Citing cost overruns, Navy cancels LCS 4

[unhappycamper]

This is an artist's rendering of an LCS.


Citing cost overruns, Navy cancels LCS 4
By Zachary M. Peterson - Staff writer
Posted : Thursday Nov 1, 2007 15:29:48 EDT

The Navy announced Thursday it had canceled the fourth Littoral Combat Ship in the service’s latest dose of tough love to shipbuilders.

Over the past months, the Navy has halved its orders for the small, next-generation ships; Lockheed Martin and General Dynamics now are building one LCS sea frame each, based on separate designs. Originally the contractors were to build two apiece.

The Navy cited cost overruns on LCS 2, now under construction by General Dynamics at Austal USA’s shipyard in Mobile, Ala., as the main reason for the cancellation of the second General Dynamics ship, LCS 4. The Navy terminated the contract for Lockheed Martin’s second sea frame, LCS 3, in the spring.

“The Navy worked closely with General Dynamics to try to restructure the agreement for LCS 4 to more equitably balance cost and risk but could not come to terms and conditions that were acceptable to both parties,” the Navy said in a statement issued by Navy Secretary Donald C. Winter and Chief of Naval Operations Adm. Gary Roughead.

Nonetheless, Winter restated the Navy’s commitment to the LCS platform.

“LCS continues to be a critical warfighting requirement for our Navy to maintain dominance in the littorals and strategic choke points around the world,” Winter said. “While this is a difficult decision, we recognize that active oversight and strict cost controls in the early years are necessary to ensuring we can deliver these ships to the fleet over the long term,” he said in the statement.


Rest iof article at: http://www.navytimes.com/news/2007/11/navy_lcs4_canceled_071101w/



uhc comment: Previous threads on the LCS program:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=259&topic_id=4140
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=259&topic_id=4428
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=259&topic_id=5034
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=259&topic_id=5372

[unhappycamper]

1. An article in the Portland Press Herald sez

Navy terminates warship contract
By EDWARD D. MURPHY, Staff Writer November 2, 2007

The Navy on Thursday terminated a contract for construction of a second coastal combat ship that was to be built in Alabama by a team led by General Dynamics' Bath Iron Works.

General Dynamics and Lockheed Martin are each in the midst of completing work on the first two Littoral Combat Ships. They are to be delivered to the Navy in a year, and the Pentagon is expected to test them and pick one of the two designs for the rest of the littoral fleet.

The program is a key part of the Navy's strategy. The Pentagon foresees a 313-ship naval fleet, and 55 of those are expected to be littoral warships that can operate in coastal waters, engaging in surface combat and running anti-submarine missions, said Lt. Cmdr. John Schofield, a Navy spokesman.

But the first two ships have run well over budget. Lockheed Martin's version was budgeted for $189 million and General Dynamics' was expected to cost $221 million. Both ships have seen cost overruns of 50 percent to 75 percent, Schofield said. The Navy and contractors were unable to agree on prices for the second ships that would be built by the two yards, resulting in the contract terminations, he said.

The Navy terminated its contract with Lockheed Martin for a second ship in April, so Thursday's decision regarding the BIW team's ship wasn't a huge shock.

~snip~

Korman noted that Navy officials are expected to meet with Congress on its budget in the next few weeks, and "I don't know how the program is going to fare on Capitol Hill. Some people are going to have it in their cross hairs."

Rest of article at: http://pressherald.mainetoday.com/story.php?id=144706&ac=PHnws

[Eagle_Eye]

2. The defense procurement establishment was told 'the rules have been changed' a few years ago

The word came down to get a handle on procurement costs. It was not just the Navy, but all branches. Congress will no longer tolerate the practice of 'buying in' on defense contracts.

Buying in is where a contractor deliberately under bids a proposal, the Navy knowingly writes the contract for the low-ball price, and then after a significant amount of money has been spent goes to congress for additional funds to save the program. Congress is playing hardball now by not writing a check for the extra half billion per ship that Lockheed and GD want to continue the program.

This is going to be an interesting game of brinkmanship here. The Navy is retiring 56 hulls in the next few years and intends to replace them with 55 new Littoral Combat Ships. We are going to lose 30 frigates, 12 mine hunters, and 14 mine countermeasures ships. Either the contractors get paid additional big bucks, or the Navy goes short of the 313 ships it needs.