Navy aims to please all by splitting ship work

Navy aims to please all by splitting ship work

© December 30, 2010

By Philip Ewing

The U.S. Navy on Wednesday announced what its top officials hope will be a Solomonic answer to a thorny problem: How do you execute a major, multi-billion dollar weapons program in today’s climate of deadlock, while at the same time pleasing as many interests as possible in the defense industry and on the Hill?

The Navy has tried to do it by halving work on a series of new warships, called littoral combat ships, between two competing vendors, preempting what officials feared might have become a drawn-out legal fight with the losing contractor. The Navy says it’s a good deal for taxpayers: It will get 20 ships for the price of 19; it will build up its shrinking fleet; and it will guarantee thousands of shipbuilding jobs in Wisconsin and Alabama.

But the brass rolled out its new arrangement at the same time Defense Secretary Robert Gates is fighting against other instances of splitting work between competitors: He opposes buying two separate jet engines for the new F-35 Lightning II fighter, for example, and buying two different aerial refueling tankers for the Air Force. Backers of split buys in both those other cases say they too would save money over the long term and create jobs, not to mention end warfare between corporate defense giants and their surrogates in Washington.

Navy officials say the LCS dual buy isn’t quite comparable with other Pentagon programs, and the dynamics of shipbuilding are certainly distinct from the aerospace world. Still, until November, the Navy’s plan was for a conventional strategy of picking just one competitor, showing that if the right deal comes along, the Department of Defense can quickly shift to an arrangement in which everyone is (theoretically) a winner.

“The real story here to me is DoD’s inexplicable schizophrenia on split buys and competition,” said defense analyst Mackenzie Eaglen of the conservative Heritage Foundation.

So what’s different about this particular case? The Navy’s top weapons buyer, Sean Stackley, told reporters Wednesday that unlike other programs, the service had “bids in hand” that were “in the box, in terms of affordability,” that would provide both immediate savings and long-term stability. “There was nothing but goodness there,” he said.

Unlike a large, traditional warship such as a destroyer, bristling with expensive weaponry, LCS is envisioned as a comparatively cheap, small, fast craft designed to work with an interchangeable set of weapons and equipment. On one mission, for example, Navy engineers might load out an LCS with the gear it needs to hunt submarines, but on another mission, that same ship would be equipped to clear mines.

Competing vendors offered very different options for the LCS challenge: The steel-and-aluminum USS Freedom, built by Lockheed Martin, looks like a sleek, futuristic yacht. The all-aluminum USS Independence, first designed by General Dynamics and now to be built by Austal USA, looks more like a Klingon warbird out of “Star Trek,” with a three-hull shape unlike any ship that has ever flown a U.S. flag.
Under Wednesday’s contract awards, the Navy will get ten more ships of each design: Lockheed will receive more than $4 billion through 2015 and Austal will receive almost $3.8 billion over that period, Stackley said. The total cost of Lockheed’s ship in this fiscal year is more than $491 million and Austal’s ship is more than $465 million, Stackley said; the Navy expects an average total cost of about $450 million across its batch of 20 – some $30 million under a congressionally imposed per-ship cost cap. Across the total batch, the Navy says its dual buy will save $2.9 billion over its single-winner plan.

One longtime naval observer said there were few historical precedents for a parallel ship class, and those examples didn’t bode well either for LCS or the Pentagon’s other big programs.

“It has never proven useful to put two ‘competing’ designs into production at the same time, since the differences create the need for separate training on their differing systems and because maintenance logistics costs are greatly increased when more than one line is produced – the same thing goes with the purely politically driven push for two competing engines for the F-35 aircraft series,” said A.D. Baker III, a former Navy Department official and longtime editor of “Combat Fleets of the World.”

“This is the first time, in modern times, that the Navy will have ordered series production of two different design ships for the same purpose for political – and, to my mind, highly dubious – economic reasons,” Baker said. “Dual designs may make a small reduction in contract cost, but they will inevitably result in higher personnel and maintenance costs for the LCS type as a whole. There is also a very strong likelihood that over the course of the two 10-ship contracts, supplementary appropriations will have to be provided by Congress to cover the usual program cost increases.”

Although Eaglen agreed there are some apples-and-oranges issues when comparing LCS to other programs, she said some of the arguments for the dual-buy make sense in other cases. For example, Eaglen cited a Government Accountability Office report on the LCS deal that said buying both ships might give “an insurance policy” if one of them has problems or delays, a concept that “would absolutely hold true” for the alternate F-35 engine, she said.

Likewise with the tanker, Eaglen said: “I just don’t see any way forward on actually delivering a tanker to the U.S. Air Force in the next two decades unless DoD approves a dual buy.”

But there’s an important caveat, she added — once the Air Force selects a builder, it won’t hold another competition for that model again. The single winner of that contract, either Boeing or the European Aeronautic Defense and Space Co., would build the entire run of airplanes. But the Navy’s total program is for 55 littoral combat ships, so Wednesday’s deal for 20 leaves open the possibility that other shipyards could get work later. Lockheed and Austal also could sell copies of their LCS to foreign customers, while it’s unlikely other air forces would buy the U.S. Air Force’s tanker.

Wednesday’s announcement is the latest change in course for the LCS program, which has ballooned significantly over its original budget and schedule. Although the Navy’s original plans called for it to have more than a dozen ships in service by now, it actually has two. So the dual-buy quickly won the support of Congressional lawmakers, who leapt at the prospect of getting LCS on track and having a major acquisition deal with no loser.

“This is the first daylight for this program that we’ve seen,” said Sen. Carl Levin, the Michigan Democrat who chairs the Senate Armed Services Committee, during a hearing about LCS this month.

One major holdout was Arizona Sen. John McCain, the armed service’s committee’s top Republican, who lambasted the Navy for the roughly $8 billion spent so far on the program. As a former naval officer, McCain was “embarrassed” by LCS, he said.

The contract announcement certainly does not end the story, though – now the Navy has to make it all work. The ships are crewed by small, highly experienced teams of senior sailors, as compared to traditional warships’ bigger crews with many newcomer trainees, and the Navy has to figure out how to reproduce what it’s accomplished with its two prototype warships at a fleet level. Congressional investigators have found the Navy’s personnel management systems can barely handle the complexity of finding and training the expert sailors needed for LCS, in which one person does the work of three or more.

And as Baker observed, now the Navy needs to set up separate training and maintenance for its dual class: The ships have different sensors, weapons, engines and internal designs, meaning that a sailor qualified on one ship can’t easily join the crew of another. There are a few commonalities, including the ships’ main gun, but otherwise the Navy needs to buy separate upgrades, spare parts and other necessities for each type.

Still unclear is what will happen with the interchangeable equipment LCS needs to actually do its job. Each ship was basically supposed to be a fast, floating launch pad for small, remotely operated vehicles, including unmanned boats, helicopters and submersibles. The idea is that the ship and its crew will stay out of harm’s way while its unmanned sub, for example, noses around for sea mines. But the mission modules, as they’re called, have encountered more development problems than their would-be mother ships, and a congressional report this month said they won’t be ready until at least 2017.

Some of the key systems on which LCS was to rely – including a new surface-to-surface missile the Navy was developing with the Army – already have been canceled outright. Without its mission modules, an LCS can sail fast and defend itself against minor threats, but not much else.

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