The Navy Secretary said on Tuesday the leaders of Fincantieri Marinette Marine should talk with the Navy about how their Littoral Combat Ship (LCS) variant can have a more competitive price.
Richard Spencer suggested the get-together while responding to an LCS question from Sen. Tammy Baldwin (D-Wis.) at a Senate Appropriations defense subcommittee hearing.
Marinette Marine builds the Freedom-variant LCS in Marinette, Wis., while Austal USA in Mobile, Ala., makes the Independence-variant.
Last week a bipartisan group of Senators and Members of Congress from Wisconsin and Michigan sent Spencer a letter expressing concerns about the service’s LCS acquisition strategy, particularly how it may be biased against Marinette’s Freedom-variant. They said the FY ’18 and ’19 acquisition strategy unduly disadvantages the Wisconsin team and without changes a quarter of the Marinette shipyard workforce will be laid off (Defense Daily, April 19).
Baldwin repeated the group’s concerns that the Navy is focusing on lowest-price choices rather than including overall value measurements that also include differences in capabilities, service life, and total lifecycle cost.
The Navy asked for only one LCS in the administration’s FY ’19 budget request (Defense Daily, Feb. 12).
Baldwin said adding a second LCS to the FY ’19 budget would keep the minimum sustaining rate needed to maintain the workforce at both yards and maintain an effective competition for the service’s follow on future frigate program, FFG(X).
Spencer said the U.S. builders “have an amazing working force out there at all our shipyards and they are owned by companies. And I believe that when I talk about the partnership of our suppliers, everybody has to get on board.”
“I would say there is probably room at the owner of the LCS operation up there to be competitive. And they should sit down with us and address those abilities to become competitive,” he added.
Baldwin also repeated concerns from the letter that a shortfall in LCS work cannot be made up by building the Saudi Navy’s Multi Mission Surface Combatant (MMSC) on a faster timeline.
Last week Spencer told the Senate Armed Services Committee last week in a hearing that the Navy was looking “how do we pull that to the left” as one lever to balance the shipyard workforces (Defense Daily, April 19).
However, Baldwin said she believes the Saudi program “cannot be accelerated without injecting unacceptable risk into the program, [it is not], in my opinion, a substitute for LCS.”
She also said an earlier shipbuilding backlog at Marinette is now clear, so that will not give the shipyard sufficient work to maintain the workforce either.
Spencer said the Navy will do everything it can to make sure the skilled workers have sufficient work. Nevertheless, he noted, “we are not in it for corporate welfare.”
“Everybody has to get on board with the program — both the suppliers and the Department of Defense,” Spencer said.
After the hearing, Spencer characterized the LCS situation to reporters as a competitive market “and one of the yards goes ‘Oh, I’m disadvantaged because I’m up North in a union, or I’m steel, or whatever.’ I think there is room for us to make some progress there on bringing those prices to be more competitive.”
A spokesman for Spencer said after the hearing that he was referring to Lockheed Martin [LMT] as the prime in the Freedom-variant LCS variant when he raised the possibility of discussing competitive pricing issue with contractor leadership.