Navy Frigate (FFG[X]) Program: Background and Issues for Congress

The FFG(X) program is a Navy program to build a class of 20 guided-missile frigates (FFGs). The Navy wants to procure the first FFG(X) in FY2020, the next 18 at a rate of two per year in FY2021-FY2029, and the 20th in FY2030. The Navy’s proposed FY2020 budget requests $1,281.2 million for the procurement of the first FFG(X). The Navy’s FY2020 budget submission shows that subsequent ships in the class are estimated by the Navy to cost roughly $900 million each in then-year dollars.

The Navy intends to build the FFG(X) to a modified version of an existing ship design—an approach called the parent-design approach. The parent design could be a U.S. ship design or a foreign ship design. At least four industry teams are reportedly competing for the FFG(X) program. Two of the teams are reportedly proposing to build their FFG(X) designs at the two shipyards that have been building Littoral Combat Ships (LCSs) for the Navy—Austal USA of Mobile, AL, and Fincantieri/Marinette Marine (F/MM) of Marinette, WI. The other two teams are reportedly proposing to build their FFG(X) designs at General Dynamics/Bath Iron Works, of Bath, ME, and Huntington Ingalls Industries/Ingalls Shipbuilding of Pascagoula, MS.

On May 28, 2019, it was reported that a fifth industry team that had been interested in the FFG(X) program had informed the Navy on May 23, 2019, that it had decided to not submit a bid for the program. This fifth industry team, like one of the other four, reportedly had proposed building its FFG(X) design at F/MM.

On June 20, 2019, the Navy released its Request for Proposals (RFP) for the Detail Design and Construction (DD&C) contract for up to 10 ships in FFG(X) program (the lead ship plus 9 option ships). Responses to the RFP are due by August 22, 2019. The Navy plans to award the contract in July 2020.

The FFG(X) program presents several potential oversight issues for Congress, including the following:

whether to approve, reject, or modify the Navy’s FY2020 funding request for the program;

whether the Navy has appropriately defined the cost, capabilities, and growth margin of the FFG(X);

the Navy’s intent to use a parent-design approach for the FFG(X) program rather than develop an entirely new (i.e., clean-sheet) design for the ship;

cost, schedule, and technical risk in the FFG(X) program;

whether any additional LCSs should be procured in FY2020 as a hedge against potential delays in the FFG(X) program;

the potential industrial-base impacts of the FFG(X) for shipyards and supplier firms;

whether to build FFG(X)s at a single shipyard, as the Navy’s baseline plan calls for, or at two or three shipyards;

the potential impact on required numbers of FFG(X)s of a possible change in the Navy’s surface force architecture; and

the potential impact on the FFG(X) program of using one or more continuing resolutions (CRs) to fund Department of Defense (DOD) operations for at least some portion of FY2020.

Navy Frigate (FFG[X]) Program: Background and Issues for Congress

Updated October 10, 2019 (R44972)
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Contents

Summary

The FFG(X) program is a Navy program to build a class of 20 guided-missile frigates (FFGs). The Navy wants to procure the first FFG(X) in FY2020, the next 18 at a rate of two per year in FY2021-FY2029, and the 20th in FY2030. The Navy's proposed FY2020 budget requests $1,281.2 million for the procurement of the first FFG(X). The Navy's FY2020 budget submission shows that subsequent ships in the class are estimated by the Navy to cost roughly $900 million each in then-year dollars.

The Navy intends to build the FFG(X) to a modified version of an existing ship design—an approach called the parent-design approach. The parent design could be a U.S. ship design or a foreign ship design. At least four industry teams are reportedly competing for the FFG(X) program. Two of the teams are reportedly proposing to build their FFG(X) designs at the two shipyards that have been building Littoral Combat Ships (LCSs) for the Navy—Austal USA of Mobile, AL, and Fincantieri/Marinette Marine (F/MM) of Marinette, WI. The other two teams are reportedly proposing to build their FFG(X) designs at General Dynamics/Bath Iron Works, of Bath, ME, and Huntington Ingalls Industries/Ingalls Shipbuilding of Pascagoula, MS.

On May 28, 2019, it was reported that a fifth industry team that had been interested in the FFG(X) program had informed the Navy on May 23, 2019, that it had decided to not submit a bid for the program. This fifth industry team, like one of the other four, reportedly had proposed building its FFG(X) design at F/MM.

On June 20, 2019, the Navy released its Request for Proposals (RFP) for the Detail Design and Construction (DD&C) contract for up to 10 ships in FFG(X) program (the lead ship plus 9 option ships). Responses to the RFP are due by August 22, 2019. The Navy plans to award the contract in July 2020.

The FFG(X) program presents several potential oversight issues for Congress, including the following:

  • whether to approve, reject, or modify the Navy's FY2020 funding request for the program;
  • whether the Navy has appropriately defined the cost, capabilities, and growth margin of the FFG(X);
  • the Navy's intent to use a parent-design approach for the FFG(X) program rather than develop an entirely new (i.e., clean-sheet) design for the ship;
  • cost, schedule, and technical risk in the FFG(X) program;
  • whether any additional LCSs should be procured in FY2020 as a hedge against potential delays in the FFG(X) program;
  • the potential industrial-base impacts of the FFG(X) for shipyards and supplier firms;
  • whether to build FFG(X)s at a single shipyard, as the Navy's baseline plan calls for, or at two or three shipyards;
  • the potential impact on required numbers of FFG(X)s of a possible change in the Navy's surface force architecture; and
  • the potential impact on the FFG(X) program of using one or more continuing resolutions (CRs) to fund Department of Defense (DOD) operations for at least some portion of FY2020.


Introduction

This report provides background information and discusses potential issues for Congress regarding the Navy's FFG(X) program, a program to procure a new class of 20 guided-missile frigates (FFGs). The Navy's proposed FY2020 budget requests $1,281.2 million for the procurement of the first FFG(X).

The FFG(X) program presents several potential oversight issues for Congress. Congress's decisions on the program could affect Navy capabilities and funding requirements and the shipbuilding industrial base.

This report focuses on the FFG(X) program. A related Navy shipbuilding program, the Littoral Combat Ship (LCS) program, is covered in detail in CRS Report RL33741, Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress, by Ronald O'Rourke. Other CRS reports discuss the strategic context within which the FFG(X) program and other Navy acquisition programs may be considered.1

Background

Navy's Force of Small Surface Combatants (SSCs)

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, LCSs, mine warfare ships, and patrol craft.2 SSCs are smaller, less capable in some respects, and individually 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.

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(X)s. 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.3

At the end of FY2018, the Navy's force of SSCs totaled 27 battle force ships, including 0 frigates, 16 LCSs, and 11 mine warfare ships. Under the Navy's FY2020 30-year (FY2020-FY2049) shipbuilding plan, the SSC force is to grow to 52 ships (34 LCSs and 18 FFG[X]s) in FY2034, reach a peak of 62 ships (30 LCSs, 20 FFG[X]s, and 12 SSCs of a future design) in FY2040, and then decline to 50 ships (20 FFG[X]s and 30 SSCs of a future design) in FY2049.

U.S. Navy Frigates in General

In contrast to cruisers and destroyers, which are designed to operate in higher-threat areas, frigates are generally 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.4

The most recent class of frigates operated by the Navy was the Oliver Hazard Perry (FFG-7) class (Figure 1). A total of 51 FFG-7 class ships were procured between FY1973 and FY1984. The ships entered service between 1977 and 1989, and were decommissioned between 1994 and 2015.

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/.

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 9,300 tons.) Following their decommissioning, a number of FFG-7 class ships, like certain other decommissioned U.S. Navy ships, have been transferred to the navies of U.S. allied and partner countries.

FFG(X) Program

Meaning of Designation FFG(X)

In the program designation FFG(X), FF means frigate,5 G means guided-missile ship (indicating a ship equipped with an area-defense AAW system),6 and (X) indicates that the specific design of the ship has not yet been determined. FFG(X) thus means a guided-missile frigate whose specific design has not yet been determined.7

Procurement Quantity and Schedule

Procurement Quantity

The Navy wants to procure 20 FFG(X)s, which in combination with the Navy's planned total of 32 LCSs would meet the Navy's 52-ship SSC force-level goal. A total of 35 (rather than 32) LCSs have been procured through FY2019, but Navy officials have stated that the Navy nevertheless wants to procure 20 FFG(X)s.

The Navy's 355-ship force-level goal is the result of a Force Structure Analysis (FSA) that the Navy conducted in 2016. The Navy conducts a new or updated FSA every few years, and it is currently conducting a new FSA that is scheduled to be completed by the end of 2019. Navy officials have stated that this new FSA will likely not reduce the required number of small surface combatants, and might increase it. Navy officials have also suggested that the Navy in coming years may shift to a new surface force architecture that will include, among other things, a larger proportion of small surface combatants.

Figure 2 shows a Navy briefing slide depicting the potential new surface force architecture, with each sphere representing a manned ship or an unmanned surface vehicle (USV). Consistent with Figure 2, the Navy's 355-ship goal, reflecting the current force architecture, calls for a Navy with twice as many large surface combatants as small surface combatants. Figure 2 suggests that the potential new surface force architecture could lead to the obverse—a planned force mix that calls for twice as many small surface combatants than large surface combatants—along with a new third tier of numerous USVs.8

Figure 2. Navy Briefing Slide on Surface Force Architecture

Each sphere represents a ship or a USV

Source: Illustration accompanying Megan Eckstein, "Sea Hunter Unmanned Ship Continues Autonomy Testing as NAVSEA Moves Forward with Draft RFP," USNI News, April 29, 2019. The illustration was also included as Slide 2 in a Navy briefing entitled "Designing & Building the Surface Fleet: Unmanned and Small Combatants," by Rear Admiral Casey Moton at a June 20, 2019, conference of the American Society of Naval Engineers (ASNE).

Notes: Each sphere represents a ship or a USV. LSC means large surface combatant (i.e., cruiser or destroyer); SSC means small surface combatant (i.e., frigate or Littoral Combat Ship); LUSV means large USV; MUSV means medium USV. Spheres with multiple colors (the LSCs and SSCs) are ships equipped with a combination of sensors (green), command and control (C2) equipment (red), and payloads (including weapons) (blue). Spheres with single colors (the USVs) are equipped with either payloads (blue) or sensors (green).

Procurement Schedule

The Navy wants to procure the first FFG(X) in FY2020, the next 18 at a rate of two per year in FY2021-FY2029, and the 20th in FY2030. Under the Navy's FY2020 budget submission, the first FFG(X) is scheduled to be delivered in July 2026, 72 months after the contract award date of July 2020.

Ship Capabilities, Design, and Crewing

Ship Capabilities and Design

As mentioned above, the (X) in the program designation FFG(X) means that the design of the ship has not yet been determined. In general, the Navy envisages the FFG(X) as follows:

  • The ship is to be a multimission small surface combatant capable of conducting anti-air warfare (AAW), anti-surface warfare (ASuW), antisubmarine warfare (ASW), and electromagnetic warfare (EMW) operations.
  • Compared to an FF concept that emerged under a February 2014 restructuring of the LCS program, the FFG(X) is to have increased AAW and EMW capability, and enhanced survivability.
  • The ship's area-defense AAW system is to be capable of local area AAW, meaning a form of area-defense AAW that extends to a lesser range than the area-defense AAW that can be provided by the Navy's cruisers and destroyers.
  • The ship is to be capable of operating in both blue water (i.e., mid-ocean) and littoral (i.e., near-shore) areas.
  • The ship is to be capable of operating either independently (when that is appropriate for its assigned mission) or as part of larger Navy formations.

Given the above, the FFG(X) design will likely be larger in terms of displacement, more heavily armed, and more expensive to procure than either the LCS or an FF concept that emerged from the February 2014 LCS program restructuring.

Figure 3 shows a January 2019 Navy briefing slide summarizing the FFG(X)'s planned capabilities. For additional information on the FFG(X)'s planned capabilities, see Appendix A.9

Dual Crewing

To help maximize the time that each ship spends at sea, the Navy reportedly is considering operating FFG(X)s with dual crews—an approach, commonly called blue-gold crewing, that the Navy uses for operating its ballistic missile submarines and LCSs.10

Figure 3. Navy Briefing Slide on FFG(X) Capabilities

Presented at Surface Navy Association National Symposium, January 2019

Source: Presentation by Dr. Reagan Campbell, "FFG(X) Update, National Symposium—Surface Navy Association," January 15, 2019, briefing slide 3, posted at InsideDefense.com (subscription required), January 22, 2019.

Procurement Cost

The Navy wants the follow-on ships in the FFG(X) program (i.e., ships 2 through 20) to have an average unit procurement cost of $800 million to $950 million each in constant 2018 dollars.11 The Navy reportedly believes that the ship's cost can be held closer to the $800 million figure.12 By way of comparison, the Navy estimates the average unit procurement cost of the three LCSs procured in FY2019 at $523.7 million (not including the cost of each ship's embarked mission package), and the average unit procurement cost of the three DDG-51 class destroyers that the Navy has requested for procurement in FY2020 at $1,821.0 million.

As shown in Table 2, the Navy's proposed FY2020 budget requests $1,281.2 million for the procurement of the first FFG(X). The lead ship in the program will be considerably more expensive than the follow-on ships in the program, because the lead ship's procurement cost incorporates most or all of the detailed design/nonrecurring engineering (DD/NRE) costs for the class. (It is a traditional Navy budgeting practice to attach most or all of the DD/NRE costs for a new ship class to the procurement cost of the lead ship in the class.) As shown in Table 2, the Navy's FY2020 budget submission shows that subsequent ships in the class are estimated by the Navy to cost roughly $900 million each in then-year dollars over the next few years.

The Navy's FY2020 budget submission estimates the total procurement cost of 20 FFG(X)s at $20,470.1 million (i.e., about $20.5 billion) in then-year dollars, or an average of about $1,023.5 million each. Since the figure of $20,470.1 million is a then-year dollar figure, it incorporates estimated annual inflation for FFG(X)s to be procured out to FY2030.

Acquisition Strategy

Parent-Design Approach

The Navy's desire to procure the first FFG(X) in FY2020 does not allow enough time to develop a completely new design (i.e., a clean-sheet design) for the FFG(X). (The Navy states that using an unaccelerated acquisition strategy involving a lengthier requirements-evaluation phase and a clean-sheet design would defer the procurement of the first ship to FY2025.13) Consequently, the Navy intends to build the FFG(X) to a modified version of an existing ship design—an approach called the parent-design approach. The parent design could be a U.S. ship design or a foreign ship design.14

Using the parent-design approach 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.15 The parent-design approach has also been used in the past for other Navy and Coast Guard ships, including Navy mine warfare ships16 and the Coast Guard's new Fast Response Cutters (FRCs).17

No New Technologies or Systems

As an additional measure for reducing cost, schedule, and technical risk in the FFG(X) program, the Navy envisages developing no new technologies or systems for the FFG(X)—the ship is to use systems and technologies that already exist or are already being developed for use in other programs.

Number of Builders

Given the currently envisaged procurement rate of two ships per year, the Navy's baseline plan for the FFG(X) program envisages using a single builder to build the ships.18 Consistent with U.S. law,19 the ship is to be built in a U.S. shipyard, even if it is based on a foreign design. Using a foreign design might thus involve cooperation or a teaming arrangement between a U.S. builder and a foreign developer of the parent design. The Navy has not, however, ruled out the option of building the ships at two or three shipyards. At a December 12, 2018, hearing on Navy readiness before two subcommittees (the Seapower subcommittee and the Readiness and Management Support subcommittee, meeting jointly) of the Senate Armed Services Committee, the following exchange occurred:

SENATOR ANGUS KING (continuing):

Talking about industrial base and acquisition, the frigate, which we're talking about, there are 5 yards competing, there are going to be 20 ships. As I understand it, the intention now is to award all 20 ships to the winner, it's a winner take all among the five. In terms of industrial base and also just spreading the work, getting the—getting the work done faster, talk to me about the possibility of splitting that award between at least two yards if not three.

SECRETARY OF THE NAVY RICHARD SPENCER:

You bring up an interesting concept. There's two things going on here that need to be weighed out. One, yes, we do have to be attentive to our industrial base and the ability to keep hands busy and trained. Two, one thing we also have to look at, though, is the balancing of the flow of new ships into the fleet because what we want to avoid is a spike because that spike will come down and bite us again when they all go through regular maintenance cycles and every one comes due within two or three years or four years. It gets very crowded. It's not off the table because we've not awarded anything yet, but we will—we will look at how best we can balance with how we get resourced and, if we have the resources to bring expedition, granted, we will do that.20

Competing Industry Teams

As shown in Table 1, at least four industry teams are reportedly competing for the FFG(X) program. Two of the teams are reportedly proposing to build their FFG(X) designs at the two shipyards that have been building Littoral Combat Ships (LCSs) for the Navy—Austal USA of Mobile, AL, and Fincantieri/Marinette Marine (F/MM) of Marinette, WI. The other two teams are reportedly proposing to build their FFG(X) designs at General Dynamics/Bath Iron Works (GD/BIW), of Bath, ME, and Huntington Ingalls Industries/Ingalls Shipbuilding (HII/Ingalls) of Pascagoula, MS.

As also shown in Table 1, a fifth industry team that had been interested in the FFG(X) program reportedly informed the Navy on May 23, 2019, that it had decided to not submit a bid for the program.21 As shown in the table, this fifth industry team, like one of the other four, reportedly had proposed building its FFG(X) design at F/MM.

Table 1. Industry Teams Reportedly Competing for FFG(X) Program

Industry team leader

Parent design

Shipyard that would build the ships

At least four industry teams, shown below, are reportedly competing for the FFG(X) program

Austal USA

Independence (LCS-2) class LCS design

Austal USA of Mobile, AL

Fincantieri Marine Group

Italian Fincantieri FREMM (Fregata Europea Multi-Missione) frigate

Fincantieri/Marinette Marine (F/MM) of Marinette, Wi

General Dynamics/Bath Iron Works

Spanish Navantia Álvaro de Bazán-class F100 frigate

General Dynamics/Bath Iron Works (GD/BIW) of Bath, ME

Huntington Ingalls Industries

[Not disclosed]

Huntington Ingalls Industries/ Ingalls Shipbuilding (HII/Ingalls) of Pascagoula, MS

A fifth industry team reportedly informed the Navy on May 23, 2019, that it had decided to not submit a bid—details below are for the bid that it was reportedly developing

Lockheed Martin

Freedom (LCS-1) class LCS design

F/MM of Marinette, WI

Source: Sam LaGrone and Megan Eckstein, "Navy Picks Five Contenders for Next Generation Frigate FFG(X) Program," USNI News, February 16, 2018; Sam LaGrone, "Lockheed Martin Won't Submit Freedom LCS Design for FFG(X) Contest," USNI News, May 28, 2019. See also David B. Larter, "Navy Awards Design Contracts for Future Frigate," Defense News, February 16, 2018; Lee Hudson, "Navy Awards Five Conceptual Design Contracts for Future Frigate Competition," Inside the Navy, February 19, 2018.

On February 16, 2018, the Navy awarded five FFG(X) conceptual design contracts with a value of $15.0 million each to the leaders of the five industry teams shown in Table 1.22 Being a recipient of a conceptual design contract is not a requirement for competing for the subsequent Detailed Design and Construction (DD&C) contract for the program.

On June 20, 2019, the Navy released its Request for Proposals (RFP) for the DD&C contract for up to 10 ships in FFG(X) program (the lead ship plus 9 option ships). Responses to the RFP are due by August 22, 2019. The Navy plans to award the contract in July 2020.

Potential Use of Block Buy Contracting

As a means of reducing their procurement cost, the Navy may use one or more fixed-price block buy contracts to procure the ships.23 The RFP for the FFG(X) program (see previous section) states: "Following contract award, the Government may designate any or all of [the nine option ships] as part of a 'Block Buy.' In the event that a Block Buy is enacted under the National Defense Authorization Act in future fiscal years, the Contractor shall enter into negotiations with the Government to determine a fair and reasonable price for each item under the Block Buy. The price of any ship designated as part of the Block Buy shall not exceed the corresponding non-Block Buy price."24

Program Funding

Table 2 shows funding for the FFG(X) program under the Navy's FY2020 budget submission.

Table 2. FFG(X) Program Funding

Millions of then-year dollars, rounded to nearest tenth.

 

Prior years

FY18

FY19

FY20

FY21

FY22

FY23

FY24

Research and development

84.6

137.7

132.8

59.0

85.3

75.4

70.7

72.1

Procurement

0

0

0

1,281.2

2,057.0

1,750.4

1,792.1

1,827.9

(Procurement quantity)

 

 

 

(1)

(2)

(2)

(2)

(2)

Source: Navy FY2020 budget submission.

Note: Research and development funding is located in PE (Program Element) 0603599N, Frigate Development, which is line 54 in the FY2020 Navy research and development account.

Issues for Congress

FY2020 Funding Request

One issue for Congress is whether to approve, reject, or modify the Navy's FY2020 funding request for the program. In assessing this question, Congress may consider, among other things, whether the work the Navy is proposing to do in the program in FY2020 is appropriate, and whether the Navy has accurately priced that work.

Cost, Capabilities, and Growth Margin

Another issue for Congress is whether the Navy has appropriately defined the cost, capabilities, and growth margin of the FFG(X).

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 the FFG(X), 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.25

Independent DOD Cost Estimate

Another potential aspect of this issue concerns the Navy's cost estimate for the program. An August 2019 Government Accountability Office (GAO) report on the FFG(X) program states

The Navy undertook a conceptual design phase for the FFG(X) Guided Missile Frigate program that enabled industry to inform FFG(X) requirements, identify opportunities for cost savings, and mature different ship designs. The Navy also streamlined the FFG(X) acquisition approach in an effort to accelerate the timeline for delivering the ships to the fleet…. [H]owever, the Navy has requested funding for the FFG(X) lead ship even though it has yet to complete key cost estimation activities, such as an independent cost estimate, to validate the credibility of cost expectations. Department of Defense (DOD) cost estimators told GAO the timeline for completing the independent cost estimate is uncertain. Specifically, they stated that this estimate will not be finalized until the Navy communicates to them which FFG(X) design is expected to receive the contract award. GAO-identified best practices call for requisite cost knowledge to be available to inform resource decisions and contract awards.26

Balance Between Cost and Capabilities

Another potential aspect of this issue is whether the Navy has arrived at a realistic balance between its desired capabilities for the FFG(X) and its estimated procurement cost for the ship. An imbalance between these two could lead to an increased risk of cost growth in the program. The Navy could argue that a key aim of the five FFG(X) conceptual design contracts and other preliminary Navy interactions with industry was to help the Navy arrive at a realistic balance by informing the Navy's understanding of potential capability-cost tradeoffs in the FFG(X) design.

Number of VLS Tubes

Another potential aspect of this issue concerns the planned number of Vertical Launch System (VLS) missile tubes on the FFG(X). The VLS is the FFG(X)'s principal (though not only) means of storing and launching missiles. As shown in Figure 3 (see the box in the upper-left corner labeled "AW," meaning air warfare), the FFG(X) is to be equipped with 32 Mark 41 VLS tubes. (The Mark 41 is the Navy's standard VLS design.)

Supporters of requiring the FFG(X) to be equipped with a larger number of VLS tubes, such as 48, might argue that the FFG(X) is to be roughly half as expensive to procure as the DDG-51 destroyer, and might therefore be more appropriately equipped with 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,27 it might be prudent to equip the FFG(X)s with 48 rather than 32 VLS tubes, and that doing so might only marginally increase the unit procurement cost of the FFG(X).

Supporters of requiring the FFG(X) to have no more than 32 VLS tubes might argue that the analyses indicating a need for 32 already took improving adversary capabilities (as well as other U.S. Navy capabilities) into account. They might also argue that the FFG(X), in addition to having 32 VLS tubes, is also to have a separate, 21-cell Rolling Airframe Missile (RAM) missile launcher (see again the "AW" box in the upper-left corner of Figure 3), that the Navy plans to deploy additional VLS tubes on Large Unmanned Surface Vehicles (LUSVs),28 and that increasing the number of VLS tubes on the FFG(X) from 32 to 48 would increase 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(X) VLS capacity from 32 cells to 48 cells 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.29

Compared to an FFG(X) follow-on ship unit procurement cost of about $900 million, the above estimated increase of $16 million to $24 million 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, beyond the specific question of the number of VLS tubes, the Navy more generally has chosen the appropriate amount of growth margin to incorporate into the FFG(X) design. As shown in the Appendix A, the Navy wants the FFG(X) design to have a growth margin (also called service life allowance) 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. As shown in the Appendix A, the Navy also wants the FFG(X) 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(X)'s 5% growth margin is supplemented by the additional growth margin for a directed energy system or active electronic attack system, and that requiring a larger growth margin could make the FFG(X) 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,30 and that increasing the FFG(X) growth margin from 5% to 10% would have only a limited impact on the FFG(X)'s procurement cost.

A potential oversight question for Congress might be: What would be the estimated increase in unit procurement cost of the FFG(X) of increasing the ship's growth margin from 5% to 10%?

Parent-Design Approach

Another potential oversight issue for Congress concerns the parent-design approach for the program. One alternative would be to use a clean-sheet design approach, under which procurement of the FFG(X) would begin about FY2024 and procurement of LCSs might be extended through about 2023.

As mentioned earlier, using the parent-design approach can reduce design time, design cost, and technical, schedule, and cost risk in building the ship. A clean-sheet design approach, on the other hand, might result in a design that more closely matches the Navy's desired capabilities for the FFG(X), which might make the design more cost-effective for the Navy over the long run. It might also provide more work for the U.S. ship design and engineering industrial base.

Another possible alternative would be to consider frigate designs that have been developed, but for which there are not yet any completed ships. This approach might make possible consideration of designs, such as (to cite just one possible example) the UK's new Type 26 frigate design, production of which was in its early stages in 2018. Compared to a clean-sheet design approach, using a developed-but-not-yet-built design would offer a reduction in design time and cost, but might not offer as much reduction in technical, schedule, and cost risk in building the ship as would be offered by use of an already-built design.

Cost, Schedule, and Technical Risk

Another potential oversight issue for Congress concerns cost, schedule, and technical risk in the FFG(X) program. The Navy can argue that the program's cost, schedule, and technical risk has been reduced by use of the parent-design approach and 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.

Skeptics, while acknowledging that point, might argue that lead ships in Navy shipbuilding programs inherently pose cost, schedule, and technical risk, because they serve as the prototypes for their programs, and that, as detailed by CBO31 and GAO,32 lead ships in Navy shipbuilding programs in many cases have turned out to be more expensive to build than the Navy had estimated.

October 2019 CBO Report

An October 2019 Congressional Budget Office (CBO) report on the cost of the Navy's shipbuilding programs stated the following about the FFG(X):

The four shipbuilders in the [FFG(X)] competition are using existing designs that have displacements of between 3,000 tons and almost 7,000 tons.

The Navy's cost goal for the program is currently set at $1.2 billion for the first ship of the class and an average cost of $800 million to $950 million for the remaining 19 ships. Because the 2020 shipbuilding plan estimates an average cost of slightly more than $850 million each for all 20 ships—an amount near the lower end of the Navy's cost goal—actual costs would probably exceed the estimates. Historically, the costs of lead ships have grown by 27 percent, on average, over the Navy's initial estimates…. Taking into account all publicly available information, CBO's estimate reflects an assumption that the FFG(X) would displace about 4,700 tons, or the median point of the four proposed ship designs in competition for the program contract. As a result, CBO estimates the average cost of the FFG(X)s at $1.2 billion each, for a total cost of $23 billion, compared with the Navy's estimate of $17 billion. Uncertainty about the frigate design makes that estimate difficult to determine.33

May 2019 GAO Report

A May 2019 GAO report on the status of various Department of Defense (DOD) acquisition programs states the following about the FFG(X) program:

Current Status

The FFG(X) program continues conceptual design work ahead of planned award of a lead ship detail design and construction contract in September 2020. In May 2017, the Navy revised its plans for a new frigate derived from minor modifications of an LCS design. The current plan is to select a design and shipbuilder through full and open competition to provide a more lethal and survivable small surface combatant.

As stated in the FFG(X) acquisition strategy, the Navy awarded conceptual design contracts in February 2018 for development of five designs based on ships already demonstrated at sea. The tailoring plan indicates the program will minimize technology development by relying on government-furnished equipment from other programs or known-contractor-furnished equipment.

In November 2018, the program received approval to tailor its acquisition documentation to support development start in February 2020. This included waivers for several requirements, such as an analysis of alternatives and an affordability analysis for the total program life cycle. FFG(X) also received approval to tailor reviews to validate system specifications and the release of the request for proposals for the detail design and construction contract….

Program Office Comments

We provided a draft of this assessment to the program office for review and comment. The program office did not have any comments.34

Guaranty vs. Warranty in Construction Contract

Another potential oversight issue for Congress concerns the Navy's proposal to use a guaranty rather than a warranty in the Detail Design and Construction (DD&C) contract for the FFG(X) program. An August 2019 GAO report on the FFG(X) 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 potentially 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 generally 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 will have a warranty will 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 will indeed pay something to fix problems with earlier work—but it will make the payment in the less-visible (but still 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 will 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 will 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, 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

Procurement of LCSs in FY2020 as Hedge against FFG(X) Delay

Another potential issue for Congress is whether any additional LCSs should be procured in FY2020 as a hedge against potential delays in the FFG(X) program. Supporters might argue that, as detailed by GAO,41 lead ships in Navy shipbuilding programs in many cases encounter schedule delays, some quite lengthy, and that procuring additional LCSs in FY2020 could hedge against that risk at reasonable cost by taking advantage of hot LCS production lines. Skeptics might argue that the Navy does not have a requirement for any additional LCSs, and that funding the procurement of additional LCSs in FY2020 could reduce FY2020 funding available for other Navy or DOD programs, with an uncertain impact on net Navy or DOD capabilities.

Potential Industrial-Base Impacts of FFG(X) Program

Another issue for Congress concerns the potential industrial-base impacts of the FFG(X) for shipyards and supplier firms.

Shipyards

One aspect of this issue concerns the potential impact on shipyards of the Navy's plan to shift procurement of small surface combatants from LCSs to FFG(X)s starting in FY2020, particularly in terms of future workloads and employment levels at the two LCS shipyards, if one or both of these yards are not involved in building FFG(X)s.

If a design proposed for construction at one of the LCS shipyards is chosen as the winner of the FFG(X) competition, then other things held equal (e.g., without the addition of new work other than building LCSs), workloads and employment levels at the other LCS shipyard (the one not chosen for the FFG(X) program), as well as supplier firms associated with that other LCS shipyard, would decline over time as the other LCS shipyard's backlog of prior-year-funded LCSs is completed and not replaced with new FFG(X) work. If no design proposed for construction at an LCS shipyard is chosen as the FFG(X)—that is, if the winner of the FFG(X) competition is a design to be built at a shipyard other than the two LCS shipyards—then other things held equal, employment levels at both LCS shipyards and their supplier firms would decline over time as their backlogs of prior-year-funded LCSs are completed and not replaced with FFG(X) work.42

As mentioned earlier, the Navy's current baseline plan for the FFG(X) program is to build FFG(X)s at a single shipyard. One possible alternative to this baseline plan would be to build FFG(X)s at two or three shipyards, including one or both of the LCS shipyards. This alternative is discussed further in the section below entitled "Number of FFG(X) Builders."

Another possible alternative would be would be to shift Navy shipbuilding work at one of the LCS yards (if the other wins the FFG(X) competition) or at both of the LCS yards (if neither wins the FFG(X) competition) to the production of sections of larger Navy ships (such as DDG-51 destroyers or amphibious ships) that undergo final assembly at other shipyards. Under this option, in other words, one or both of the LCS yards would function as shipyards participating in the production of larger Navy ships that undergo final assembly at other shipyards. This option might help maintain workloads and employment levels at one or both of the LCS yards, and might alleviate capacity constraints at other shipyards, permitting certain parts of the Navy's 355-ship force-level objective to be achieved sooner. The concept of shipyards producing sections of larger naval ships that undergo final assembly in other shipyards was examined at length in a 2011 RAND report.43

Supplier Firms

Another aspect of the industrial-base issue concerns the FFG(X) program's potential impact on supplier firms (i.e., firms that provide materials and components that are incorporated into ships). Some supporters of U.S. supplier firms argue that the FFG(X) program as currently structured does not include strong enough provisions for requiring certain FFG(X) components to be U.S.-made, particularly since two of the five industry teams reported to be competing for the FFG(X) program (see the earlier section entitled "Competing Industry Teams") are reportedly using European frigate designs as their proposed parent design. For example, the American Shipbuilding Suppliers Association (ASSA)—a trade association for U.S. ship supplier firms—states

The US Navy has historically selected US manufactured components for its major surface combatants and designated them as class standard equipment to be procured either as government-furnished equipment (GFE) or contractor-furnished equipment (CFE). In a major departure from that policy, the Navy has imposed no such requirement for the FFG(X), the Navy's premier small surface combatant. The acquisition plan for FFG(X) requires proposed offerings to be based on an in-service parent craft design. Foreign designs and/or foreign-manufactured components are being considered, with foreign companies performing a key role in selecting these components. Without congressional direction, there is a high likelihood that critical HM&E components on the FFG(X) will not be manufactured within the US shipbuilding industrial supplier base.….

The Navy's requirements are very clear regarding the combat system, radar, C4I suite,44 EW [electronic warfare], weapons, and numerous other war-fighting elements. However, unlike all major surface combatants currently in the fleet (CGs [cruisers], DDGs [destroyers]), the [Navy's] draft RFP [Request for Proposals] for the FFG(X) does not identify specific major HM&E components such as propulsion systems, machinery controls, power generation and other systems that are critical to the ship's operations and mission execution. Instead, the draft RFP relegates these decisions to shipyard primes or their foreign-owned partners, and there is no requirement for sourcing these components within the US shipbuilding supplier industrial base.

The draft RFP also does not clearly identify life-cycle cost as a critical evaluation factor, separate from initial acquisition cost. This ignores the cost to the government of initial introduction [of the FFG(X)] into the [Navy's] logistics system, the training necessary for new systems, the location of repair services (e.g., does the equipment need to leave the US?), and the cost and availability of parts and services for the lifetime of the ship. Therefore, lowest acquisition cost is likely to drive the award—certainly for component suppliers.

Further, the US Navy's acquisition approach not only encourages, but advantages, the use of foreign designs, most of which have a component supplier base that is foreign. Many of these component suppliers (and in some cases the shipyards they work with) are wholly or partially owned by their respective governments and enjoy direct subsidies as well as other benefits from being state owned (e.g., requirements relaxation, tax incentives, etc.). This uneven playing field, and the high-volume commercial shipbuilding market enjoyed by the foreign suppliers, make it unlikely for an American manufacturer to compete on cost. As incumbent component manufacturers, these foreign companies have a substantial advantage over US component manufacturers seeking to provide equipment even if costs could be matched, given the level of non-recurring engineering (NRE) required to facilitate new equipment into a parent craft's design and the subsequent performance risk.

The potential outcome of such a scenario would have severe consequences across the US shipbuilding supplier base…. the loss of the FFG(X) opportunity to US suppliers would increase the cost on other Navy platforms [by reducing production economies of scale at U.S. suppliers that make components for other U.S. military ships]. Most importantly, maintaining a robust domestic [supplier] manufacturing capability allows for a surge capability by ensuring rapidly scalable capacity when called upon to support major military operations—a theme frequently emphasized by DOD and Navy leaders.

These capabilities are a critical national asset and once lost, it is unlikely or extremely costly to replicate them. This would be a difficult lesson that is not in the government's best interests to re-learn. One such lesson exists on the DDG-51 [destroyer production] restart,45 where the difficulty of reconstituting a closed production line of a critical component manufacturer—its main reduction gear—required the government to fund the manufacturer directly as GFE, since the US manufacturer for the reduction gear had ceased operations.46

Other observers, while perhaps acknowledging some of the points made above, might argue one or more of the following:

  • foreign-made components have long been incorporated into U.S. Navy ships (and other U.S. military equipment);
  • U.S-made components have long been incorporated into foreign warships47 (and other foreign military equipment); and
  • requiring a foreign parent design for the FFG(X) to be modified to incorporate substitute U.S.-made components could increase the unit procurement cost of the FFG(X) or the FFG(X) program's acquisition risk (i.e., cost, schedule, and technical risk), or both.

Current U.S. law requires certain components of U.S. Navy ships to be made by a manufacturer in the national technology and industrial base. The primary statute in question—10 U.S.C. 2534—states in part

§2534. Miscellaneous limitations on the procurement of goods other than United States goods

(a) Limitation on Certain Procurements.-The Secretary of Defense may procure any of the following items only if the manufacturer of the item satisfies the requirements of subsection (b):…

(3) Components for naval vessels.-(A) The following components:

(i) Air circuit breakers.

(ii) Welded shipboard anchor and mooring chain with a diameter of four inches or less.

(iii) Vessel propellers with a diameter of six feet or more.

(B) The following components of vessels, to the extent they are unique to marine applications: gyrocompasses, electronic navigation chart systems, steering controls, pumps, propulsion and machinery control systems, and totally enclosed lifeboats.

(b) Manufacturer in the National Technology and Industrial Base.-

(1) General requirement.-A manufacturer meets the requirements of this subsection if the manufacturer is part of the national technology and industrial base….

(3) Manufacturer of vessel propellers.-In the case of a procurement of vessel propellers referred to in subsection (a)(3)(A)(iii), the manufacturer of the propellers meets the requirements of this subsection only if-

(A) the manufacturer meets the requirements set forth in paragraph (1); and

(B) all castings incorporated into such propellers are poured and finished in the United States.

(c) Applicability to Certain Items.-

(1) Components for naval vessels.-Subsection (a) does not apply to a procurement of spare or repair parts needed to support components for naval vessels produced or manufactured outside the United States….

(4) Vessel propellers.-Subsection (a)(3)(A)(iii) and this paragraph shall cease to be effective on February 10, 1998….

(d) Waiver Authority.-The Secretary of Defense may waive the limitation in subsection (a) with respect to the procurement of an item listed in that subsection if the Secretary determines that any of the following apply:

(1) Application of the limitation would cause unreasonable costs or delays to be incurred.

(2) United States producers of the item would not be jeopardized by competition from a foreign country, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.

(3) Application of the limitation would impede cooperative programs entered into between the Department of Defense and a foreign country, or would impede the reciprocal procurement of defense items under a memorandum of understanding providing for reciprocal procurement of defense items that is entered into under section 2531 of this title, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.

(4) Satisfactory quality items manufactured by an entity that is part of the national technology and industrial base (as defined in section 2500(1) of this title) are not available.

(5) Application of the limitation would result in the existence of only one source for the item that is an entity that is part of the national technology and industrial base (as defined in section 2500(1) of this title).

(6) The procurement is for an amount less than the simplified acquisition threshold and simplified purchase procedures are being used.

(7) Application of the limitation is not in the national security interests of the United States.

(8) Application of the limitation would adversely affect a United States company….

(h) Implementation of Naval Vessel Component Limitation.-In implementing subsection (a)(3)(B), the Secretary of Defense-

(1) may not use contract clauses or certifications; and

(2) shall use management and oversight techniques that achieve the objective of the subsection without imposing a significant management burden on the Government or the contractor involved.

(i) Implementation of Certain Waiver Authority.-(1) The Secretary of Defense may exercise the waiver authority described in paragraph (2) only if the waiver is made for a particular item listed in subsection (a) and for a particular foreign country.

(2) This subsection applies to the waiver authority provided by subsection (d) on the basis of the applicability of paragraph (2) or (3) of that subsection.

(3) The waiver authority described in paragraph (2) may not be delegated below the Under Secretary of Defense for Acquisition, Technology, and Logistics.

(4) At least 15 days before the effective date of any waiver made under the waiver authority described in paragraph (2), the Secretary shall publish in the Federal Register and submit to the congressional defense committees a notice of the determination to exercise the waiver authority.

(5) Any waiver made by the Secretary under the waiver authority described in paragraph (2) shall be in effect for a period not greater than one year, as determined by the Secretary....

In addition to 10 U.S.C. 2534, 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) 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.

The issue of U.S.-made components for Navy ships is also, for somewhat different reasons, an issue for Congress in connection with the Navy's John Lewis (TAO-205) class oiler shipbuilding program.48

Number of FFG(X) Builders

Another issue for Congress whether to build FFG(X)s at a single shipyard, as the Navy's baseline plan calls for, or at two or three shipyards. As mentioned earlier, one possible alternative to the Navy's current baseline plan for building FFG(X)s at a single shipyard would be to build them at two or three yards, including potentially one or both of the LCS shipyards. The Navy's FFG-7 class frigates, which were procured at annual rates of as high as eight ships per year, were built at three shipyards.49 Supporters of building FFG(X)s at two or three yards might argue that it could

  • boost FFG(X) production from the currently planned two ships per year to four or more ships per year, substantially accelerating the date for attaining the Navy's small surface combatant force-level goal;
  • permit the Navy to use competition (either competition for quantity at the margin, or competition for profit [i.e., Profit Related to Offers, or PRO, bidding])50 to help restrain FFG(X) prices and ensure production quality and on-time deliveries; and
  • perhaps complicate adversary defense planning by presenting potential adversaries with multiple FFG(X) designs, each with its own specific operating characteristics.

Opponents of this plan might argue that it could

  • weaken the current FFG(X) competition by offering the winner a smaller prospective number of FFG(X)s and perhaps also essentially guaranteeing the LCSs yard that they will build some number of FFG(X)s;
  • substantially increase annual FFG(X) procurement funding requirements so as to procure four or more FFG(X)s per year rather than two per year, which in a situation of finite DOD funding could require offsetting reductions in other Navy or DOD programs; and
  • reduce production economies of scale in the FFG(X) program by dividing FFG(X) among two or three designs, and increase downstream Navy FFG(X) operation and support (O&S) costs by requiring the Navy to maintain two or three FFG(X) logistics support systems.

Potential Change in Navy Surface Force Architecture

Another potential oversight issue for Congress concerns the potential impact on required numbers of FFG(X)s of a possible change in the Navy's surface force architecture. As mentioned earlier, Navy officials have stated that the new Force Structure Assessment (FSA) being conducted by the Navy may shift the Navy to a new fleet architecture that will include, among other thing, a larger proportion of small surface combatants—and, by implication, a smaller proportion of large surface combatants (i.e., cruisers and destroyers). A change in the required number of FFG(X)s could influence perspectives on the annual procurement rate for the program and the number of shipyards used to build the ships. A January 15, 2019, press report states

The Navy plans to spend this year taking the first few steps into a markedly different future, which, if it comes to pass, will upend how the fleet has fought since the Cold War. And it all starts with something that might seem counterintuitive: It's looking to get smaller.

"Today, I have a requirement for 104 large surface combatants in the force structure assessment; [and] I have [a requirement for] 52 small surface combatants," said Surface Warfare Director Rear Adm. Ronald Boxall. "That's a little upside down. Should I push out here and have more small platforms? I think the future fleet architecture study has intimated 'yes,' and our war gaming shows there is value in that."51

An April 8, 2019, press report states that Navy discussions about the future surface fleet include

the upcoming construction and fielding of the [FFG(X)] frigate, which [Vice Admiral Bill Merz, the deputy chief of naval operations for warfare systems] said is surpassing expectations already in terms of the lethality that industry can put into a small combatant.

"The FSA may actually help us on, how many (destroyers) do we really need to modernize, because I think the FSA is going to give a lot of credit to the frigate—if I had a crystal ball and had to predict what the FSA was going to do, it's going to probably recommend more small surface combatants, meaning the frigate … and then how much fewer large surface combatants can we mix?" Merz said.

An issue the Navy has to work through is balancing a need to have enough ships and be capable enough today, while also making decisions that will help the Navy get out of the top-heavy surface fleet and into a better balance as soon as is feasible.

"You may see the evolution over time where frigates start replacing destroyers, the Large Surface Combatant [a future cruiser/destroyer-type ship] starts replacing destroyers, and in the end, as the destroyers blend away you're going to get this healthier mix of small and large surface combatants," he said—though the new FSA may shed more light on what that balance will look like and when it could be achieved.52

A May 16, 2019, press report states

The Deputy Chief of Naval Operations for Warfare Systems said Wednesday [May 15] he thinks the upcoming Force Structure Assessment (FSA) will focus on smaller surface combatants as the service looks to build up to a 355-ship Navy.

"I certainly don't see that [FSA fleet] number going down, but it is going to be more reflective of the DMO [Distributed Maritime Operations] construct and it includes not just the battle force ships, but the logistics ships, the trainers, the maritime operations centers, everything that we pull together to keep this machine running," Vice Adm. William Merz said during an event at the Center for Strategic and International Studies.

"What we think is going to happen with this FSA is there will be more emphasis on the smaller surface combatants, mostly because the frigate looks like it's coming along very well and it's going to be more lethal than we had planned," Merz said.

Merz explained the likely outcome by comparing it to how Rear Adm. Ron Boxall, director of surface warfare (N96), talks about how the Navy has too many large surface combatants and needs to get more balanced.

"When you look at the lethality of the frigate, yeah that makes sense. So we'll see how the FSA handles the lethality of that – and then how does that bleed over into the other accounts," Merz said.53

Impact of Continuing Resolution (CR)

Another issue for Congress concerns the potential impact on the FFG(X) program of using one or more continuing resolutions (CRs) to fund DOD operations for at least some portion of FY2020. Federal government agency operations, including DOD operations, are currently being funded in FY2020 under a CR (H.R. 4378/P.L. 116-59 of September 27, 2019, the Continuing Appropriations Act, 2020, and Health Extenders Act of 2019). The issue of potential CR-related impacts on FY2020 Navy shipbuilding programs is discussed more fully in another CRS report.54

Consistent with CRs that have been used to fund federal government agency operations during parts of prior fiscal years, H.R. 4378/P.L. 116-59 includes, among other things, a prohibition for DOD on new program starts ("new starts"), meaning the initiation of new program efforts that did not exist in the prior year—a prohibition that includes not only the initiation of new acquisition programs, but also the shifting of an existing acquisition program from its research and development phase to its procurement phase. The CR's prohibition on new starts would appear to prohibit the Navy from using CR-provided funding for procuring the requested first FFG(X) frigate in FY2020.

  • As discussed in the other CRS report where the question of potential CR impacts on FY2020 Navy shipbuilding programs are discussed more fully, the military services have observed that in many cases in recent years, CRs have been used to fund DOD for the first few months of the fiscal year. As an apparent adaptation, DOD program managers now structure their programs to reduce the potential impacts of DOD being funded during the first few months of the fiscal year by CRs, in part by not having major program contracting actions scheduled for the first quarter of the fiscal year. Consequently, if DOD operations are funded under a CR for less than 90 days of FY2020, the potential impacts on FY2020 Navy shipbuilding programs, including the FFG(X) program, might be relatively limited. As noted earlier, the Navy plans to award the contract for the detail design and construction (DD&C) of the first FFG(X) in July 2020 (i.e., the fourth quarter of FY2020). An October 8, 2019, press report stated:

[Assistant Secretary of the Navy (Research, Development and Acquisition) James] Geurts said [on October 8 that] there was no one particular program that was most threatened by starting FY 2020 with a CR, but he said the cumulative effect is that the CR halts Navy progress in doing its business more efficiently.

"A CR always causes inefficiencies for us, whether it's delaying new starts until we get new start authority like with the [helicopter trainer replacement] program, or in ship maintenance having to split up different awards," he said.

"It's an opportunity lost, which we showed last year we could really exploit to great value. But we'll figure out how to deal with the CR."

He noted that the Navy had taken many steps over the years to mitigate the effects of starting the year without a proper spending plan, such as not planning to award major contracts in the first quarter of the fiscal year. But not having a spending plan and defense policy bill passed into law at the start of the fiscal year can have consequences later in the year, too.

The frigate program is supposed to downselect to a single contractor who will design and build the ships by the end of FY 2020. But, Geurts said, the program office might not be able to do some leg work today as planned because "there's terms and conditions and there's provisos right now that need to be conferenced. Depending on the outcome, some of those positions between the House and the Senate can have large impacts on the program, and not knowing what the conference result will be creates uncertainty, and uncertainty creates inefficiency. So for instance, there are provisions regarding sources for frigate which need to be conferenced; until we know the output of the final conference position, we won't know the impact on the program. So what I would always say is, uncertainty generates inefficiency and perceived risk; perceived risk costs us."55

Legislative Activity for FY2020

Summary of Congressional Action on FY2020 Funding Request

Table 3 summarizes congressional action on the Navy's FY2020 funding request for the LCS program.

Table 3. Congressional Action on FY2020 FFG(X) Program Funding Request

Millions of dollars, rounded to nearest tenth.

 

 

Authorization

Appropriation

 

Request

HASC

SASC

Conf.

HAC

SAC

Conf.

Research and development

59.0

59.0

59.0

 

59.0

59.0

 

Procurement

1,281.2

1,266.2

1,281.2

 

1,281.2

1,281.2

 

(Procurement quantity)

(1)

(1)

(1)

 

(1)

(1)

 

Source: Table prepared by CRS based on FY2020 Navy budget submission, committee and conference reports, and explanatory statements on the FY2020 National Defense Authorization Act and the FY2020 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. Research and development funding is located in PE (Program Element) 0603599N, Frigate Development, which is line 54 in the FY2020 Navy research and development account.

FY2020 National Defense Authorization Act (H.R. 2500/S. 1790)

House

The House Armed Services Committee, in its report (H.Rept. 116-20 of June 19, 2019) on H.R. 2500, recommended the funding levels shown in the HASC column of Table 3. The recommended reduction of $15.0 million in procurement funding is for "Change order early to need." (Page 379)

Section 810 of H.R. 2500 as reported by the committee states

SEC. 810. 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 811 of H.R. 2500 as reported by the committee states

SEC. 811. CONSIDERATION OF PRICE IN PROCUREMENT OF THE FFG(X) FRIGATE.

In evaluating proposals for a contract to procure a FFG(X) frigate, the Secretary of the Navy shall ensure price is a critical evaluation factor set forth in the request for proposal (solicitation number N0002419R2300) for the procurement of the frigate.

H.Rept. 116-120 states

Frigate requirements review

The committee supports the Navy's efforts to leverage mature technologies and systems for the new Frigate class (FFG(X)), and continues to encourage the Secretary of the Navy to emphasize risk reduction efforts, commonality, and reduced life-cycle sustainment costs in developing a best-value solution. The committee also believes that the Navy should not trade warfighting capabilities for other considerations, particularly in anti-submarine warfare (ASW). Given ongoing efforts by adversarial nations to increase the capability, lethality, and size of their respective submarine fleets, the committee recognizes the projected role the FFG(X) will play in performing ASW missions. As such, it is imperative that the platform be deployed with the most capable ASW technology available. (Page 18)

H.Rept. 116-120 also states

Sourcing of Domestic Components for U.S. Navy Ships

The committee is concerned with the sourcing of non-domestic components on U.S. Navy ships. The committee directs the Secretary of the Navy to provide a report to the congressional defense committees by December 1, 2019, on the feasibility of sourcing domestic components such as: auxiliary equipment, including pumps; propulsion system components, including engines, reduction gears, and propellers; shipboard cranes and spreaders for shipboard cranes; and other components on all Navy ships. (Page 186)

Senate

The Senate Armed Services Committee, in its report (S.Rept. 116-48 of June 11, 2019) on S. 1790, recommended the funding levels shown in the SASC column of Table 3.

S.Rept. 116-48 states

Guided missile frigate (FFG(X))

The committee applauds the Navy's decision to procure a guided missile frigate (FFG(X)) with increased lethality, survivability, and endurance to meet the requirement for Small Surface Combatants in the most recent Navy Force Structure Assessment. While maintaining the Navy's "high/low" mix of ships, the FFG(X) program greatly expands upon the capabilities of the Littoral Combat Ship program, returning to the force and improving on many of the multi-mission warfighting attributes of Oliver Hazard Perry-class frigates, including the ability to operate in more contested environments.

As the Navy prepares to issue the FFG(X) request for proposals, the committee continues to support a full and open competition with a single source detail design and construction award in fiscal year 2020. The committee also supports the Navy's approach to commonality with existing Navy platforms, such as the Mark-41 Vertical Launch System and Enterprise Air Surveillance Radar, to reduce acquisition and sustainment costs. The committee encourages the Navy not to sacrifice warfighting capability for other considerations. (Pages 45-46)

FY2020 DOD Appropriations Act (H.R. 2968/S. 2474)

House

The House Appropriations Committee, in its report (H.Rept. 116-84 of May 23, 2019) on H.R. 2968, recommended the funding levels shown in the HAC column of Table 3.

Section 8108 of H.R. 2968 as reported by the committee states

Sec. 8108. None of the funds provided in this Act for the TAO Fleet Oiler program or the FFG-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: Auxiliary equipment (including pumps) for shipboard services; propulsion equipment (including engines, reduction gears, and propellers); shipboard cranes; and spreaders for shipboard cranes.

Regarding Section 8108, a Navy information paper states

The Navy does not agree with the proposed language in [Section 8108 of H.R. 2968 as reported by the House Appropriations Committee]. If enacted, it will result in the potential for: redesign, loss of commonality with the rest of the US Fleet, increases in cost, and delay to the FFG(X) Detail Design and Construction (DD&C) contract award. There is no direct impact on the TAO Fleet Oiler program.

There are several FFG(X) components that would fall into this broad language which are not currently available in the US marketplace (e.g., Auxiliary Propulsion Units and exhaust cooling, etc.) which would result in redesign to obtain equivalent capability with US made parts. Finding US suppliers would drive developmental systems into the program as new equipment is engineered and qualified to US standards (e.g., shock, electromagnetic interference, etc.). Additionally, this use of developmental systems is not in accordance with the FFG(X) strategy of commonality with the Fleet and will drive cost risk into our production and support.

The FFG(X) program is nearing completion of Conceptual Design (and has a final NAVSEA Chief Engineer approved specification), the primary purpose of which is to stabilize requirements and mature the designs in advance of the competition for DD&C. The proposed language would delay the Primes readiness to respond to a DD&C Request for Proposal. The Primes have already released Purchase Technical Specifications (and in some cases, made selections) to support their DD&C proposals while adhering to current law (41 U.S.C. 10a-10d Buy American Act and 10 U.S.C 2534). Examples of foreign sourced materials are main propulsion diesel engines, diesel generator sets, main reduction gearing, and auxiliary equipment for shipboard services. Many of these foreign sourced components are common with other US Navy platforms (e.g. fuel oil purifiers). Selecting new equipment would necessitate new vendor relationships which will take several months (and may increase cost).

The Conceptual Design phase was further intended to reduce costs by providing flexibility to the Primes to make selections while still complying with government-developed System Specification requirements. This language would reduce competition at the component level, increasing the cost of an FFG(X). These increasing costs may take some or all of the competitors outside the competitive range for our contract.

The FFG(X) program utilized a strategy to require parent designs to reduce cost, technical, and schedule risk to get to a competitive DD&C contract award. As such, many of the referenced components are proven on the parent designs. An insertion of change of this magnitude would negate much of the progress achieved during the Conceptual Design phase. This would result in a loss of design maturity and the FFG(X) DD&C award will be delayed a minimum of one year.56

Senate

The Senate Appropriations Committee, in its report (S.Rept. 116-103 of September 12, 2019) on S. 2474, recommended the funding levels shown in the SAC column of Table 3.

Appendix A. Navy Briefing Slides from July 25, 2017, FFG(X) Industry Day Event

This appendix reprints some of the briefing slides that the Navy presented at its July 25, 2017, industry day event on the FFG(X) program, which was held in association with the Request for Information (RFI) that the Navy issued on July 25, 2017, to solicit information for better understanding potential trade-offs between cost and capability in the FFG(X) design. The reprinted slides begin on the next page.


Slides from Navy FFG(X) Industry Day Briefing

Source: Slides from briefing posted on July 28, 2017, at RFI: FFG(X) - US Navy Guided Missile Frigate Replacement Program, https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=d089cf61f254538605cdec5438955b8e&_cview=0, accessed August 11, 2017.

Appendix B. Competing Industry Teams

This appendix presents additional background information on the industry teams competing for the FFG(X) program.

February 16, 2018, Press Report About Five Competing Industry Teams

A February 16, 2018, press report about the five competing industry teams reportedly competing for the FFG(X) program (i.e., the five industry teams shown in Table 1) stated the following:

The Navy would not confirm how many groups bid for the [FFG(X)] work. At least one U.S.-German team that was not selected for a [conceptual] design contract, Atlas USA and ThyssenKrupp Marine Systems, told USNI News they had submitted for the [DD&C] competition....

During last month's Surface Navy Association [annual symposium], several shipbuilders outlined their designs for the FFG(X) competition.

Austal USA

Shipyard: Austal USA in Mobile, Ala.

Parent Design: Independence-class [i.e., LCS-2 class] Littoral Combat Ship

One of the two Littoral Combat Ship builders, Austal USA has pitched an upgunned variant of the Independence-class LCS as both a foreign military sales offering and as the answer to the Navy's upgunned small surface combatant and then frigate programs. Based on the 3,000-ton aluminum trimaran design, the hull boasts a large flight deck and space for up to 16 Mk-41 Vertical Launching System (VLS) cells.

Fincantieri Marine Group

Shipyard: Fincantieri Marinette Marine in Marinette, Wisc.

Parent Design: Fincantieri Italian FREMM

As part of the stipulations of the FFG(X) programs, a contractor can offer just one design in the competition as a prime contractor but may also support a second bid as a subcontractor. Fincantieri elected to offer its 6,700-ton Italian Fregata europea multi-missione (FREMM) design for construction in its Wisconsin Marinette Marine shipyard, as well as partner with Lockheed Martin on its Freedom-class pitch as a subcontractor. The Italian FREMM design features a 16-cell VLS as well as space for deck-launched anti-ship missiles.

General Dynamics Bath Iron Works

Shipyard: Bath Iron Works in Bath, Maine

Parent Design: Navantia Álvaro de Bazán-class F100 Frigate

The 6,000-ton air defense guided-missile frigates fitted with the Aegis Combat System have been in service for the Spanish Armada since 2002 and are the basis of the Australian Hobart-class air defense destroyers and the Norwegian Fridtjof Nansen-class frigates. The Navantia partnership with Bath is built on a previous partnership from the turn of the century. The F100 frigates were a product of a teaming agreement between BIW, Lockheed Martin and Navantia predecessor Izar as part of the Advanced Frigate Consortium from 2000.

Huntington Ingalls Industries

Shipyard: Ingalls Shipbuilding in Pascagoula, Miss.

Parent Design: Unknown

Out of the competitors involved in the competition, HII was the only company that did not present a model or a rendering of its FFG(X) at the Surface Navy Association symposium in January. A spokeswoman for the company declined to elaborate on the offering when contacted by USNI News on Friday. In the past, HII has presented a naval version of its Legend-class National Security Cutter design as a model at trade shows labeled as a "Patrol Frigate."

Lockheed Martin

Shipyard: Fincantieri Marinette Marine in Marinette, Wisc.

Parent Design: Freedom-class [i.e., LCS-1 class] Littoral Combat Ship

Of the two LCS builders, Lockheed Martin is the first to have secured a foreign military sale with its design. The company's FFG(X) bid will have much in common with its offering for the Royal Saudi Navy's 4,000-ton multi-mission surface combatant. The new Saudi ships will be built around an eight-cell Mk-41 vertical launch system and a 4D air search radar. Lockheed has pitched several other variants of the hull that include more VLS cells.

"We are proud of our 15-year partnership with the U.S. Navy on the Freedom-variant Littoral Combat Ship and look forward to extending it to FFG(X)," said Joe DePietro, Lockheed Martin vice president of small combatants and ship systems in a Friday evening statement.

"Our frigate design offers an affordable, low-risk answer to meeting the Navy's goals of a larger and more capable fleet."57

May 28, 2019, Press Report About One Industry Team Deciding to Not Submit a Bid

On May 28, 2019, it was reported that one of the five industry teams that had been interested in the FFG(X) program had informed the Navy on May 23 that it had decided to not submit a bid for the program. The May 28, 2019, press report about this industry team's decision stated:

Lockheed Martin won't submit a bid to compete in the design of the Navy's next-generation guided-missile (FFG(X)) frigate competition, company officials told USNI News on Tuesday [May 28].

The company elected to focus on its involvement developing the frigate combat system and other systems rather than forward its Freedom-class LCS design for the detailed design and construction contract Naval Sea Systems Command plans to issue this summer, Joe DePietro, Lockheed Martin vice president of small combatants and ship systems, told USNI News.

"We reviewed the entire program and obviously, given some of the stuff that has already happened that is outside of the contract for the program—that includes the designation of our combat management system, COMBATSS 21, derived off of Aegis; we have the Mk-41 vertical launch system; the processing for our anti-submarine warfare area; advanced [electronic warfare] and platform integration," he said.

"As we evaluated all of those different areas, we determined not to pursue, as a prime contractor, the FFG(X) detailed design and construction."

The company informed the Navy on May 23 it would not join the other bidders for the hull design, two sources familiar with the notification told USNI News.

While the design passed two Navy reviews, the company told the service it felt the Freedom design would be stretched too far to accommodate all the capabilities required, one source told USNI News….

While Lockheed is moving away from leading a frigate team, the company will be heavily involved with whoever wins. The FFG(X)'s COMBATSS-21 Combat Management System will be derived from the company's Aegis Combat System, and Lockheed Martin makes the ship's vertical launch system.58

Author Contact Information

Ronald O'Rourke, Specialist in Naval Affairs ([email address scrubbed], [phone number scrubbed])

Footnotes

1.

See CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress, by Ronald O'Rourke; CRS Report R43838, A Shift in the International Security Environment: Potential Implications for Defense—Issues for Congress, by Ronald O'Rourke; and CRS Report R44891, U.S. Role in the World: Background and Issues for Congress, by Ronald O'Rourke and Michael Moodie.

2.

See, for example, CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress, by Ronald O'Rourke.

3.

For 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.

4.

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 disaster 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.

5.

The 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 combatants—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.

6.

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.

7.

When the ship's design has been determined, the program's designation might be changed to the FFG-62 program, since FFG-61 was the final ship in the FFG-7 program. It is also possible, however, that the Navy could choose a different designation for the program at that point. Based on Navy decisions involving the Seawolf (SSN-21) class attack submarine and the Zumwalt (DDG-1000) class destroyer, other possibilities might include FFG-1000, FFG-2000, or FFG-2100. (A designation of FFG-21, however, might cause confusion, as FFG-21 was used for Flatley, an FFG-7 class ship.) A designation of FFG-62 would be consistent with traditional Navy practices for ship class designations.

8.

For additional discussion of this possible change in surface force architecture, see CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress, by Ronald O'Rourke.

9.

RFI: FFG(X) - US Navy Guided Missile Frigate Replacement Program, accessed August 11, 2017, at https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=d089cf61f254538605cdec5438955b8e&_cview=0.

10.

See, for example, David B. Larter, "The US Navy Is Planning for Its New Frigate to Be a Workhorse," Defense News, January 30, 2018.

11.

See Sam LaGrone, "NAVSEA: New Navy Frigate Could Cost $950M Per Hull," USNI News, January 9, 2018; Richard Abott, "Navy Confirms New Frigate Nearly $1 Billion Each, 4-6 Concept Awards By Spring," Defense Daily, January 10, 2018: 1; Sydney J. Freedberg Jr., "Navy Says It Can Buy Frigate For Under $800M: Acquisition Reform Testbed," Breaking Defense, January 12, 2018; Lee Hudson, "Navy to Downselect to One Vendor for Future Frigate Competition," Inside the Navy, January 15, 2018; Richard Abott, "Navy Aims For $800 Million Future Frigate Cost, Leveraging Modularity and Commonality," Defense Daily, January 17, 2018: 3. The $800 million figure is the objective cost target; the $950 million figure is threshold cost target. Regarding the $950 million figure, the Navy states that

The average follow threshold cost for FFG(X) has been established at $950 million (CY18$). The Navy expects that the full and open competition will provide significant downward cost pressure incentivizing industry to balance cost and capability to provide the Navy with a best value solution. FFG(X) cost estimates will be reevaluated during the Conceptual Design phase to ensure the program stays within the Navy's desired budget while achieving the desired warfighting capabilities. Lead ship unit costs will be validated at the time the Component Cost Position is established in 3rd QTR FY19 prior to the Navy awarding the Detail Design and Construction contract.

(Navy information paper dated November 7, 2017, provided by Navy Office of Legislative Affairs to CRS and CBO on November 8, 2017.)

The Navy wants the average basic construction cost (BCC) of ships 2 through 20 in the program to be $495 million per ship in constant 2018 dollars. BCC excludes costs for government furnished combat or weapon systems and change orders. (Source: Navy briefing slides for FFG(X) Industry Day, November 17, 2017, slide 11 of 16, entitled "Key Framing Assumptions.")

12.

See, for example, Justin Katz, "FFG(X) Follow-On Ships Likely yo Cost Near $800M, Down from $950M Threshold," Inside the Navy, January 21, 2019; Sam LaGrone, "Navy Squeezing Costs Out of GG(X) Program as Requirements Solidify," USNI News, January 22, 2019; David B. Larter, "The US Navy's New, More Lethal Frigate Is Coming into Focus," Defense News, January 28, 2019.

13.

Source: Slide 3, entitled "Accelerating the FFG(X)," in a Navy briefing entitled "Designing & Building the Surface Fleet: Unmanned and Small Combatants," by Rear Admiral Casey Moton at a June 20, 2019, conference of the American Society of Naval Engineers (ASNE).

14.

For articles about reported potential parent designs for the FFG(X), see, for example, Chuck Hill, "OPC Derived Frigate? Designed for the Royal Navy, Proposed for USN," Chuck Hill's CG [Coast Guard] Blog, September 15, 2017; David B. Larter, "BAE Joins Race for New US Frigate with Its Type 26 Vessel," Defense News, September 14, 2017; "BMT Venator-110 Frigate Scale Model at DSEI 2017," Navy Recognition, September 13, 2017; David B. Larter, "As the Service Looks to Fill Capabilities Gaps, the US Navy Eyes Foreign Designs," Defense News, September 1, 2017; Lee Hudson, "HII May Offer National Security Cutter for Navy Future Frigate Competition," Inside the Navy, August 7, 2017; Sydney J. Freedberg Jr., "Beyond LCS: Navy Looks To Foreign Frigates, National Security Cutter," Breaking Defense, May 11, 2017.

15.

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

16.

The Navy's Osprey (MCM-51) class mine warfare ships are an enlarged version of the Italian Lerici-class mine warfare ships.

17.

The FRC design is based on a Dutch patrol boat design, the Damen Stan Patrol Boat 4708.

18.

See, for example, Lee Hudson, "Navy to Downselect to One Vendor for Future Frigate Competition," Inside the Navy, January 15, 2018.

19.

10 U.S.C. 7309 requires that, subject to a presidential waiver for the national security interest, "no vessel to be constructed for any of the armed forces, and no major component of the hull or superstructure of any such vessel, may be constructed in a foreign shipyard." In addition, the paragraph in the annual DOD appropriations act that makes appropriations for the Navy's shipbuilding account (the Shipbuilding and Conversion, Navy account) typically contains these provisos: " ... 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: Provided further, That none of the funds provided under this heading shall be used for the construction of any naval vessel in foreign shipyards.... "

20.

Source: Transcript of hearing posted at CQ.com.

21.

Sam LaGrone, "Lockheed Martin Won't Submit Freedom LCS Design for FFG(X) Contest," USNI News, May 28, 2019.

22.

Department of Defense, Contracts, Press Operations, Release No: CR-032-18, February 16, 2018 (i.e., the DOD contracts award page for February 16, 2018). See also Ben Werner, "Navy Exercises Options For Additional Future Frigate Design Work," USNI News, July 31, 2018; Rich Abott, "Navy Awards Mods To FFG(X) Design Contracts," Defense Daily, August 1, 2018; Kris Osborn, "The Navy Is Moving Fast to Build a New Frigate. Here Is What We Know," National Interest, August 1, 2018.

23.

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 and Moshe Schwartz.

24.

FFG(X) Guided Missile Frigate Detail Design & Construction, Solicitation Number: N0002419R2300, June 20, 2019, p. 51 of 320, accessed June 25, 2019, at https://www.fbo.gov/index?s=opportunity&mode=form&id=d7203a2dd8010b79ef62e67ee7850083&tab=core&_cview=1.

25.

See, for example, the version of this report dated February 4, 2019.

26.

Government Accountability Office, Guide Missile Frigate[:] Navy Has Taken Steps to Reduce Acquisition Risk, but Opportunities Exist to Improve Knowledge for Decision Makers, GAO-19-512, August 2019, summary page.

27.

For more on China's naval modernization effort, see CRS Report RL33153, China Naval Modernization: Implications for U.S. Navy Capabilities—Background and Issues for Congress, by Ronald O'Rourke.

28.

For additional discussion, see CRS Report R45757, Navy Large Unmanned Surface and Undersea Vehicles: Background and Issues for Congress, by Ronald O'Rourke.

29.

Navy information paper entitled "FFG(X) Cost to Grow to 48 cell VLS," dated May 14, 2019, received from Navy Office of Legislative Affairs on June 14, 2019.

30.

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 The Navy's FFG-7 Class Frigate Shipbuilding Program, and Other Ship Program Issues, January 3, 1979, pp. 9-11.

31.

See Congressional Budget Office, An Analysis of the Navy's Fiscal Year 2019 Shipbuilding Plan, October 2018, p. 25, including Figure 10.

32.

See Government Accountability Office, Navy Shipbuilding[:] Past Performance Provides Valuable Lessons for Future Investments, GAO-18-238SP, June 2018, p. 8.

33.

Congressional Budget Office, An Analysis of the Navy's Fiscal Year 2020 Shipbuilding Plan, October 2019, pp. 252-26.

34.

Government Accountability Office, Weapon Systems Annual Assessment[:] Limited Use of Knowledge-Based Practices Continues to Undercut DOD's Investments, GAO-19-336SP, p. 132.

35.

Government Accountability Office, Guide Missile Frigate[:] Navy Has Taken Steps to Reduce Acquisition Risk, but Opportunities Exist to Improve 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 Investments, 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.

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]). These two shipbuilders operate the only U.S. shipyards currently capable of building several major types of Navy ships, including submarines, aircraft carriers, large surface combatants, and amphibious ships. Thus, 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.

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 Improve 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 Government Accountability Office, Navy Shipbuilding[:] Past Performance Provides Valuable Lessons for Future Investments, GAO-18-238SP, June 2018, p. 9.

42.

For additional discussion, see, for example, Roxana Tiron, "Shipyards Locked in 'Existential' Duel for Navy's New Frigate," Bloomberg, February 20, 2019; Paul McLeary, "Saudis Save Wisconsin Shipbuilder: Fills Gap Between LCS & Frigates At Marinette," Breaking Defense, January 17, 2019.

43.

Laurence Smallman et al., Shared Modular Build of Warships, How a Shared Build Can Support Future Shipbuilding, RAND, Santa Monica, CA, 2011 (report TR-852), 81 pp. The Navy in recent years has made some use of the concept:

All Virginia-class attack submarines have been produced jointly by General Dynamics' Electric Boat division (GD/EB) and Huntington Ingalls Industries' Newport News Shipbuilding (HII/NNS), with each yard in effect acting as a feeder yard for Virginia-class boats that undergo final assembly at the other yard.

Certain components of the Navy's three Zumwalt (DDG-1000) class destroyers were produced by HII's Ingalls Shipyard (HII/Ingalls) and then transported to GD's Bath Iron Works (GD/BIW), the primary builder and final assembly yard for the ships.

San Antonio (LPD-17) class amphibious ships were built at the Ingalls shipyard at Pascagoula, MS, and the Avondale shipyard near New Orleans, LA. These shipyards were owned by Northrop and later by HII. To alleviate capacity constraints at Ingalls and Avondale caused by damage from Hurricane Katrina in 2005, Northrop subcontracted the construction of portions of LPDs 20 through 24 (i.e., the fourth through eighth ships in the class) to other shipyards on the Gulf Coast and East Coast, including shipyards not owned by Northrop.

For more on the Virginia-class joint production arrangement, see CRS Report RL32418, Navy Virginia (SSN-774) Class Attack Submarine Procurement: Background and Issues for Congress, by Ronald O'Rourke. Regarding the LPD-17 program, see Laurence Smallman et al., Shared Modular Build of Warships, How a Shared Build Can Support Future Shipbuilding, RAND, Santa Monica, CA, 2011 (report TR-852), pp. 45-48. See also David Paganie, "Signal International positions to capture the Gulf," Offshore, June 1, 2006; Peter Frost, "Labor Market, Schedule Forces Outsourcing of Work," Newport News Daily Press, April 1, 2008; Holbrook Mohr, "Northrop Gets LPD Help From General Dynamics," NavyTimes.com, April 1, 2008; and Geoff Fein, "Northrop Grumman Awards Bath Iron Works Construction Work On LPD-24," Defense Daily, April 2, 2008.

44.

This is a reference to the ship's collection of command and control, communications, and computer equipment.

45.

This is a reference to how procurement of DDG-51 destroyers stopped in FY2005 and then resumed in FY2010. For additional discussion, see CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress, by Ronald O'Rourke.

46.

Source: American Shipbuilding Suppliers Association (ASSA) point paper, "The Impact of FFG(X) on the US Shipbuilding Supplier Industrial Base," undated, received by CRS from ASSA on May 1, 2019, pp. 1, 2-3.

47.

For example, foreign warships incorporate, among other things, U.S.-made combat system components and U.S.-made gas turbine engines.

48.

See CRS Report R43546, Navy John Lewis (TAO-205) Class Oiler Shipbuilding Program: Background and Issues for Congress, by Ronald O'Rourke.

49.

The 51 FFG-7s were procured from FY1973 through FY1984 in annual quantities of 1, 0, 3, 6, 8, 8, 8, 5, 6, 3, 2, and 1. The three FFG-7 builders were GD/BIW, Todd Shipyards/San Pedro, CA, and Todd Shipyards/Seattle, WA. The two Todd shipyards last built Navy ships in the latter 1980s. (See, for example, U.S. Navy, Report to Congress on the Annual Long-Range Plan for Construction of Naval Vessels for Fiscal Year 2020, March 2019, p. 16.) Todd/San Pedro closed at the end of the 1980s. Todd/Seattle was purchased by and now forms part of Vigor Shipyards, a firm with multiple facilities in the Puget Sound area and in Portland, OR. Vigor's work for the Navy in recent years has centered on the overhaul and repair of existing Navy ships, although it also builds ships for other customers.

50.

For more on PRO bidding, see Statement of Ronald O'Rourke, Specialist in Naval Affairs, Congressional Research Service, before the House Armed Services Committee on Case Studies in DOD Acquisition: Finding What Works, June 24, 2014, p. 7.

51.

David B. Larter, "US Navy Moves Toward Unleashing Killer Robot Shps on the World's Oceans," Defense News, January 15, 2019.

52.

Megan Eckstein, "Navy Sees No Easy Answer to Balance Future Surface Fleet," USNI News, April 8, 2019. Ellipse as in original.

53.

Rich Abott, "Merz Says FSA To Emphasize Smaller Ships," Defense Daily, May 16, 2019. For additional discussion of Distributed Maritime Operations (DMO), see CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress, by Ronald O'Rourke.

54.

See CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress, by Ronald O'Rourke.

55.

Megan Eckstein, "Navy's FY 2019 Contracting Showed Efficiency Improvements, CR May Hamper Progress," USNI News, October 8, 2019.

56.

Navy information paper entitled "Impacts of draft HAC-D FY20 appropriations bill on FFG(X)," May 17, 2019, received by CRS from Navy Legislative Affairs Office on June 5, 2019.

57.

Sam LaGrone and Megan Eckstein, "Navy Picks Five Contenders for Next Generation Frigate FFG(X) Program," USNI News, February 16, 2018. See also David B. Larter, "Navy Awards Design Contracts for Future Frigate," Defense News, February 16, 2018; Lee Hudson, "Navy Awards Five Conceptual Design Contracts for Future Frigate Competition," Inside the Navy, February 19, 2018.

58.

Sam LaGrone, "Lockheed Martin Won't Submit Freedom LCS Design for FFG(X) Contest," USNI News, May 28, 2019.