Navy Constellation (FFG-62) Class Frigate
Program: Background and Issues for Congress
Updated June 3, 2021
Congressional Research Service
https://crsreports.congress.gov
R44972

Navy Constellation (FFG-62) Class Frigate Program: Background and Issues for Congress

Summary
The Navy began procuring Constel ation (FFG-62) class frigates (FFGs) in FY2020, and wants to
procure a total of 20 FFG-62s. Congress funded the first FFG-62 in FY2020 at a cost of $1,281.2
mil ion (i.e., about $1.3 bil ion) and the second in FY2021 at a cost of $1,053.1 mil ion (i.e.,
about $1.1 bil ion). The Navy’s proposed FY2022 budget requests $1,087.9 mil ion (i.e., about
$1.1 bil ion) for the procurement of the third FFG-62, and $69.1 mil ion in advance procurement
(AP) funding for the fourth and fifth FFG-62s, which are programmed for procurement in one or
more future fiscal years.
Four industry teams competed for the FFG-62 program. On April 30, 2020, the Navy announced
that it had awarded the FFG-62 contract to the team led by Fincantieri/Marinette Marine (F/MM)
of Marinette, WI. F/MM was awarded a fixed-price incentive (firm target) contract for Detail
Design and Construction (DD&C) for up to 10 ships in the program—the lead ship plus nine
option ships. The other three industry teams reportedly competing for the program were led by
Austal USA of Mobile, AL; General Dynamics/Bath Iron Works (GD/BIW) of Bath, ME; and
Huntington Ingal s Industries/Ingal s Shipbuilding (HII/Ingal s) of Pascagoula, MS.
As part of its action on the Navy’s FY2020 and FY2021 budgets, Congress has passed provisions
relating to U.S. content requirements for certain components of each FFG-62 class ship, as wel
as a provision requiring the Navy to conduct a land-based test program for the FFG-62’s
engineering plant (i.e., its propulsion plant and associated machinery).
The FFG-62 program presents several potential oversight issues for Congress, including the
following:
 the accuracy of the Navy’s estimated unit procurement cost for FFG-62s,
particularly when compared to the known unit procurement costs of other recent
U.S. surface combatants;
 the potential impact of the COVID-19 situation on the execution of U.S. military
shipbuilding programs, including the FFG-62 program;
 whether to build FFG-62s at a single shipyard at any one time (the Navy’s
baseline plan), or at two or three shipyards;
 whether the Navy has appropriately defined the required capabilities and growth
margin for FFG-62s;
 whether to take any further legislative action regarding U.S. content requirements
for the FFG-62 program;
 technical risk in the FFG-62 program; and
 the potential industrial-base impacts of the FFG-62 program for shipyards and
supplier firms in the context of other Navy and Coast Guard shipbuilding
programs.
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Table 2. Congressional Action on FY2022 Procurement Funding Request.............................. 22

Contacts
Author Information ....................................................................................................... 22

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Navy Constellation (FFG-62) Class Frigate Program: Background and Issues for Congress

Introduction
This report provides background information and discusses potential issues for Congress
regarding the Navy’s Constel ation (FFG-62) class frigate program, a program to procure a new
class of 20 guided-missile frigates (FFGs). The Navy’s proposed FY2022 budget requests
$1,087.9 mil ion (i.e., about $1.1 bil ion) for the procurement of the third FFG-62, and $69.1
mil ion in advance procurement (AP) funding for the fourth and fifth FFG-62s, which are
programmed for procurement in one or more future fiscal years.
The FFG-62 program presents several potential oversight issues for Congress. Congress’s
decisions on the program could affect Navy capabilities and funding requirements and the U.S.
shipbuilding industrial base.
Background
Navy’s Force of Small Surface Combatants (SSCs)
Overview
In discussing its force-level goals and 30-year shipbuilding plans, the Navy organizes its surface
combatants into large surface combatants (LSCs), meaning the Navy’s cruisers and destroyers,
and small surface combatants (SSCs), meaning the Navy’s frigates, Littoral Combat Ships
(LCSs), mine warfare ships, and patrol craft.1 SSCs are smal er, less capable in some respects,
and individual y less expensive to procure, operate, and support than LSCs. SSCs can operate in
conjunction with LSCs and other Navy ships, particularly in higher-threat operating
environments, or independently, particularly in lower-threat operating environments.
Current 52-Ship SSC Force-Level Goal Within Navy’s 355-Ship Plan
In December 2016, the Navy released a goal to achieve and maintain a Navy of 355 ships,
including 52 SSCs, of which 32 are to be LCSs and 20 are to be FFG-62s. Although patrol craft
are SSCs, they do not count toward the 52-ship SSC force-level goal, because patrol craft are not
considered battle force ships, which are the kind of ships that count toward the quoted size of the
Navy and the Navy’s force-level goal.2
December 9, 2020, Shipbuilding Document Show ing Potentially Increased
SSC Force-Level Goal
The Navy and the Department of Defense (DOD) since 2019 have been working to develop a new
Navy force-level goal to replace the above-mentioned 355-ship force-level goal. Remarks from
Navy and DOD officials since 2019 indicate that this new Navy force-level goal wil introduce a
once-in-a-generation change in fleet architecture, meaning basic the types of ships that make up
the Navy and how these ships are used in combination with one another to perform Navy
missions. This new fleet architecture is expected to be more distributed than the fleet architecture

1 See, for example, CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for
Congress, by Ronald O'Rourke.
2 For more on the 355-ship plan and additional discussion of battle force ships, see CRS Report RL32665, Navy Force
Structure and Shipbuilding Plans: Background and Issues for Congress, by Ronald O'Rourke.
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reflected in the 355-ship goal or previous Navy force-level goals. In particular, the new fleet
architecture is expected to feature
 a smal er proportion of larger ships (such as large-deck aircraft carriers, cruisers,
destroyers, large amphibious ships, and large resupply ships);
 a larger proportion of smal er ships (such as frigates, corvettes, smal er
amphibious ships, smal er resupply ships, and perhaps smal er aircraft carriers);
and
 a new third tier of surface vessels about as large as corvettes or large patrol craft
that wil be either lightly manned, optional y manned, or unmanned, as wel as
large unmanned underwater vehicles (UUVs).
Navy and DOD leaders believe that shifting to a more distributed fleet architecture is
 operationally necessary, to respond effectively to the improving maritime anti-
access/area-denial (A2/AD) capabilities of other countries, particularly China;3
 technically feasible as a result of advances in technologies for UVs and for
networking widely distributed maritime forces that include significant numbers
of UVs; and
 affordable—no more expensive, and possibly less expensive, than the current
fleet architecture for a given amount of overal navy capability, so as to fit within
expected future Navy budgets.
As discussed in greater detail in the CRS overview report on Navy force-structure and
shipbuilding plans,4 on December 9, 2020, the Trump Administration released a document that
can be viewed as its own vision for future Navy force structure and/or a draft version of the
FY2022 30-year Navy shipbuilding plan. The document presents an envisioned Navy force-level
goal for achieving by 2045 a Navy with a more distributed fleet architecture, including 382 to 446
manned ships and 143 to 242 large unmanned vehicles. Included in the envisioned total of 382 to
446 manned ships is a requirement for 60 to 67 SSCs, or 8 to 15 more SSCs than cal ed for under
the current 355-ship plan. In establishing its force-level goal for the Navy, the Biden
Administration can choose to adopt, revise, or set aside the December 9, 2020, document.

3 See, for example, David B. Larter, “With China Gunning for Aircraft Carriers, US Navy Says It Must Change How It
Fights,” Defense News, December 6, 2019; Arthur H. Barber, “Redesign the Fleet,” U.S. Naval Institute Proceedings,
January 2019. Some observers have long urged the Navy to shift to a mo re distributed fleet architecture, on the grounds
that the Navy’s current architecture—which concentrates much of the fleet’s capability into a relatively limited number
of individually larger and more expensive surface ships—is increasingly vulnerable to attack by the improving A2/AD
capabilities (particularly anti-ship missiles and their supporting detection and targeting systems) of potential
adversaries, particularly China. Shifting to a more distributed architecture, these observers have argued, would
•
complicate an adversary’s targeting challenge by presenting the adversary with a larger number of Navy units
to detect, identify, and track;
•
reduce the loss in aggregate Navy capability that would result from the destruction of an individual Navy
platform;
•
give U.S. leaders the option of deploying USVs and UUVs in wartime to sea locations that would be
tactically advantageous but too risky for manned ships; and
•
increase the modularity and reconfigurability of the fleet for adapting to changing mission needs.
For more on China’s maritime A2/AD capabilities, see CRS Report RL33153, China Naval Modernization:
Im plications for U.S. Navy Capabilities—Background and Issues for Congress, by Ronald O'Rourke.
4 CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress, by
Ronald O'Rourke.
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U.S. Navy Frigates in General
In contrast to cruisers and destroyers, which are designed to operate in higher-threat areas,
frigates are general y intended to operate more in lower-threat areas. U.S. Navy frigates perform
many of the same peacetime and wartime missions as U.S. Navy cruisers and destroyers, but
since frigates are intended to do so in lower-threat areas, they are equipped with fewer weapons,
less-capable radars and other systems, and less engineering redundancy and survivability than
cruisers and destroyers.5 The most recent class of frigates operated by the Navy was the Oliver
Hazard Perry (FFG-7) class (Figure 1).
Figure 1. Oliver Hazard Perry (FFG-7) Class Frigate

Source: Photograph accompanying Dave Werner, “Fighting Forward: Last Oliver Perry Class Frigate
Deployment,” Navy Live, January 5, 2015, accessed September 21, 2017, at http://navylive.dodlive.mil/2015/01/05/
fighting-forward-last-oliver-perry-class-frigate-deployment/.
A total of 51 FFG-7s were procured between FY1973 and FY1984. The ships entered service
between 1977 and 1989, and were decommissioned between 1994 and 2015. In their final
configuration, FFG-7s were about 455 feet long and had full load displacements of roughly 3,900
tons to 4,100 tons. (By comparison, the Navy’s Arleigh Burke [DDG-51] class destroyers are
about 510 feet long and have full load displacements of roughly 9,700 tons.6) Following their

5 Compared to cruisers and destroyers, frigates can be a more cost -effective way to perform missions that do not require
the use of a higher-cost cruiser or destroyer. In the past, the Navy’s combined force of higher -capability, higher-cost
cruisers and destroyers and lower-capability, lower-cost frigates has been referred to as an example of a so-called high-
low force mix. High-low mixes have been used by the Navy and the other military services in recent decades as a
means of balancing desires for individual platform capability against desires for platform numbers in a context of
varied missions and finite resources.
Peacetime missions performed by frigates can include, among other things, engagement with allied and partner navies,
maritime security operations (such as anti-piracy operations), and humanitarian assistance and disast er response
(HA/DR) operations. Intended wartime operations of frigates include escorting (i.e., protecting) military supply and
transport ships and civilian cargo ships that are moving through potentially dangerous waters. In support of intended
wartime operations, frigates are designed to conduct anti-air warfare (AAW—aka air defense) operations, anti-surface
warfare (ASuW) operations (meaning operations against enemy surface ships and craft), and antisubmarine warfare
(ASW) operations. U.S. Navy frigates are designed to operate in larger Navy formations or as solitary ships. Operations
as solitary ships can include the peacetime operations mentioned above.
6 T his is the displacement for the current (Flight III) version of the DDG-51 design.
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decommissioning, a number of FFG-7s, like certain other decommissioned U.S. Navy ships, have
been transferred to the navies of U.S. al ied and partner countries.
FFG-62 Class Program
Program Name
The FFG-62 program was previously known as the FFG(X) program.7 On October 7, 2020, the
Navy announced that FFG-62 would be named Constellation, in honor of the first U.S. Navy
ships authorized by Congress in 1794—the six heavy frigates United States, Constellation,
Constitution, Chesapeake, Congress, and President. FFG(X)s henceforth became known as
Constel ation (FFG-62) class ships. Even though the program is now known as the Constel ation
(FFG-62) class program, some Navy documents and other sources may continue to refer to it as
the FFG(X) program.
Ship Capabilities and Crewing
FFG-62s are to be multimission smal surface combatants capable of conducting anti-air warfare
(AAW), anti-surface warfare (ASuW), antisubmarine warfare (ASW), and electromagnetic
warfare (EMW) operations. They are to be capable of operating in both blue water (i.e., mid-
ocean) and littoral (i.e., near-shore) area, and capable of operating either independently (when
that is appropriate for its assigned mission) or as part of larger Navy formations.
To help maximize the time that each ship spends at sea, the Navy reportedly is considering
operating FFG-62s eventual y with dual crews—an approach, commonly cal ed blue-gold
crewing, that the Navy uses for operating its bal istic missile submarines and LCSs.8 The Navy
plans to operate the first few FFG-62s, however, with single crews.9
Figure 2 and Figure 3 show renderings of the FFG-62 design, which is based on the design of the
FREMM (Fregata Europea Multi-Missione) frigate, a ship that has been built in two variants, one
for the Italian navy and one for the French navy.

7 In the designation FFG(X), FF meant frigate, G meant guided-missile ship (indicating a ship equipped with an area-
defense anti-air warfare [AAW] system), and (X) indicated that the specific design of the ship had not yet been
determined. FFG(X) thus meant a guided-missile frigate whose specific design has not yet been determined.
T he designation FF, with two Fs, means frigate in the same way that the designation DD, with two Ds, means
destroyer. FF is sometimes translated less accurately as fast frigate. FFs, however, are not particularly fast by the
standards of U.S. Navy combatant s—their maximum sustained speed, for example, is generally lower than that of U.S.
Navy aircraft carriers, cruisers, and destroyers. In addition, there is no such thing in the U.S. Navy as a slow frigate.
Some U.S. Navy surface combatants are equipped with a point -defense AAW system, meaning a short -range AAW
system that is designed to protect the ship itself. Other U.S. Navy surface combatants are equipped with an area -
defense AAW system, meaning a longer-range AAW system that is designed to protect no only the ship itself, but other
ships in the area as well. U.S. Navy surface combatants equipped with an area-defense AAW system are referred to as
guided-missile ships and have a “ G” in their designation.
8 See, for example, David B. Larter, “T he US Navy Is Planning for Its New Frigate to Be a Workhorse,” Defense News,
January 30, 2018.
9 Richard R. Burgess, “ CNO: First Few New Frigates to Have Single Crews,” Seapower, January 11, 2021.
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Figure 2. Constellation (FFG-62) Class Frigate
Artist’s rendering of F/MM design

Source: Cropped version of photograph accompanying PEO USC Public Affairs, “US Navy Awards Guided
Missile Frigate (FFG(X)) Contract,” Navy News Service, April 30, 2020.
Figure 3. Constellation (FFG-62) Class Frigate
Computer rendering of F/MM design

Source: Fincantieri/Marinette Marine, screen capture from video entitled “Constel ation Class Frigate 360°
View,” posted at https://futurefrigate.com/, accessed December 8, 2020.
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Procurement Quantities and Schedule
Total Procurement Quantity
The Navy wants to procure 20 FFG-62s, which in combination with the Navy’s required total of
32 LCSs would meet the Navy’s 52-ship SSC force-level goal within the Navy’s current 355-ship
plan.
As discussed earlier, on December 9, 2020, the Trump Administration released a document that
can be viewed as its own vision for future Navy force structure and/or a draft version of the
FY2022 30-year Navy shipbuilding plan. The document presents an envisioned Navy force-level
goal for achieving by 2045 a Navy with a more distributed fleet architecture, including 382 to 446
manned ships and 143 to 242 large unmanned vehicles. Included in the envisioned total of 382 to
446 manned ships is a requirement for 60 to 67 SSCs, or 8 to 15 more SSCs than cal ed for under
the current 355-ship plan. Increasing the SSC force-level goal to 60 to 67 ships could lead to
increasing the planned total procurement quantity of the FFG-62 program by 8 to 15 ships, to a
total of 28 to 35 ships. As noted earlier, in establishing its force-level goal for the Navy, the Biden
Administration can choose to adopt, revise, or set aside the December 9, 2020, document.
Annual Procurement Quantities
Table 1 compares projected annual procurement quantities for the FFG-62 program under the
Navy’s FY2020, FY2021, and FY2022 budget submissions and the Trump Administration’s
December 9, 2020, shipbuilding document.
Table 1. Annual FFG-62 Procurement Quantities

FY20
FY21
FY22
FY23
FY24
FY25
FY26
FY2020 budget submission
1
2
2
2
2

FY2021 budget submission

1
1
2
2
3

Trump Admin. December 9,

1
3
3
4
4
2020, shipbuilding document
FY2022 budget submission

1
n/a
n/a
n/a
n/a
Source: Table prepared by CRS based on Navy’s FY2020 and FY2021 budget submissions and Trump
Administration December 9, 2020, shipbuilding document.
Note: N/a means not available.
Procurement Cost
Congress funded the procurement of the first FFG-62 in FY2020 at a cost of $1,281.2 mil ion
(i.e., about $1.3 bil ion), and the second FFG-62 in FY2021 at a cost of $1,053.1 mil ion (i.e.,
about $1.1 bil ion). The lead ship in the program wil be more expensive than the follow-on ships
in the program because the lead ship’s procurement cost incorporates most or al of the detailed
design/nonrecurring engineering (DD/NRE) costs for the class. (It is a traditional Navy budgeting
practice to attach most or al of the DD/NRE costs for a new ship class to the procurement cost of
the lead ship in the class.) The Navy’s proposed FY2022 budget requests $1,087.9 mil ion (i.e.,
about $1.1 bil ion) for the procurement of the third FFG-62.
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Acquisition Strategy
Number of Builders
The Navy’s baseline plan for the FFG-62 program envisages using a single builder at any one
time to build FFG-62s. The Navy has not, however, ruled out the option of building the ships at
two or three shipyards at the same time. The annual procurement quantities of three and four
ships per year that are shown in Table 1 under the Trump Administration’s December 9, 2020,
shipbuilding document would be executed by two shipyards.10
Parent-Design Approach
As noted earlier, FFG-62s are to be built to a modified version of an existing ship design—an
approach, cal ed the parent-design approach, that can reduce design time, design cost, and cost,
schedule, and technical risk in building the ship. The Coast Guard and the Navy are currently
using the parent-design approach for the Coast Guard’s Polar Security Cutter (i.e., polar
icebreaker) program.11 The parent-design approach has also been used in the past for other Navy
and Coast Guard ships, including Navy mine warfare ships12 and the Coast Guard’s new Fast
Response Cutters (FRCs).13
No New Technologies or Systems
As an additional measure for reducing cost, schedule, and technical risk in the FFG-62 program,
the Navy envisages developing no new technologies or systems for FFG-62s—the ships are to use
systems and technologies that already exist or are already being developed for use in other
programs.
FY2021 Legislation Regarding Land-Based Test Program for Engineering Plant
Section 125 of the FY2021 National Defense Authorization Act (H.R. 6395/P.L. 116-283 of
January 1, 2021) requires the Navy to commence, prior to the delivery of the first FFG-62, a land-
based test program for the FFG-62 engineering plant (i.e., its propulsion system and related
machinery). The provision specifies how the test program is to be conducted and requires the
Navy to complete the test program not later than the date on which the first FFG-62 is scheduled
to be available for tasking by operational military commanders.14

10 T he December 9, 2020, document states that the shipbuilding p lan presented in the document “makes investments in
FY2022 in long lead time material and the stand up of a ‘follow yard’ [i.e., a second shipyard] in FY2023 to increase
FFG 62 production to three ships in FY2023 and to four ships by FY2025.” (U.S. Navy, Report to Congress on the
Annual Long-Range Plan for Construction of Naval Vessels, December 9, 2020, p. 6.)
11 For more on the polar security cutter program, including the parent -design approach, see CRS Report RL34391,
Coast Guard Polar Security Cutter (Polar Icebreaker) Program : Background and Issues for Congress, by Ronald
O'Rourke.
12 T he Navy’s Osprey (MCM-51) class mine warfare ships are an enlarged version of the Italian Lerici-class mine
warfare ships.
13 T he FRC design is based on a Dutch patrol boat design, the Damen Stan Patrol Boat 4708.
14 Regarding Section 125, t he conference report (H.Rept. 116-617 of December 3, 2020) on H.R. 6395/P.L. 116-283 of
January 1, 2021 states:
Given that the Constellation-class will play a significant role in the Navy battle force for many
decades and the current program of record calls for building 20 frigates, the conferees believe a
strong technical foundation for this program is critically important.
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U.S. Content Requirements for Components
As part of its action on the Navy’s FY2020 and FY2021 budgets, Congress has passed provisions
relating to U.S. content requirements for certain components of each FFG-62.
Section 856 of the FY2020 National Defense Authorization Act (S. 1790/P.L. 116-92 of
December 20, 2019) states
SEC. 856. APPLICATION OF LIMITATION ON PROCUREMENT OF GOODS
OTHER THAN UNITED STATES GOODS TO THE FFG–FRIGATE PROGRAM.
Notwithstanding any other provision of law, amounts authorized to carry out the FFG–
Frigate Program may be used to award a new contract that provides for the acquisition of
the following components regardless of whether those components are manufactured in the
United States:
(1) Auxiliary equipment (including pumps) for shipboard services.
(2) Propulsion equipment (including engines, reduction gears, and propellers).
(3) Shipboard cranes.
(4) Spreaders for shipboard cranes.
Section 8113(b) of the FY2020 DOD Appropriations Act (Division A of H.R. 1158/P.L. 116-93 of
December 20, 2019) states
SEC. 8113….
(b) None of the funds provided in this Act for the FFG(X) Frigate program shall be used to
award a new contract that provides for the acquisition of the following components unless
those components are manufactured in the United States: Air circuit breakers;
gyrocompasses; electronic navigation chart systems; steering controls; pumps; propulsion
and machinery control systems; totally enclosed lifeboats; auxiliary equipment pumps;
shipboard cranes; auxiliary chill water systems; and propulsion propellers: Provided, That
the Secretary of the Navy shall in corporate United States manufactured propulsion engines

T he conferees note that the winning Constellation -class ship design is based on a foreign design.
While recognizing an existing parent design can reduce design, technical, and integration risks, the
conferees are concerned that significant risks remain in the FFG-62 program, including: cost
realism; shifting to predominantly U.S. component suppliers instead of the mainly foreign suppliers
used in the parent vessel design; and a complex Combined Diesel Electric and Gas Hull,
Mechanical and Electrical (HM&E) drive train that has not previously been used on U.S. Navy
ships.
T he conferees believe land based engineering and test sites (LBET S) are critical resources for the
Department of Defense, particularly for Navy ship HM& E systems.…
Since 1972, NSWCPD LBET S testing has reduced the acquisition risk of five of the seven Navy
surface combatant classes (Spruance-class, Oliver Hazard Perry-class, T iconderoga-class, Arleigh
Burke-class, and Zumwalt -class).… T he littoral combat ship (LCS) classes, the Freedom- and
Independence-classes, are the two recent classes that have not had the benefit of a LBET S. Since
lead ship deliveries in 2008 and 2010, both LCS classes have encountered significant, costly, and
debilitating engineering failures. T he conferees believe many of these LCS engineering failures
would have been discovered, analyzed, and corrected faster with less negative operational impact
had the Navy established a LCS LBET S.
Accordingly, the provision would require the Secretary of the Navy to establish a FFG-62 class
LBET S as soon as possible.…
In addition, the conferees direct the Secretary to submit to the congressional defense committees a
plan to implement this section with the budget materials that accompany the Preside nt’s Budget
request for fiscal year 2022. T his plan shall include the costs, activities, and test plan necessary to
meet the requirements under this section. (Pages 1523 -1524)
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and propulsion reduction gears into the FFG(X) Frigate program beginning not later than
with the eleventh ship of the program.
Section 8113(b) of the FY2021 DOD Appropriations Act (Division C of H.R. 133/P.L. 116-260 of
December 27, 2020), the Consolidated Appropriations Act, 2021) states:
SEC. 8113….
(b) None of the funds provided in this Act for the FFG(X) Frigate program shall be used to
award a new contract that provides for the acquisition of the following components unless
those components are manufactured in the United States: Air circuit breakers;
gyrocompasses; electronic navigation chart systems; steering controls; pumps; propulsion
and machinery control systems; totally enclosed lifeboats; auxiliary equipment pumps;
shipboard cranes; auxiliary chill water systems; and propulsion propellers: Provided, That
the Secretary of the Navy shall incorporate United States manufactured propulsion engines
and propulsion reduction gears into the FFG(X) Frigate program beginning not later than
with the eleventh ship of the program.
In addition to the above provisions, a permanent statute—10 U.S.C. 2534—requires certain
components of U.S. Navy ships to be made by a manufacturer in the national technology and
industrial base. The paragraph in the annual DOD appropriations act that makes appropriations
for the Navy’s shipbuilding account (i.e., the Shipbuilding and Conversion, Navy, or SCN,
appropriation account), moreover, has in recent years included this proviso:
… Provided further, That none of the funds provided under this heading for the
construction or conversion of any naval vessel to be constructed in shipyards in the United
States shall be expended in foreign facilities for the construction of major components of
such vessel….
10 U.S.C. 2534 explicitly applies to certain ship components, but not others. The meaning of
“major components” in the above proviso from the annual DOD appropriations act might be
subject to interpretation.
Contract Award
Four industry teams competed for the FFG-62 program. On April 30, 2020, the Navy announced
that it had awarded the FFG-62 contract to the team led by Fincantieri/Marinette Marine (F/MM)
of Marinette, WI. F/MM was awarded a fixed-price incentive (firm target) contract for Detail
Design and Construction (DD&C) for up to 10 ships in the program—the lead ship plus nine
option ships. The other three industry teams reportedly competing for the program were led by
Austal USA of Mobile, AL; General Dynamics/Bath Iron Works (GD/BIW) of Bath, ME; and
Huntington Ingal s Industries/Ingal s Shipbuilding (HII/Ingal s) of Pascagoula, MS.
Under the DD&C contract, the Navy has the option of recompeting the program after the lead
ship (if none of the nine option ships are exercised), after the 10th ship (if al nine of the option
ships are exercised), or somewhere in between (if some but not al of the nine option ships are
exercised). As a means of reducing their procurement cost, the Navy might at some point convert
the DD&C contract into a multiyear contract known as a block buy contract to procure the
ships.15

15 For more on block buy contracting, see CRS Report R41909, Multiyear Procurement (MYP) and Block Buy
Contracting in Defense Acquisition: Background and Issues for Congress, by Ronald O'Rourke.
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Issues for Congress
Accuracy of Navy’s Estimated Unit Procurement Cost
One potential issue for Congress concerns the accuracy of the Navy’s estimated unit procurement
cost for FFG-62s, particularly when compared to the known unit procurement costs of other
recent U.S. surface combatants.
Overview
As detailed by the Congressional Budget Office (CBO)16 and the Government Accountability
Office (GAO),17 lead ships in Navy shipbuilding programs in many cases have turned out to be
more expensive to build than the Navy had estimated. If the lead ship in a shipbuilding program
turns out to be intrinsical y more expensive to build than the Navy had estimated, the follow-on
ships in the program wil likely also be more expensive to build than the Navy had estimated.
Ships of the same general type and complexity that are built under similar production conditions
tend to have similar costs per weight and consequently unit procurement costs that are more or
less proportional to their displacements. An initial analysis of the issue of the accuracy of the
Navy’s estimated unit procurement cost for FFG-62s that was done by CRS following the Navy’s
April 30, 2020, contract award in the FFG-62 program, and which has been presented in this CRS
report since May 4, 2020, suggested that if FFG-62s were to wind up costing about the same to
construct per thousand tons of displacement as other recent U.S. military surface combatants, then
the third and subsequent FFG-62a could cost 17% to 56% more than the estimate for those ships
shown in the Navy’s FY2021 budget submission.
A follow-on and more-refined analysis of the issue of the accuracy of the Navy’s estimated unit
procurement cost for FFG-62s that was done by CBO and released on October 13, 2020,18 and
which also compared the Navy’s FFG-62 cost estimate to actual costs for building other recent
U.S. military surface combatants, estimates that the first 10 FFG-62s would cost 40% more than
the Navy estimates. The initial analysis by CRS and the follow-on analysis by CBO are discussed
in the two sections that follow.
Depending on the exact terms of the fixed-price incentive (firm target) contract for Detail Design
and Construction (DD&C) that the Navy awarded to F/MM for the FFG-62 program, some
portion (perhaps much) of any cost growth that might occur on the first 10 FFG-62s could be
borne by F/MM rather than the Navy, although F/MM under such a circumstance might also have
the option of seeking some form of contractual relief from the Navy, which if granted could shift
at least some of the cost growth back to the government.19

16 See Congressional Budget Office, An Analysis of the Navy’s Fiscal Year 2019 Shipbuilding Plan, October 2018, p.
25, including Figure 10.
17 See Government Accountability Office, Navy Shipbuilding[:] Past Performance Provides Valuable Lessons for
Future Investm ents, GAO-18-238SP, June 2018, p. 8.
18 Congressional Budget Office, The Cost of the Navy’s New Frigate, October 2020, 11 pp.
19 For example, in 2019, Eastern Shipbuilding Group of Panama City, FL, requested and received contractual relief for
Offshore Patrol Cutters (OPCs) that it is building for the Coast Guard. T he relief was granted unde r P.L. 85-804 as
amended (50 U.S.C. 1431-1435), a law that authorizes certain federal agencies to provide certain types of extraordinary
relief to contractors who are encountering difficulties in the performance of federal contracts or subcontracts relatin g to
national defense. ESG reportedly submitted a request for extraordinary relief on June 30, 2019, after ESG’s
shipbuilding facilities were damaged by Hurricane Michael, which passed through the Florida panhandle on October
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Initial (May 2020) Analysis by CRS
The Navy’s FY2021 budget submission estimated that the third and subsequent FFG-62s would
cost roughly $940 mil ion each in then-year dollars to procure. This equates to a cost of about
$127 mil ion per thousand tons of full load displacement, a figure that is
 about 36% less than the cost per thousand tons of ful load displacement of Flight
III DDG-51s;
 about 15% less than the cost per thousand tons of ful load displacement of the
Freedom (LCS-1) variant Littoral Combat Ships (LCSs) that F/MM currently
builds; and
 about 15% less than the cost per thousand tons of ful load displacement of Coast
Guard’s National Security Cutters (NSCs).20
Put another way, FFG-62s have
 an estimated full load displacement that is about 76% as great as that of Flight III
DDG-51s, and an estimated unit procurement cost that is about 49% as great as
that of Flight III DDG-51s;
 an estimated full load displacement that is about 120% greater than that of LCS-1
variant LCSs, and an estimated unit procurement cost that is about 80% greater
than that of LCS-1 variant LCSs; and
 an estimated full load displacement that is about 64% greater than that of NSCs,
and an estimated unit procurement cost that is about 40% greater than that of
NSCs.21
As mentioned above, ships of the same general type and complexity that are built under similar
production conditions tend to have similar costs per weight and consequently unit procurement
costs that are more or less proportional to their displacements. Setting the estimated cost per
thousand tons of displacement of FFG-62s about equal to those of LCS-1 variant LCSs or NSCs
would increase the estimated unit procurement cost of the third and subsequent FFG-62s from the
Navy’s estimate of about $940 mil ion to an adjusted figure of about $1,100 mil ion, an increase
of about 17%. Setting the estimated cost per thousand tons of displacement of FFG-62s about
equal to that of Flight III DDG-51s would increase the estimated unit procurement cost of the
third and subsequent FFG-62s from the Navy’s estimate of about $940 mil ion to an adjusted
figure of about $1,470 mil ion, an increase of about 56%.
Follow -on (October 2020) Analysis by CBO
CBO’s follow-on and more-refined analysis was done at the direction of the Senate Armed
Services Committee.22 CBO’s analysis states:

10, 2018. For additional discussion of the OPC program, including the contractual relief provided under P.L. 85 -804,
see CRS Report R42567, Coast Guard Cutter Procurem ent: Background and Issues for Congress, by Ronald
O'Rourke. See also Congressional Budget Office, The Cost of the Navy’s New Frigate, October 2020, p. 11.
20 For more on the NSC program, see CRS Report R42567, Coast Guard Cutter Procurement: Background and Issues
for Congress, by Ronald O'Rourke.
21 Source: CRS analysis of full load displacements and unit procurement costs of FFG-62, Flight III DDG-51, LCS-1
variant of the LCS, and the NSC.
22 In its report (S.Rept. 116-236 of June 24, 2020) on the FY2021 National Defense Authorization Act (S. 4049), the
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• CBO estimates the cost of the [first] 10 FFG(X) ships would be $12.3 billion in 2020
(inflation-adjusted) dollars, [or an average of] about $1.2 billion per ship, on the basis of
its [CBO’s] own weight-based cost model. That amount is 40 percent more than the Navy’s
estimate.
• The Navy estimates that the 10 ships would cost $8.7 billion in 2020 dollars, an average
of $870 million per ship.
• If the Navy’s estimate turns out to be accurate, the FFG(X) would be the least expensive
[U.S.] surface combatant program of the past 50 years (measured in cost per thousand tons
when the ship is mostly empty), even in comparison to much less capable ships.
Several factors support the Navy’s estimate:
• The FFG(X) is based on a[n Italian] design that has been in production [in Italy and
France] for many years.
• Little if any new technology is being developed for it.
• The contractor is an experienced builder of small surface combatants.
• An independent [cost] estimate [for the FFG(X) that was done] within the Department of
Defense (DoD) was lower than the Navy’s estimate.
Other factors suggest the Navy’s estimate is too low:
• The costs of all [U.S. Navy] surface combatants since 1970, as measured per thousand
tons, were higher.
• Historically the Navy has almost always underestimated the cost of the lead ship, and a
more expensive lead ship generally results in higher costs for the follow-on ships.
• Even when major parts of the ship’s estimated cost are known, as they were for the
Arleigh Burke [DDG-51 class] destroyer, costs have turned out to be higher than initialy
estimated.
• Compared with the [Italian] design on which it is based, the FFG(X) will be more densely
built and will have somewhat more complex weapon systems.
In addition, although the Navy’s contract with Fincantieri is for a fixed price, which limits
the government’s financial liability, that fixed-price contract does not guarantee that costs
will not increase [for the government] for three reasons:
• The terms of the Navy’s contract permit the ship’s contract price to be increased under
certain circumstances.

Senate Armed Services Committee stated
Guide d missile frigate
T he committee notes that a contract for up to 10 guided missile frigates (FFG(X)) was awarded in
April 2020 with a potential cumulative value of $5.6 billion. Given that this is a new class of ship s
that will have a significant role in the Navy battle force, the committee seeks additional information
on the program.
Accordingly, the committee directs the Director of the Congressional Budget Office to submit to
the congressional defense committees, not later than October 1, 2020, a report analyzing the
FFG(X) program. T he report shall include (1) An analysis of the estimated costs of the program in
the context of other current and past Navy shipbuilding programs; (2) An independent cost estimate
of the FFG(X) program based on the specific winning ship design; and (3) Other related matters the
Director deems appropriate. (Pages 51-52)
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• The Navy could make changes to the ship’s design during construction that would
increase costs, as it did, for example, in the littoral combat ship (LCS) program.
• If costs rise enough to threaten the financial viability of the shipbuilder, the Navy may
opt to cover some of those higher costs rather than experience a disruption in a shipbuilding
program that it considers essential.23
Potential Oversight Questions
Potential oversight questions for Congress include the following:
 What is the Navy’s basis for its view that FFG-62s—ships about three-quarters as
large as Flight III DDG-51s, and with instal ed capabilities that are in many cases
similar to those of DDG-51s—can be procured for about one-half the cost of
Flight III DDG-51s?
 DDG-51s are procured using multiyear procurement (MYP), which reduces their
procurement cost by several percent, while the FFG-62 DD&C contract is a
contract with options, which operates as a form of annual contracting and
consequently does not achieve the kinds of savings that are possible with an
MYP contract.24 Would adjusting for this difference by assuming the use of
annual contracting for procuring DDG-51s mean that the difference between
Flight III DDG-51s and FFG-62s in cost per thousand tons displacement, other
things held equal, is greater than the figure of 36% shown above in the initial
CRS analysis?
 What is the Navy’s basis for its view that FFG-62s—ships with a full collection
of permanently instal ed combat system equipment—can be procured for a cost
per thousand tons of full load displacement that is (by CRS’s initial analysis)
about 15% less than that of LCS-1 variant LCSs, which are ships built by the
same shipyard that features only a partial collection of permanently instal ed
combat system equipment?25
 What is the Navy’s basis for its view that FFG-62s—ships built to Navy combat
survivability standards and featuring a full collection of instal ed Navy combat
system equipment—can be procured for a cost per thousand tons of full load
displacement that is (by CRS’s initial analysis) 15% less than that NSCs, which
are ships built to a Coast Guard rather than Navy combat-survivability standard
and featuring a more-modest collection of combat system equipment?
 To what degree can differences in costs for building ships at F/MM compared to
costs for building ships at the shipyards that build DDG-51s and NSCs account
for the FFG-62s’ lower estimated cost per thousand tons displacement?
 To what degree can the larger size of FFG-62s compared to LCS-1 variant LCSs
or NSCs account for the FFG-62s’ lower estimated cost per thousand tons
displacement?

23 Congressional Budget Office, The Cost of the Navy’s New Frigate, October 2020, pp. 1-2.
24 For additional discussion of the savings that are possible with MYP contracts, see CRS Report R41909, Multiyear
Procurem ent (MYP) and Block Buy Contracting in Defense Acquisition: Background and Issues for Congress, by
Ronald O'Rourke.
25 Some of the combat system equipment of a deployed LCS consists of a modular mission package is not permanently
built into the ship. T hese modular mission packages are procured separately from the ship, and their procureme nt costs
are not included in the unit procurement costs of LCSs. For additional discussion, see CRS Report RL33741, Navy
Littoral Com bat Ship (LCS) Program : Background and Issues for Congress, by Ronald O'Rourke.
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 To what degree wil process improvements at F/MM, beyond those that were in
place for building LCSs at F/MM, permit FFG-62s to be built at the Navy’s
estimated cost per thousand tons?
 How much might the cost of building FFG-62s be reduced by converting the
FFG-62 contract into a block buy contract (i.e., a multiyear contract)?
 Under the terms of the fixed-price incentive (firm target) contract for Detail
Design and Construction (DD&C) that the Navy awarded to F/MM for the FFG-
62 program, what portion of any cost growth that might occur on the first 10
FFG-62s might be borne by F/MM, and what portion might be borne by the
Navy?
Potential Impact of COVID-19 Situation
Another issue for Congress concerns the potential impact of the COVID-19 situation on the
execution of U.S. military shipbuilding programs, including the FFG-62 program. A May 1, 2020,
press report states that James Geurts, the Assistant Secretary of the Navy for Research
Development, and Acquisition (i.e., the Navy’s acquisition executive),
said he does not expect the COVID-19 pandemic to affect the newly awarded FFG(X)
frigate program to Fincantieri’s Marinette Marine. “I don’t expect it to slow down the
program…knowing what I know about COVID and the impact. You know the first year or
two of this will be in detail design, engineering level work. We’ve proven across all our
shipyards an ability to keep a high percentage of design work going on schedule an d high
percentage of the workforce on track there.” He said that unlike how the industrial
operations are being affected in some shipyards this level of design work should not be
sensitive to the pandemic. “I don’t see that as a risk to this program because of the phasing
that industrial operations and construction won’t start for a little while, another two years
down the road,” he added.26
For additional discussion of the potential impact of the COVID-19 situation on the execution of
U.S. military shipbuilding programs, see CRS Report RL32665, Navy Force Structure and
Shipbuilding Plans: Background and Issues for Congress, by Ronald O'Rourke.
Number of FFG-62 Builders
Another issue for Congress is whether to build FFG-62s at a single shipyard (the Navy’s baseline
plan), or at two or three shipyards. The Navy’s FFG-7s, which were procured at annual rates of as
high as eight ships per year, were built at three shipyards.
In considering whether to build FFG-62s at a single shipyard (the Navy’s baseline plan), or at two
or three shipyards, Congress may consider several factors, including but not limited to the annual
FFG-62 procurement rate, shipyard production capacities and production economies of scale, the
potential costs and benefits in the FFG-62 program of employing recurring competition between
multiple shipyards, and how the number of FFG-62 builders might fit into a larger situation
involving the production of other Navy and Coast Guard ships, including Navy DDG-51
destroyers, Navy amphibious ships, Coast Guard National Security Cutters (NSCs), and Coast
Guard Offshore Patrol Cutters (OPCs).27

26 Item entitled “FFG(X) COVID” within DDN Staff, “ Defense Watch: COVID Delays, DDG-1002, SASC Hearings,
OPC,” Defense Daily, May 1, 2020.
27 For more on the DDG-51 program, see CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs:
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U.S. Content Requirements
Another issue for Congress is whether to take any further legislative action regarding U.S. content
requirements for FFG-62s. Potential options include amending, repealing, or replacing the
previously mentioned U.S. content provisions for the FFG-62 program that Congress passed in
FY2020 and FY2021; passing a new, separate provision of some kind; or doing none of these
things.
Required Capabilities and Growth Margin
Another issue for Congress is whether the Navy has appropriately defined the required
capabilities and growth margin of FFG-62s.
Analytical Basis for Desired Ship Capabilities
One aspect of this issue is whether the Navy has an adequately rigorous analytical basis for its
identification of the capability gaps or mission needs to be met by FFG-62s, and for its decision
to meet those capability gaps or mission needs through the procurement of a FFG with the
capabilities outlined earlier in this CRS report. The question of whether the Navy has an
adequately rigorous analytical basis for these things was discussed in greater detail in earlier
editions of this CRS report.28
Number of VLS Tubes
Another potential aspect of this issue concerns the planned number of Vertical Launch System
(VLS) missile tubes on FFG-62s. The VLS is the FFG-62’s principal (though not only) means of
storing and launching missiles. FFG-62s are to each be equipped with 32 Mark 41 VLS tubes.
(The Mark 41 is the Navy’s standard VLS design.)
Supporters of requiring each FFG-62 to be equipped with a larger number of VLS tubes, such as
48, might argue that FFG-62s are to be roughly three-quarters as large, and at least half as
expensive to procure, as DDG-51s, and might therefore be more appropriately equipped with at
least 48 VLS tubes, which is one-half the number on recent DDG-51s. They might also argue that
in a context of renewed great power competition with potential adversaries such as China, which
is steadily improving its naval capabilities,29 it might be prudent to equip each FFG-62 with 48
rather than 32 VLS tubes each, and that doing so might only marginal y increase FFG-62 unit
procurement costs. They might also argue that equipping each FFG-62 with 48 rather than 32
VLS tubes wil permit the Navy to more fully offset a substantial reduction in VLS tubes that the
Navy’s surface fleet is projected to experience when the Navy’s 22 Ticonderoga (CG-47) class
cruisers, which are each equipped with 122 VLS tubes, are retired,30 and provide a hedge against

Background and Issues for Congress, by Ronald O'Rourke. For more on Navy amphibious shipbuilding programs, see
CRS Report R43543, Navy LPD-17 Flight II and LHA Am phibious Ship Program s: Background and Issues for
Congress, by Ronald O'Rourke. For more on the NSC and OPC programs, see CRS Report R42567, Coast Guard
Cutter Procurem ent: Background and Issues for Congress, by Ronald O'Rourke.
28 See, for example, the version of this report dated February 4, 2019.
29 For more on China’s naval modernization effort, see CRS Report RL33153, China Naval Modernization:
Im plications for U.S. Navy Capabilities—Background and Issues for Congress, by Ronald O'Rourke.
30 See, for example, David B. Larter, “ As the US Navy Scrambles to Field More Missiles in Asia, a T ough Decision
Looms for Aging Cruisers,” Defense News, April 12, 2021.
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the possibility that Navy plans to field VLS tubes on Large Unmanned Surface Vehicles
(LUSVs)31 wil be slowed or curtailed for technical or other reasons.
Supporters of having each FFG-62 be equipped with 32 VLS tubes might argue that the analyses
indicating a need for 32 VLS tubes already took improving adversary capabilities (as wel as
other U.S. Navy capabilities) into account. They might also argue that FFG-62s, in addition to
having 32 VLS tubes, wil also to have separate, deck-mounted box launchers for launching 16
anti-ship cruise missiles, as wel as a separate, 21-cel Rolling Airframe Missile (RAM) AAW
missile launcher; that the Navy is moving ahead with its plan to deploy additional VLS tubes on
LUSVs, which are to act as adjunct weapon magazines for the Navy’s manned surface
combatants; and that increasing the number of VLS tubes on each FFG-62 from 32 to 48 would
increase (even if only marginal y) the procurement cost of a ship that is intended to be an
affordable supplement to the Navy’s cruisers and destroyers.
A May 14, 2019, Navy information paper on expanding the cost impact of expanding the FFG-62
VLS capacity from 32 cel s to 48 cel s states
To grow from a 32 Cell VLS to a 48 Cell VLS necessitates an increase in the length of the
ship with a small beam increase and roughly a 200-ton increase in full load displacement.
This will require a resizing of the ship, readdressing stability and seakeeping analyses, and
adapting ship services to accommodate the additional 16 VLS cells.
A change of this nature would unnecessarily delay detail design by causing significant
disruption to ship designs. Particularly the smaller ship designs. Potential competitors have
already completed their Conceptual Designs and are entering the Detail Design and
Construction competition with ship designs set to accommodate 32 cells.
The cost is estimated to increase between $16M [million] and $24M [million] per ship.
This includes ship impacts and additional VLS cells.32
Compared to an FFG-62 follow-on ship unit procurement cost of about $900 mil ion, the above
estimated increase of $16 mil ion to $24 mil ion would equate to an increase in unit procurement
cost of about 1.8% to about 2.7%.
Growth Margin
Another potential aspect of this issue is whether the Navy more general y has chosen the
appropriate amount of growth margin to incorporate into the FFG-62 design. The Navy wants the
FFG-62 design to have a growth margin (also cal ed service life al owance) of 5%, meaning an
ability to accommodate upgrades and other changes that might be made to the ship’s design over
the course of its service life that could require up to 5% more space, weight, electrical power, or
equipment cooling capacity. The Navy also wants the FFG-62 design to have an additional
growth margin (above the 5% factor) for accommodating a future directed energy system (i.e., a
laser or high-power microwave device) or an active electronic attack system (i.e., electronic
warfare system).
Supporters could argue that a 5% growth margin is traditional for a ship like a frigate, that the
FFG-62 design’s 5% growth margin is supplemented by the additional growth margin for a

31 For more on the LUSV program, see CRS Report R45757, Navy Large Unmanned Surface and Undersea Vehicles:
Background and Issues for Congress, by Ronald O'Rourke.
32 Navy information paper entit led “FFG(X) Cost to Grow to 48 cell VLS,” dated May 14, 2019, received from Navy
Office of Legislative Affairs on June 14, 2019.
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directed energy system or active electronic attack system, and that requiring a larger growth
margin could make the FFG-62 design larger and more expensive to procure.
Skeptics might argue that a larger growth margin (such as 10%—a figure used in designing
cruisers and destroyers) would provide more of a hedge against the possibility of greater-than-
anticipated improvements in the capabilities of potential adversaries such as China, that a limited
growth margin was a concern in the FFG-7 design,33 and that increasing the FFG-62 design’s
growth margin from 5% to 10% would have only a limited impact on the FFG-62’s procurement
cost.
A potential oversight question for Congress might be: What would be the estimated increase the
FFG-62’s unit procurement cost of increasing the ship’s growth margin from 5% to 10%?
Technical Risk
Another potential oversight issue for Congress concerns technical risk in the FFG-62 program.
The Navy can argue that the program’s technical risk has been reduced by use of the parent-
design approach, by the decision to use only systems and technologies that already exist or are
already being developed for use in other programs, rather than new technologies that need to be
developed, and by the congressional y mandated requirement to conduct a land-based test
program for the ship’s engineering plant. Skeptics, while acknowledging these points, might
argue that lead ships in Navy shipbuilding programs nevertheless pose technical risk, because
they serve as the prototypes for their programs.
June 2020 GAO Report
A June 2020 GAO report on the status of various DOD acquisition programs states the following
about the FFG-62 program:
Technology Maturity
The Navy completed a technology readiness assessment for FFG(X) in March 2019. The
assessment, which Navy officials said included a review of about 150 systems, identified
no critical technology elements that pose major technological risk during development.
DOD has yet to complete an independent technical risk assessment for FFG(X). An official
from the Office of the Under Secretary of Defense for Research and Engineering who is
participating in the FFG(X) risk assessment said that delays in obtaining required
information from the Navy make it unlikely the assessment will be completed before the
program’s development start decision. If incomplete, information available to inform
decision makers on the sufficiency of the Navy’s efforts to account for technical risk factors
will be diminished.
The FFG(X) design approach includes the use of many existing comb at and mission
systems to reduce technical risk. However, one key system—the Enterprise Air
Surveillance Radar (EASR)—is still in development by another program. EASR, which is
a scaled down version of the Navy Air and Missile Defense Radar program’s AN/SPY-
6(V)1 radar currently in production, is expected to provide long -range detection and
engagement of advanced threats. The Navy is currently conducting land-based testing on
an EASR advanced prototype, with FFG(X)-specific testing planned to begin in 2022. The
Navy also expects to integrate versions of the radar on other ship classes beginning in 2021,

33 See, for example, See U.S. General Accounting Office, Statement of Jerome H. Stolarow, Director, Procurement and
Systems Acquisition Division, before the Subcommittee on Priorities and Economy in Government, Joint Economic
Committee on T he Navy’s FFG-7 Class Frigate Shipbuilding Program, and Other Ship Program Issues, January 3,
1979, pp. 9-11.
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which may reduce integration risk for FFG(X) if the Navy is able to incorporate lessons
learned from integration on other ships during FFG(X) detail design activities.
Design Stability
The Navy used the results from an FFG(X) conceptual design phase to inform the
program’s May 2019 preliminary design review as well as the ongoing contract award
process for detail design and construction of the lead ship. In early 2018, the Navy
competitively awarded FFG(X) conceptual design contracts to five industry teams.
Conceptual design was intended to enable industry to mature parent ship designs for
FFG(X)—designs based on ships that have been built and demonstrated at s ea—as wel as
inform requirements and identify opportunities for cost savings. Navy officials said the
specific plan for detail design will be determined based on the winning proposal.
Software and Cybersecurity
According to the FFG(X) acquisition strategy, the program is structured to provide mission
systems and associated software to the shipbuilder as government-furnished equipment.
These systems, which are provided by other Navy programs, include a new version of the
Aegis Weapon System—FFG(X)’s combat management system—to coordinate radar and
weapon system interactions from threat detection to target strike. Navy officials said
FFG(X)’s Aegis Weapon System will leverage at least 90 percent of its software from the
Aegis common source software that supports combat systems found on other Navy ships,
such as the DDG 51-class destroyers.
The Navy approved the FFG(X) cybersecurity strategy in March 2019. The strategy states
the program’s cyber survivability requirement was a large driver in the development of
network architecture. The Navy’s strategy also emphasizes the importance of the ability of
the ship to operate in a cyber-contested environment. The Navy will consider cybersecurity
for the systems provided by the shipbuilder—which control electricity, machinery, damage
control, and other related systems—as part of selecting the FFG(X) design.
Other Program Issues
In October 2019, DOD confirmed that the Navy did not request that prospective
shipbuilders include warranty pricing to correct defects after ship deliveries in their
proposals for the competitive FFG(X) detail design and construction contract award, as we
previously recommended. Instead, the Navy required that the proposals include guaranty
pricing with limited liability of at least $5 million to correct defects, which could allow for
a better value to the government than has been typical for recent shipbuilding programs.
However, warranty pricing could have provided the Navy with complete information on
the cost-effectiveness of a warranty versus a guaranty. Our prior work has found that using
comprehensive ship warranties instead of guarantees could reduce the Navy’s financial
responsibility for correcting defects and foster quality performance by linking the
shipbuilder’s cost to correct deficiencies to its profit.
Program Office Comments
We provided a draft of this assessment to the program office for review and comment. The
program office provided technical comments, which we incorporated where appropriate.
The program office stated that the Navy is working to satisfy the requirement for an
independent technical risk assessment requirement prior to development start. Regarding
warranties, the program office stated the solicitation allows shipbuilders to propose a limit
of liability beyond the $5 million requirement. It said this arrangement represents an
appropriate balance between price and risk; ensures that the shipbuilder is accountable for
the correction of defects that follow acceptance; and allows shipbuilders to use their own
judgment in proposing the value of the limit of liability. The program office also said the
Navy will evaluate the extent to which any additional liability amount proposed above the
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minimum requirement provides a meaningful benefit to the government, and will evaluate
favorably a higher proposed limitation of liability value, up to an unlimited guaranty.34
Guaranty vs. Warranty in Construction Contract
Another aspect of the issue of technical risk concerns the Navy’s use of a guaranty rather than a
warranty in the Detail Design and Construction (DD&C) contract for the FFG-62 program. An
August 2019 GAO report on the FFG-62 program states
The Navy plans to use a fixed-price incentive contract for FFG(X) detail design and
construction. This is a notable departure from prior Navy surface combatant programs that
used higher-risk cost-reimbursement contracts for lead ship construction. The Navy also
plans to require that each ship has a minimum guaranty of $5 million to correct shipbuilder-
responsible defects identified in the 18 months following ship delivery. However, Navy
officials discounted the potential use of a warranty—another mechanism to address the
correction of shipbuilder defects—stating that their use could negatively affect
shipbuilding cost and reduce competition for the contract award. The Navy provided no
analysis to support these claims and has not demonstrated why the use of warranties is not
a viable option. The Navy’s planned use of guarantees helps ensure the FFG(X) shipbuilder
is responsible for correcting defects up to a point, but guarantees generally do not provide
the same level of coverage as warranties. GAO found in March 2016 that the use of a
guaranty did not help improve cost or quality outcomes for the ships reviewed. GAO also
found the use of a warranty in commercial shipbuilding and certain Coast Guard ships
improves cost and quality outcomes by requiring the shipbuilders to pay to repair defects.
The FFG(X) request for proposal offers the Navy an opportunity to solicit pricing for a
warranty to assess the cost-effectiveness of the different mechanisms to address ship
defects.35
As discussed in another CRS report,36 in discussions of Navy (and also Coast Guard)
shipbuilding, a question that sometimes arises is whether including a warranty in a shipbuilding
contract is preferable to not including one. The question can arise, for example, in connection
with a GAO finding that “the Navy structures shipbuilding contracts so that it pays shipbuilders
to build ships as part of the construction process and then pays the same shipbuilders a second
time to repair the ship when construction defects are discovered.”37
Including a warranty in a shipbuilding contract (or a contract for building some other kind of
defense end item), while potential y valuable, might not always be preferable to not including
one—it depends on the circumstances of the acquisition, and it is not necessarily a valid criticism
of an acquisition program to state that it is using a contract that does not include a warranty (or a
weaker form of a warranty rather than a stronger one).
Including a warranty general y shifts to the contractor the risk of having to pay for fixing
problems with earlier work. Although that in itself could be deemed desirable from the
government’s standpoint, a contractor negotiating a contract that wil have a warranty wil

34 Government Accountability Office, Defense Acquisitions Annual Assessment[:] Drive to Deliver Capabilities Faster
Increases Im portance of Program Knowledge and Consistent Data for Oversight GAO-20-439, p. 124.
35 Government Accountability Office, Guide Missile Frigate[:] Navy Has Taken Steps to Reduce Acquisition Risk, but
Opportunities Exist to Im prove Knowledge for Decision Makers, GAO-19-512, August 2019, summary page.
36 See CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress, by
Ronald O'Rourke.
37 See Government Accountability Office, Navy Shipbuilding[:] Past Performance Provides Valuable Lessons for
Future Investm ents, GAO-18-238SP, June 2018, p. 21. A graphic on page 21 shows a GAO finding that the
government was financially responsible for shipbuilder deficiencies in 96% of the cases examined by GAO, and that
the shipbuilder was financially responsible for shipbuilder deficiencies in 4% of the cases.
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incorporate that risk into its price, and depending on how much the contractor might charge for
doing that, it is possible that the government could wind up paying more in total for acquiring the
item (including fixing problems with earlier work on that item) than it would have under a
contract without a warranty.
When a warranty is not included in the contract and the government pays later on to fix problems
with earlier work, those payments can be very visible, which can invite critical comments from
observers. But that does not mean that including a warranty in the contract somehow frees the
government from paying to fix problems with earlier work. In a contract that includes a warranty,
the government wil indeed pay something to fix problems with earlier work—but it wil make
the payment in the less-visible (but stil very real) form of the up-front charge for including the
warranty, and that charge might be more than what it would have cost the government, under a
contract without a warranty, to pay later on for fixing those problems.
From a cost standpoint, including a warranty in the contract might or might not be preferable,
depending on the risk that there wil be problems with earlier work that need fixing, the potential
cost of fixing such problems, and the cost of including the warranty in the contract. The point is
that the goal of avoiding highly visible payments for fixing problems with earlier work and the
goal of minimizing the cost to the government of fixing problems with earlier work are separate
and different goals, and that pursuing the first goal can sometimes work against achieving the
second goal.38
DOD’s guide on the use of warranties states the following:
Federal Acquisition Regulation (FAR) 46.7 states that “the use of warranties is not
mandatory.” However, if the benefits to be derived from the warranty are commensurate
with the cost of the warranty, the CO [contracting officer] should consider placing it in the
contract. In determining whether a warranty is appropriate for a specific acquisition, FAR
Subpart 46.703 requires the CO to consider the nature and use of the supplies and services,
the cost, the administration and enforcement, trade practices, and reduced requirements.
The rationale for using a warranty should be documented in the contract file....
In determining the value of a warranty, a CBA [cost-benefit analysis] is used to measure
the life cycle costs of the system with and without the warranty. A CBA is required to
determine if the warranty will be cost beneficial. CBA is an economic analysis, which
basically compares the Life Cycle Costs (LCC) of the system with and without the warranty
to determine if warranty coverage will improve the LCCs. In general, five key factors wil
drive the results of the CBA: cost of the warranty + cost of warranty administration +
compatibility with total program efforts + cost of overlap with Contractor support +
intangible savings. Effective warranties integrate reliability, maintainability,
supportability, availability, and life-cycle costs. Decision factors that must be evaluated
include the state of the weapon system technology, the size of the warranted population,

38 It can also be noted that the country’s two largest builders of Navy ships—General Dynamics (GD) and Huntington
Ingalls Industries (HII)—derive about 60% and 96%, respectively, of their revenues from U.S. government work. (See
General Dynamics, 2016 Annual Report, page 9 of Form 10-K [PDF page 15 of 88]) and Huntington Ingalls Industries,
2016 Annual Report, page 5 of Form 10-K [PDF page 19 of 134]). T hese two shipbuilders operate the only U.S.
shipyards currently capable of building several major types of Navy ships, including submarin es, aircraft carriers, large
surface combatants, and amphibious ships. T hus, even if a warranty in a shipbuilding contract with one of these firms
were to somehow mean that the government did not have pay under the terms of that contract —either up front or later
on—for fixing problems with earlier work done under that contract, there would still be a question as to whether the
government would nevertheless wind up eventually paying much of that cost as part of the price of one or more future
contracts the government may have that firm.
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the likelihood that field performance requirements can be achieved, and the warranty
period of performance.39
In response to a draft version of GAO’s August 2019 report, the Navy stated
As a part of the planning for the procurement of detail design and construction for FFG(X),
the Navy determined that a guaranty, rather than a commercial-type warranty, will be
implemented for the program. As a part of the FFG(X) detail design and construction
request for proposals [RFP] released on June 20, 2019, the Navy asked contractors to
include a limit of liability of at least $5 million per ship and a guaranty period of 18 months
beyond preliminary acceptance of each ship. Further, the solicitation allows offerors to
propose as additional limit of liability amount beyond the required $5 million amount, up
to and including an unlimited liability. This arrangement represents an appropriate balance
between price considerations and risks, ensuring that the shipbuilder is accountable for the
correction of defects that follow preliminary acceptance, while allowing each shipbuilder
to use its own business judgement in proposing the value of the limit of liability. The Navy
released the solicitation prior to this GAO recommendation and is unable to modify the
current solicitation because it would cause an unacceptable delay to the FFG(X) program.
To support the GAO recommendation to request pricing for an unlimited warranty, the
Navy will request pricing for unlimited warranty before exercising the first ship option and
evaluate the business case.40
Potential Industrial-Base Impacts of FFG-62 Program
Another issue for Congress concerns the potential industrial-base impacts of the FFG-62 program
for shipyards and supplier firms in the context of other Navy and Coast Guard shipbuilding
programs, including the Navy’s Littoral Combat Ship (LCS), DDG-51 destroyer, and amphibious
shipbuilding programs, and the Coast Guard’s National Security Cutter (NSC) and Offshore
Patrol Cutter (OPC) programs.
Two of the teams that competed for the FFG-62 program involved shipyards (F/MM and Austal
USA) that are currently building LCSs, procurement of which ended in FY2019. The two other
teams that competed for the FFG-62 program involved shipyards (GD/BIW and HII/Ingal s) that
currently build DDG-51 destroyers and (in the case of HII/Ingal s) Navy amphibious ships. A
potential change in the Navy’s fleet architecture might reduce quantities of destroyers and/or
large amphibious ships being procured for the Navy.41
Legislative Activity for FY2022
Summary of Congressional Action on FY2022 Funding Request

39 Department of Defense, Department of Defense Warranty Guide, Version 1.0, September 2009, accessed July 13,
2017, at https://www.acq.osd.mil/dpap/pdi/uid/docs/departmentofdefensewarrantyguide[1].doc.
40 Government Accountability Office, Guide Missile Frigate[:] Navy Has Taken Steps to Reduce Acquisition Risk, but
Opportunities Exist to Im prove Knowledge for Decision Makers, GAO-19-512, August 2019 (revised September 5,
2019 to include an omitted page in the report section, [and] comments from the Department of Defense), pp. 44 -45.
41 See CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for
Congress, by Ronald O'Rourke, and CRS Report R43543, Navy LPD-17 Flight II and LHA Am phibious Ship
Program s: Background and Issues for Congress, by Ronald O'Rourke.
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link to page 26 Navy Constellation (FFG-62) Class Frigate Program: Background and Issues for Congress

Table 2 summarizes congressional action on the Navy’s FY2022 funding request for the LCS
program.
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Table 2. Congressional Action on FY2022 Procurement Funding Request
Mil ions of dol ars, rounded to nearest tenth.

Authorization
Appropriation

Request
HASC
SASC
Conf.
HAC
SAC
Conf.
Procurement
1,087.9

Advance procurement (AP)
69.1

(Procurement quantity)
(1)

Source: Table prepared by CRS based on FY2022 Navy budget submission, committee and conference reports,
and explanatory statements on the FY2022 National Defense Authorization Act and the FY2022 DOD
Appropriations Act.
Notes: HASC is House Armed Services Committee; SASC is Senate Armed Services Committee; HAC is
House Appropriations Committee; SAC is Senate Appropriations Committee; Conf. is conference agreement.

Author Information

Ronald O'Rourke

Specialist in Naval Affairs

Disclaimer
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under the direction of Congress. Information in a CRS Report should n ot be relied upon for purposes other
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Congressional Research Service
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