Defense Secretary Chuck Hagel announced Monday he was reducing the Navy’s controversial Littoral Combat Ship program by 20 vessels, questioning whether the ship can adequately defend itself, and said he was instructing the service to examine more suitable alternatives for future small surface combatants.

Hagel, previewing the Pentagon’s budget proposal for fiscal 2015 ahead of next week’s release to Congress, told reporters he determined the Navy was overly reliant on the program to reach its planned goal of a 300-ship fleet while compromising capability and survivability.

Four Littoral Combat Ships have been delivered to the Navy, with an additional 20 in the pike under a block buy with the two builders, Lockheed Martin [LMT] and Austal USA. Hagel said he will allow the Navy to negotiate contracts for an additional eight, bringing the total to 32, but well under the Navy’s program of record of 52 vessels.

USS Freedom (LCS-1) during deployment to Singapore in 2013. Photo: U.S. Navy
USS Freedom (LCS-1) during deployment to Singapore in 2013. Photo: U.S. Navy

“I am concerned that the Navy is relying too heavily on the LCS to achieve its long-term goals for ship numbers,” Hagel said. “Therefore, no new contract negotiations beyond 32 ships will go forward.”

With the military’s greater strategic focus on the Asia-Pacific region, Hagel said the Navy’s ships must be able to operate “along the full spectrum of conflict,” including in difficult threat environments and against new technologies.

“The LCS was designed to perform certain missions–such as mine sweeping and anti-submarine warfare –in a relatively permissive environment,” Hagel said. “But we need to closely examine whether the LCS has the independent protection and firepower to operate and survive against a more advanced military adversary and emerging new technologies, especially in the Asia Pacific.”

Hagel said he has instructed the Navy to submit options within a year for a more lethal and capable small surface combatant that is consistent with a frigate. That could be a new design, an existing one or a modified LCS, he said.

In previewing the Navy’s portion of the budget, Hagel said the service planned to place half of its 22 Ticonderoga-class (CG-47) guided missile cruisers on inactive status so they can be gradually modernized and eventually return to the fleet. The Navy will also delay until next year a decision on whether the USS George Washington (CVN-73) aircraft carrier should be retired halfway through its planned service time or receive its $6 billion midlife-refueling and overhaul, Hagel said. If the sequester budget cuts return in fiscal 2016, the Navy will be forced abandon the carrier and reduce its fleet to 10 strike groups despite previous legislation requiring  the service to maintain 11 carrier strike groups, he said.

The Littoral Combat Ship has been sharply criticized from the beginning. Cost overruns, delays and technical problems brought further scrutiny to the program. Even as the Navy has made progress in addressing the problems and reduced cost, some lawmakers continued to call for its cancellation, and it remained dogged by questions of survivability. The Navy designed the ship at its lowest standard for survivability, meaning it couldn’t stay in the fight after taking significant hit, according to descriptions previously offered by senior Navy officials.

The Navy is developing three swappable mission modules for the LCS to carry out anti-mine, anti-submarine and surface warfare. It was unclear how the cut would impact the three module sets. Hagel, as did a senior defense official speaking to reporters under the condition of anonymity, specifically referred to the importance of the mine countermeasure and anti-submarine warfare missions.

“We clearly do need the LCS capabilities of the mine sweeps, of, the (anti-submarine warfare) module, for example, is looking very promising. And we absolutely need those capabilities,” the official said.

“But as we look at our adversaries going forward we also need to make sure that we have enough capability, enough survivability and lethality so that they can go up against those adversaries,” the official added. “So we want to look at what is out there for the future of the small surface combatant beyond LCS and we want to start that now.”

The Navy first 24 LCSs are split evenly between the Freedom-variant built by Lockheed Martin in Marinette, Wisc., and the Independence-variant built by Austal USA in Mobile, Ala. Hagel did not indicate whether the service would choose a similar strategy, or go with a single variant for the remaining eight.

Lockheed Martin spokesman Keith Little said the company was reviewing the proposal. Austal USA’s Washington office did not return a call seeking comment.