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Tuesday, December 21, 2010

Navy Littoral Combat Ship (LCS) Program: Background, Issues, and Options for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The Littoral Combat Ship (LCS) is a relatively inexpensive Navy surface combatant equipped with modular “plug-and-fight” mission packages. The basic version of the LCS, without any mission packages, is referred to as the LCS sea frame. The Navy wants to field a force of 55 LCSs. The first two (LCS-1 and LCS-2) were procured in FY2005 and FY2006 and were commissioned into service on November 8, 2008, and January 16, 2010. Another two (LCS-3 and LCS-4) were procured in FY2009 and are under construction. Two more (LCS-5 and LCS-6) were procured in FY2010.

The Navy’s FY2011-FY2015 shipbuilding plan calls for procuring 17 more LCSs in annual quantities of 2, 3, 4, 4, and 4. The Navy’s proposed FY2011 budget requests $1,231.0 million in procurement funding for the two LCSs that the Navy wants to procure in FY2011, and $278.4 million in FY2011 advance procurement funding for the 11 LCSs that the Navy wants to procure in FY2012-FY2014. The Navy’s proposed FY2011 budget also requests procurement funding to procure LCS module weapons and LCS mission packages, and research and development funding for the LCS program.

There are currently two very different LCS designs—one developed and produced by an industry team led by Lockheed, and another developed and produced by an industry team led by General Dynamics. LCS-1 and LCS-3 use the Lockheed design; LCS-2 and LCS-4 use the General Dynamics design.

On September 16, 2009, the Navy announced a proposed LCS acquisition strategy. Under the strategy, the Navy would hold a competition to pick a single design to which all LCSs procured in FY2010 and subsequent years would be built. (The process of selecting the single design for all future production is called a down select.) The winner of the down select would be awarded a contract to build 10 LCSs over the five-year period FY2010-FY2014, at a rate of two ships per year. The Navy would then hold a second competition—open to all bidders other than the shipyard building the 10 LCSs in FY2010-FY2014—to select a second shipyard to build up to five additional LCSs to the same design in FY2012-FY2014 (one ship in FY2012, and two ships per year in FY2013-FY2014). These two shipyards would then compete for contracts to build LCSs procured in FY2015 and subsequent years. Section 121(a) and (b) of the FY2010 defense authorization act (H.R. 2647/P.L. 111-84 of October 28, 2009) grant the Navy contracting and other authority needed to implement this LCS acquisition strategy. The Navy had earlier planned to make the down select decision and award the contract to build the 10 LCSs sometime this past summer, but the decision was delayed to as late as December 14. (The final bids submitted by the two LCS contractors were submitted on about September 15, and were valid for another 90 days, or until December 14.)

On November 3, 2010, the Navy notified congressional offices that it was prepared to implement an alternative LCS acquisition strategy that would involve awarding 10-ship contracts to both LCS bidders. The Navy would need additional legislative authority from Congress to implement this dual-award strategy. The Navy stated on November 3 that if the additional authority were not granted by December 14, the Navy would proceed to announce its down select decision under the acquisition strategy announced on September 16, 2009. On December 13, it was reported that the two LCS bidders, at the Navy’s request, had extended the prices in their bids to December 30. The Navy’s proposed dual-award strategy poses a near-term issue for Congress of whether this strategy would be preferable to the down select strategy, and whether Congress should grant the Navy, by December 30, the additional legislative authority the Navy would need to implement the dual-award strategy.

Date of Report: December 16, 2010
Number of Pages: 78
Order Number: RL33741
Price: $29.95

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