The Navy on Friday notified Congress about a significant but not critical cost breach in the Littoral Combat System’s (LCS) module program caused by canceling the anti-submarine (ASW) mission package.

“The U.S. Navy notified Congress of an increase in the Program Acquisition Unit Cost (PAUC) and the Average Procurement Unit Cost (APUC) for the Littoral Combat Ship (LCS) Mission Modules (MM) program that exceeds the original baseline estimate by at least 30 percent and the current baseline by at least 15 percent, breaching the Nunn-McCurdy significant cost growth threshold,” Navy spokesman Capt. Clay Doss told Defense Daily

in a statement.

“Specifically, PAUC increased by 37.3 percent from the original baseline.  PAUC increased by 18.0 percent and APUC increased by 17.2 percent from the current baseline,” the statement continued.

A Nunn-McCurdy breach involves a unit cost increase of 15 percent or more. It is named as a provision added to the 1982 Defense Authorization Act by former Sen. Sam Nunn (D-Ga.) and former Rep. Dave McCurdy (D-Okla.) that requires military service secretaries to report to Congress every time a defense project exceeds its acquisition unit cost budget by 15 percent. If the project exceeds the cost budget by 25 percent, the provision allows Congress to kill the project unless the Secretary of Defense can convince them it is critical to national security and there is no cheaper alternative.

The Navy said the cost growth and legislative breach was caused by the Navy canceling the Anti-Submarine Warfare (ASW) mission package portion of the LCS Mission Module  (MM) program in the fiscal year 2023 budget request.

“The total cost of the LCS MM program was then spread across fewer units,” the statement said.

The Navy said the overall LCS MM program is not at increased risk due to the cost breach and confirmed this is not a critical breach, requiring program recertification by Congress.

This comes after a previous Navy Nunn-McCurdy cost breach notification last year with the Ship-to-Shore Connector (SSC) (Defense Daily, June 14, 2021).

When the FY ‘23 budget request first came out, Rear Adm. John Gumbleton, Deputy Assistant Secretary of the Navy for Budget, said the ASW systems have “huge challenges, not going to work,” and their cancellation was the main element in the Navy deciding to retire nine Freedom-variant LCSs. Those ships are also plagued by a production deficiency requiring fixes to their combining gear and drivetrain, without which their top speed is limited (Defense Daily, March 28).

“If I were to be completely transparent, the drive train fix isn’t an exorbitant amount of money, but when you target your savings at one variant, there’s savings programmatically instead of having to sustain two different lines. So, collectively, ASW and drivetrain led us to this,” Gumbleton said.

On May 11, Chief of Naval Operations Adm. Michael Gilday reiterated to the House Armed Services Committee in a hearing that “the primary reason why the nine LCS ships are on the retirement list has to do with an anti-submarine warfare system.”

Gilday said the ASW system did not work out technically and he wanted to cancel what was not worth fixing.

“So after about a year and a half study, I refused to put an additional dollar against a system that would not be able to track a high end submarine in today’s environment,” Gilday said.

Testifying before the Senate Armed Services Committee on May 12, Gilday noted 15 to 20 Freedom-variant LCSs total need the combining gear engine fixed and the nine vessels the Navy is seeking to divest are those that were also due to receive the ASW module. 

Again, Gilday noted the ASW module “technically has not met its requirements. It is incapable, in other words.”

Of the remaining LCSs, 15 Independence-variant vessels are due to have a mine countermeasures module set to reach initial operational capability (IOC) in 2022 to replace the existing Avenger-class minesweepers and six Freedom-variant LCSs will retain the current anti-surface warfare modules with a “proven capability that went IOC three years ago,” Gilday said.

The Navy intends to replace the ASW MP on LCS with ASW capabilities on the forthcoming Constellation-class frigate.