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Thursday, April 21, 2011

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 Navy wants to field a force of 55 LCSs.

The first two LCSs (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 and are under contract. The Navy’s proposed FY2011 budget requested funding to procure an additional two (LCS-7 and LCS-8). Although the Navy’s FY2011 funding has not yet been fully determined, the Navy announced on March 17 that it had brought these two ships under contract. The Navy’s proposed FY2012 budget requests funding to procure four more (LCSs 9 through 12). Navy plans call for procuring an additional 15 LCSs in FY2013-FY2016 in annual quantities of 4-4-4-3.

There are 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. The Lockheed design is built at the Marinette Marine shipyard at Marinette, WI; the General Dynamics design is built at the Austal USA shipyard at Mobile, AL.

On November 3, 2010, the Navy notified congressional offices that it was prepared to implement a dual-award acquisition strategy under which the Navy would award each LCS builder a 10-ship contract for the six-year period FY2010-FY2015. The Navy stated that, compared to an earlier down select strategy that the Navy had announced in September 2009, the dual-award strategy would reduce LCS procurement costs by hundreds of millions of dollars. The Navy needed additional legislative authority from Congress to implement the dual-award strategy. Congress granted the authority in Section 150 of H.R. 3082/P.L. 111-322 of December 22, 2010, an act that, among other things, funded federal government operations through March 4, 2011. On December 29, 2010, the Navy implemented the dual-award strategy, awarding a 10-ship, fixed-price incentive (FPI) block-buy contract to Lockheed, and another 10-ship, FPI block-buy contract to Austal USA. LCSs 5 through 8 are the first four LCSs executed under the two block-buy contracts.

Current issues for Congress concerning the LCS program include the Navy’s lack of economic order quantity (EOQ) authority for executing the two block-buy contracts, changes or potential changes to the composition of LCS mission modules announced by the Navy in January 2011, the combat survivability of the LCS, and hull cracking on LCS-1.

Date of Report: April 14, 2011
Number of Pages: 18
Order Number: RL33741
Price: $29.95

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