By Geoff Fein
For the first time the Navy has acknowledged that it will likely not meet its goal of awarding a contract for 10 Littoral Combat Ships (LCS) this summer as the service continues to seek additional information from both competing teams.
Additionally, the Defense Acquisition Board now won’t meet until mid-October to give the green light to the Navy to proceed with the LCS contract award.
Since moving to a “winner-take-all” acquisition strategy last year, the Navy has said a down select decision would be made this summer. However, in the past week the Navy has gone back and asked officials from Austal USA and General Dynamics [GD], who are building an all-aluminum hull trimaran, and Lockheed Martin [LMT], which is building a semi-planing monohull, to provide further details on cost and technical aspects of their submissions.
“The Navy is currently engaged in discussions with offerors and will request Final Proposal Revisions (FPRs) from them soon. The Navy anticipates that FPRs will be received in September 2010, and will require that these revised offers remain valid for 90 days,” according to Cmdr. Victor Chen, Navy spokesman. “The Navy intends to make a contract award as expeditiously as practicable, consistent with its source selection plan, but in any event prior to the expiration of such offers.”
Lockheed Martin said its LCS team has demonstrated proven performance on the program.
The company put forward a competitive proposal that offers the Navy the lowest risk, most affordable option to meet their urgent needs, Kimberly Martinez, a company spokeswoman said.
“Our first ship, the USS Freedom (LCS-1), deployed two years earlier than planned and has performed extremely well in operational service in the Atlantic and Pacific oceans,” she added. “Our second ship, Fort Worth (LCS-3), is more than 50 percent complete and remains on schedule and on cost, maintaining a 30 percent reduction in labor hours compared to the first ship.”
Austal and General Dynamics built the USS Independence (LCS-2). The Coronado (LCS-4) is currently under construction at Austal USA’s Mobile, Ala. facility.
“Austal will not have any comment on the competition at this time,” a company spokeswoman said.
Analysts and industry officials had anticipated a contract for the first two of 10 ships to be awarded earlier this month. However the Navy has maintained that it had only said an award would be made this summer, and noted that the season officially ends on Sept. 22. Now however, it appears the Navy will miss that mark, likely resulting in a contract award in the fall.
Part of the reason for the delay can be traced to the cost differential between the two ships, sources have said. The price difference between the two competitors is negligible, making it tougher for the Navy to select the best value for the service, sources noted.
It has been almost a year since the Navy changed its acquisition strategy for LCS.
The Navy will select a single provider and shipyard to build up to 10 LCS through fiscal year ’14. The new plan will have the winning contractor build two ships, with options for eight more between FY ’11 and FY ’14 (Defense Daily, Sept. 17).
At the time, Lockheed Martin said this approach will make it possible to further enhance the affordability of LCS.
The new acquisition strategy would prohibit the winning prime contractor and shipyard from competing in FY ’12 as a second source shipbuilder, the Navy said last year. The idea is to prevent one company from controlling all aspects of LCS construction (Defense Daily, Sept. 17).
The winner of the second competition will get a contract to build one ship in FY ’12 and options for four additional ships between FY ’13 and FY ’14, for a total of five LCS. This will result in an ongoing competition between the two shipbuilders, beginning in FY ’15.
The five ships will be built to the exact same specifications, and using the exact same combat systems, as the winning FY ’10 design. The combat system, supplied by either Lockheed Martin or General Dynamics, will become government furnished equipment (Defense Daily, Sept. 17).
The down select decision wasn’t the first delay in the program. The service delayed release of the request for proposals (RFP) due to the volume of questions received from industry (Defense Daily, Dec. 24).
When the Navy’s RFP for the FY ’10 LCS was finally issued in early 2010, industry sources said it stressed cost and affordability but placed less weight on total ownership cost (Defense Daily, Jan. 29).
And the Navy hasn’t been shy about stressing the need to lower the cost of LCS.
Earlier this year Navy Secretary Ray Mabus told reporters at a Defense Writers Group breakfast that earlier bids for LCS-3 and -4 came in at levels that were unsustainable (Defense Daily, April 22).
“We could not build the number we needed to inside our budget,” Mabus said at the time. “We will select one ship, and do it primarily on cost.”
The Navy intends to buy upward of 55 LCS.
The Navy has been pretty straight forward with industry in terms of what the service is expecting from them, Mabus said at the April breakfast. “We have a very finite amount of money to spend and we are going to get the most possible that we can for it.”
Austal USA and Lockheed Martin each submitted their LCS bids this past spring.
The Navy is proceeding with the LCS source selection diligently, thoroughly, and consistently with its source-selection plan and applicable law and regulations, Chen said.
“The Navy is taking the time necessary to carefully review and analyze the competing proposals,” he added. “We understand there is keen public interest in this competition, but our duty to protect the integrity of the source-selection process, as well as the confidentiality of the information submitted by the offerors, significantly limits our ability to provide additional details about the ongoing competitive procurement at this time,” he added.