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Navy Gets its Holiday Wish and Buys Both LCS Classes

by John Reed on December 30, 2010

So it happened, late yesterday the Navy gave out a pair of $430 million contracts for Lockheed and Austal to start work on the first two ships of what should be a split buy of 20 Littoral Combat Ships from both companies.

The service is kicking off the dual buy with a $430 million, fixed-price contract to each company to build one apiece of their ships, followed by an option for both firms to build nine more ships through 2015 for a total of roughly $7.1 billion, according to a Navy announcement. Congress must appropriate cash for the remaining nine ships in each of those five years.

Lockheed makes the Freedom Class LCS while Austal USA makes the Independence Class vessel.

The sea service revealed its hopes to buy both classes of LCS last month, claiming that competition between Lockheed and Austal had resulted in both company’s bids being far lower than what the Navy had expected. Navy officials insist that the split buy will save $2.9 billion over the next five years and allow for the purchase of 10 ships from each class versus 19 of a single class as previously planned.

Money saved by the dual-buy will now be redirected into other shipbuilding programs, according to the Navy.

This leaves a couple of big questions. First, what happens if the Navy decides it wants to install a common combat suite aboard both classes of LCS someday? How much will such a retrofit cost?

Navy and Lockheed officials have so far worked to downplay concerns about this.

During a Senate hearing earlier this month to discuss the deal, Sean Stackley, the Navy’s top weapons buyer told lawmakers that the only potential upgrade to the two classes combat suites would be a roughly $20 million project to install new sensor systems since the weapons are the same on both classes.

“The current acquisition strategy does not call for the change-up of the combat system,” said Stackley during the Dec. 14 hearing. “However, on the sensor side, we have contemplated moving toward a common sensor… In total, the cost of bringing a new sensor, that’s common for LCS and with the rest of the fleet is about $20 million non-recurring and about $2 million a ship.”

He added the Navy “could consider” upgrading the ships’ software systems and digital control panels someday but that it has no estimate for what that would cost.

Total lifecycle costs for the ship are “on the order of $82–83 billion,” according to Stackley.

Yesterday, a Lockheed official said the Freedom Class ships are already fairly common with the rest of the fleet.

Paul Lemmo, vice president of Lockheed’s mission systems and sensors division told reporters during a Dec. 29 teleconference that the Lockheed ships come with the same command and control suite found on the sea service’s Aegis-equipped cruisers and destroyers.

“Certainly, for our part, we believe that we’ve offered a very cost effective solution from a combat systems standpoint,” said Lemmo.

Still, “we follow the Navy’s lead and if they would like us to move down that path we’d certainly be open to that,” said Lemmo, referring to the idea of building a common combat suite for the two ships.

There’s also the question of what’s happening with the ships’ mission modules which are supposedly not working out as planned.

One also has to wonder if this will set a precedent for the Air Force’s decade-long KC-X effort to replace its oldest KC-135 tankers? Will lawmakers use the Navy’s decision as ammo to try to force the air service into splitting the $35 billion, 179-plane KC-X buy between rivals EADS and Boeing?

The Air Force isn’t too keen on that idea, saying that splitting the KC-X buy would likely drive costs up because it would reduce the total number of tankers built by each company per year.

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