuring Growth in Sea Frame Procurement Costs The Navy originally spoke of building LCS sea frames for about $220 million each in constant FY2005 dollars. Unit costs for the first few LCSs subsequently more than doubled. Costs for subsequent LCSs then came down under the current block buy contracts, to roughly $450 million each in current dollars, which equates to roughly $380 million in constant FY2005 dollars, using DOD’s budget authority deflator for procurement excluding pay, fuel, and medical.48 2007 Program Restructuring and Ship Cancellations The Navy substantially restructured the LCS program in 2007 in response to significant cost growth and delays in constructing the first LCS sea frames. This restructuring led to the cancellation in 2007 of four LCSs that were funded in FY2006 and FY2007. A fifth LCS, funded in FY2008, was cancelled in 2008. The annual procurement quantities shown above in Table 1 reflect these cancellations (i.e., the five canceled ships no longer are shown in the annual procurement quantities in this table). 2009 Down Select Acquisition Strategy (Not Implemented) On September 16, 2009, the Navy announced a proposed acquisition strategy under which the Navy would hold a competition to pick a single design to which all LCSs procured in FY2010 and subsequent years would be built (i.e., carry out a design “down select”).49 Section 121(a) and 48 This deflator is shown in National Defense Budget Estimates for FY 2014, May 2013, Table 5-7 (pages 71-72). This DOD budget reference document is also known as the “Green Book.” 49 The winner of the down select would be awarded a contract to build 10 LCSs over the five-year period FY2010FY2014, at a rate of two ships per year. The Navy would then hold a second competition—open to all bidders other than the shipyard building the 10 LCSs in FY2010-FY2014—to select a second shipyard to build up to five additional LCSs to the same design in FY2012-FY2014 (one ship in FY2012, and two ships per year in FY2013-FY2014). These two shipyards would then compete for contracts to build LCSs procured in FY2015 and subsequent years. Prior to the Navy’s announcement of September 16, 2009, the Navy had announced an acquisition strategy for LCSs to be procured in FY2009 and FY2010. Under this acquisition strategy, the Navy bundled together the two LCSs funded in FY2009 (LCSs 3 and 4) with the three LCSs to be requested for FY2010 into a single, five-ship solicitation. The Navy announced that each LCS industry team would be awarded a contract for one of the FY2009 ships, and that the prices that the two teams bid for both the FY2009 ships and the FY2010 ships would determine the allocation of the three FY2010 ships, with the winning team getting two of the FY2010 ships and the other team getting one FY2010 ship. This strategy was intended to use the carrot of the third FY2010 ship to generate bidding pressure on the two industry teams for both the FY2009 ships and the FY2010 ships. The Navy stated that the contracts for the two FY2009 ships would be awarded by the end of January 2009. The first contract (for Lockheed Martin, to build LCS-3) was awarded March 23, 2009; the second contract (for General Dynamics, to build LCS-4) was awarded May 1, 2009. The delay in the awarding of the contracts past the end-ofJanuary target date may have been due in part to the challenge the Navy faced in coming to agreement with the industry teams on prices for the two FY2009 ships that would permit the three FY2010 ships to be built within the $460 million LCS unit procurement cost cap. See also Statement of RADM Victor Guillory, U.S. Navy Director of Surface Warfare, and RADM William E. Landay, III, Program Executive Officer Ships, and Ms. E. Anne Sandel, Program Executive Officer Littoral and Mine Warfare, before the Subcommittee on Seapower and Expeditionary Forces of the House (continued...) Congressional Research Service 36 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress (b) of the FY2010 National Defense Authorization Act (H.R. 2647/P.L. 111-84 of October 28, 2009) provided the Navy authority to implement this down select strategy. The Navy’s down select decision was expected to be announced by December 14, 2010, the date when the two LCS bidders’ bid prices would expire.50 The down select strategy was not implemented; it was superseded in late December 2010 by the current dual-award acquisition strategy (see next section). 2010 Dual-Award Acquisition Strategy (Implemented) On November 3, 2010, while observers were awaiting the Navy’s decision under the down select strategy (see previous section), the Navy notified congressional offices that it was prepared to implement an alternative dual-award acquisition strategy under which the Navy would forego making a down select decision and instead award each LCS bidder a 10-ship block buy contract for the six-year period FY2010-FY2015, in annual quantities of 1-1-2-2-2-2.51 The Navy stated that, compared to the down select strategy, the dual-award strategy would reduce LCS procurement costs by hundreds of millions of dollars. The Navy needed additional legislative authority from Congress to implement the dual-award strategy. The Navy stated that if the additional authority were not granted by December 14, the Navy would proceed to announce its down select decision under the acquisition strategy announced on September 16, 2009. On December 13, 2010, it was reported that the two LCS bidders, at the Navy’s request, had extended the prices in their bids to December 30, 2010, effectively giving Congress until then to decide whether to grant the Navy the authority needed for the dual-award strategy. The Navy’s November 3, 2010, proposal of a dual-award strategy posed an issue for Congress of whether this strategy would be preferable to the down select strategy, and whether Congress should grant the Navy, by December 30, 2010, the additional legislative authority the Navy would need to implement the dual-award strategy. On December 14, 2010, the Senate Armed Services Committee held a hearing to review the proposed dual-award strategy. Congress granted the Navy authority to implement the dual-award strategy in Section 150 of H.R. 3082/P.L. 111-322 of December 22, 2010, an act that, among other things, funded federal government operations through March 4, 2011. On December 29, 2010, using the authority granted in H.R. 3082/P.L. 111-322, the Navy implemented the dual-award strategy, awarding a 10-ship, fixed-price incentive (FPI) block-buy contract to Lockheed, and another 10-ship, FPI block-buy contract to Austal USA. As mentioned earlier (see “Unit Procurement Cost Cap”), in awarding the contracts, the Navy stated that LCSs to be acquired under the two contracts are to have an average unit cost of about $440 million, a figure well below the program’s adjusted unit procurement cost cap (as of December 2010) of $538 million. The 20 ships to be acquired under the two contracts have a target cost and a higher ceiling cost. Any cost growth above the target cost and up to the ceiling cost would be shared (...continued) Armed Services Committee [hearing] on the Current Status of the Littoral Combat Ship Program, March 10, 2009, pp. 7-8. 50 The Navy had earlier planned to make the down select decision and award the contract to build the 10 LCSs in the summer of 2010, but the decision was delayed to as late as December 14. (The final bids submitted by the two LCS contractors were submitted on about September 15, and were valid for another 90 days, or until December 14.) 51 For more on block buy contracts, see CRS Report R41909, Multiyear Procurement (MYP) and Block Buy Contracting in Defense Acquisition: Background and Issues for Congress, by Ronald O'Rourke and Moshe Schwartz. Congressional Research Service 37 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress between the contractor and the Navy according to an agreed apportionment (i.e., a “share line”). Any cost growth above the ceiling cost would be borne entirely by the contractor. The Navy stated that, as a worst case, if the costs of the 20 ships under the two FPI contracts grew to the ceiling figure and all change orders were expended, the average cost of the ships would increase by about $20 million, to about $460 million, a figure still well below the adjusted cost cap figure of $538 million.52 The Navy on December 29, 2010, technically awarded only two LCSs (one to each contractor). These ships (LCS-5 and LCS-6) are the two LCSs funded in FY2010. Awards of additional ships under the two contracts are subject to congressional authorization and appropriations. The Navy states that if authorization or sufficient funding for any ship covered under the contracts is not provided, or if the Navy is not satisfied with the performance of a contractor, the Navy is not obliged to award additional ships covered under contracts. The Navy states that it can do this without paying a penalty to the contractor, because the two block-buy contracts, unlike a typical multiyear procurement (MYP) contract, do not include a provision requiring the government to pay the contractor a contract cancellation penalty.53 Changes in Mission Package Equipment The Navy since January 2011 has announced changes to the composition of all three LCS mission packages. The concept for the ASW package, and consequently the equipment making up the package, was changed substantially. The equipment making up the MIW package has changed somewhat, partly as a result of the testing of the MIW systems being developed for the package. An Army-developed missile called Non-Line of Sight Launch System (NLOS-LS) that was to be used in the SUW package was canceled by the Army and has been replaced for the next few years in the LCS SUW module by the shorter-ranged Army Longbow Hellfire missile, pending the eventual acquisition for the LCS SUW module of a follow-on missile with longer range.54 2012 Establishment of LCS Council On August 22, 2012, Admiral Jonathan Greenert, the chief of Naval Operations, established an LCS Council headed by four vice admirals to address challenges faced by the LCS program for supporting the planned deployment of an LCS to Singapore beginning in 2013. The challenges were identified in four internal Navy reviews of the LCS program (two of them based on wargames) that were completed between February and August of 2012. The memorandum from the CNO establishing the council states that the council will be “empowered ... to drive action across the acquisition, requirements and Fleet enterprises of the Navy.” The council was given an immediate focus of developing and implementing an LCS plan of action and milestones by 52 Source: Contract-award information provided to CRS by navy office of Legislative Affairs, December 29, 2010. Source: Navy briefing to CRS and the Congressional Budget Office (CBO) on December 15, 2010. For a press article on this issue, see Cid Standifer, “FY-11 LCS Contracts On Hold Because Of Continuing Resolution,” Inside the Navy, March 14, 2011. 54 The Navy initially chose the Griffin missile as the near-term replacement for NLOS-LS, but in April 2014 announced that the near-term replacement for NLOS-LS would instead be the Longbow Hellfire missile. See Sam LaGrone, “Navy Axes Griffin Missile In Favor of Longbow Hellfire for LCS,” USNI News (http://news.usni.org), April 9, 2014; Mike McCarthy, “LCS Program Dumping Griffin Missile In Favor Of Army’s Longbow,” Defense Daily, April 10, 2014; Michael Fabey, “Hellfire Front-Runner For U.S. Navy Littoral Combat Ship,” Aerospace Daily & Defense Report, April 10, 2014: 4. 53 Congressional Research Service 38 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress January 31, 2013. The memorandum also required the council to develop a charter for its operations within 14 days.55 55 Memorandum from Chief of Naval Operations to Director, Navy Staff, dated August 22, 2012, on Lilttoral Combat Ship (LCS) Council, posted at InsideDefense.com (subscription required), August 24, 2012. See also Defense Media Activity—Navy, “CNO Establishes LCS Council,” Navy News Service, August 22, 2012; Christopher P. Cavas, “U.S. Navy Creates LCS ‘Council’ To Guide Development,” DefenseNews.com, August 22, 2012; Megan Eckstein, “CNO Establishes LCS Council To Review Recent Data, Lessons Learned,” Inside the Navy, August 27, 2012; Mike McCarthy, “Navy Establishes LCS Council,” Defense Daily, August 27, 2012. Congressional Research Service 39 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress Appendix B. Defense-Acquisition Policy Lessons of LCS Program Another issue for Congress concerns what defense-acquisition policy lessons, if any, the LCS program may offer to policy makers, particularly in terms of the rapid acquisition strategy that the Navy pursued for the LCS program, which aimed at reducing acquisition cycle time (i.e., the amount of time between starting the program and getting the first ship into service). One possible perspective is that the LCS program demonstrated that reducing acquisition cycle time can be done. Supporters of this perspective might argue that under a traditional Navy ship acquisition approach, the Navy might have spent five or six years developing a design for a new frigate or corvette, and perhaps another five years building the lead ship, for a total acquisition cycle time of perhaps 10 to 11 years. For a program announced in November 2001, this would have resulted in the first ship entering service in between late 2011 and late 2012. In contrast, supporters of this perspective might argue, LCS-1 entered service on November 8, 2008, about seven years after the program was announced, and LCS-2 entered service on January 16, 2010, a little more than eight years after the program announced. Supporters of this perspective might argue that this reduction in acquisition cycle time was accomplished even though the LCS incorporates major innovations compared to previous larger Navy surface combatants in terms of reduced crew size, “plug-and fight” mission package modularity, high-speed propulsion, and (in the case of LCS-2) hull form and hull materials. Another possible perspective is that the LCS program demonstrated the risks or consequences of attempting to reduce acquisition cycle time. Supporters of this perspective might argue that the program’s rapid acquisition strategy resulted in design-construction concurrency (i.e., building the lead ships before their designs were fully developed), a practice long known to increase risks in defense acquisition programs. Supporters of this perspective might argue that the cost growth, design issues, and construction-quality issues experienced by the first LCSs were due in substantial part to design-construction concurrency, and that these problems embarrassed the Navy and reduced the Navy’s credibility in defending other acquisition programs. They might argue that the challenges the Navy faces today in terms of developing an LCS concept of operations (CONOPS),56 LCS manning and training policies, and LCS maintenance and logistics plans were increased by the rapid acquisition strategy, because these matters were partly deferred to later years (i.e., to today) while the Navy moved to put LCSs into production. Supporters of this perspective might argue that the costs of the rapid acquisition strategy are not offset by very much in terms of a true reduction in acquisition cycle time, because the first LCS to be equipped with a mission package that has reached IOC (initial operational capability) will not occur until late FY2014—almost 13 years after the LCS program was announced. Supporters of this perspective could argue that the Navy could have avoided many of the program’s early problems and current challenges—and could have had a fully equipped first ship enter service in 2011 or 2012—if it had instead pursued a traditional acquisition approach for a new frigate or corvette. They could argue that the LCS program validated, for defense acquisition, the guideline from the world of business management that if an effort aims at obtaining something fast, cheap, and good, 56 A CONOPS is a detailed understanding of how to use the ship to accomplish various missions. Congressional Research Service 40 Navy Littoral Combat Ship (LCS)/Frigate Program: Background and Issues for Congress it will succeed in getting no more than two of these things,57 or, more simply, that the LCS program validated the general saying that haste makes waste. A third possible perspective is that the LCS program offers few if any defense-acquisition policy lessons because the LCS differs so much from other Navy ships and the Navy (and DOD generally) consequently is unlikely to attempt a program like the LCS in the future. Supporters of this perspective might argue that the risks of design-construction concurrency have long been known, and that the experience of the LCS program did not provide a new lesson in this regard so much as a reminder of an old one. They might argue that the cost growth and construction delays experienced by LCS-1 were caused not simply by the program’s rapid acquisition strategy, but by a variety of factors, including an incorrectly made reduction gear58 from a supplier firm that forced the shipbuilder to build the lead ship in a significantly revised and sub-optimal construction sequence. Author Contact Information Ronald O'Rourke Specialist in Naval Affairs rorourke@crs.loc.gov, 7-7610 57 The guideline is sometimes referred to in the business world as “Fast, cheap, good—pick two.” A ship’s reduction gear is a large, heavy gear that reduces the high-speed revolutions of the ship’s turbine engines to the lower-speed revolutions of its propulsors. 58 Congressional Research Service 41