By Emelie Rutherford
The head of a naval panel in Congress is calling on the Navy to open competition for the rocky Littoral Combat Ship (LCS) program beyond the two companies tapped to build the initial vessels.
House Armed Services Seapower subcommittee Chairman Gene Taylor (D-Miss.) told Defense Daily he will air the proposal next Tuesday during a hearing with Navy officials on the bumpy LCS program.
Taylor said he intends to “put both vendors on notice that based on the fact that they’re over a year late and way, way over budget, it’d be my intention to re-bid the ships, to put it out to free and open competition.”
General Dynamics [GD] and Lockheed Martin [LMT] are each under contract to build one LCS, though only Lockheed Martin’s ship has been delivered to the Navy. While the companies have submitted proposals for one FY ’09 ship each, the sea service is still negotiating with them for those follow-on contracts for the program intended to grow to 55 vessels.
Taylor, whose district includes Northrop Grumman‘s [NOC] Ingalls shipyard, said during the economic slowdown he wants other shipbuilders to have a shot at LCS.
“I’m absolutely convinced that there will be other people who may not have been on it the first time, or folks who were unsuccessful bidders the first time who, now that they know exactly what the Navy wants, that there’s a working prototype out there” would want to get involved, Taylor said. “It’s my understanding that we own the plans to the ships. So someone can look at it and say that’s exactly what I have to make. I think all of those factors work in the nation’s favor to get those ships built at a better price.”
Taylor’s comments build upon a written statement he issued Feb. 5 on the future of naval shipbuilding. He recommended the Obama administration: “Restructure the LCS program with common combat and propulsion systems between the two variants of ships. Divorce from the use of the defense firms as Lead Systems Integrators and bid a fixed-price contract directly on a ‘build to print’ basis with any shipyard that possesses the industrial capability to build the vessels.”
Both Lockheed Martin and General Dynamics have experienced LCS cost and schedule overruns, and each firm previously lost a contract for a second ship after failing to agree with the Navy on a fixed-price contract. Northrop Grumman has had its own set of difficulties developing ships, such as the LPD-17-class for the Navy.
Asked if the Navy would considering opening bidding on future LCS contracts to additional companies, service spokesman Lt. Cmdr. Victor Chen said the LCS acquisition strategy for FY ’11 and beyond is not finalized.
“The Navy recognizes the need to maximize competition and will ensure the LCS program continues to do so,” he said.
The Navy intends to buy two of the littoral ships in FY ’09, and also is conducting a competition for three additional LCSs in FY ’10, all of which would have fixed-price contracts. The service anticipates Lockheed Martin and General Dynamics will receive one LCS each in FY ’09.
“The acquisition strategy for FY ’11 and outyear ships will be guided by cost and performance of the respective designs as they begin fleet operations, as well as options for sustaining competition throughout the life of the program,” Chen said.
Asked how General Dynamics would react if lawmakers call for opening bidding on future LCS contracts to companies beyond his and Lockheed Martin, spokesman Jim DeMartini said: “If that’s the way the customer ends up going, then we’ll adapt to support their needs.”
Lockheed Martin spokeswoman Jennifer Allen said her company “embraces full transparency and welcomes competition in this program.”
Three Navy officials are slated to testify at Tuesday’s Seapower subcommittee hearing: Rear Adm. Victor Guillory, director of surface warfare; Rear Adm. William Landay, program executive officer for ships; and Anne Sandel, program executive officer for littoral and mine warfare.
The Navy and two LCS builders have been in protracted negotiations over awarding the contracts for the two ships for FY ’09, which ends Sept. 30.
“Affordability is a critical objective for the LCS program,” Chen said, “and the Navy and LCS industry teams are working diligently to ensure the awarded contracts are in keeping with that objective.”
While the LCS program had a $460 million-per-ship cost cap, which was set in the FY ’08 defense authorization bill, the FY ’09 version of the bill temporarily lifts that cap until FY ’10. Thus, no legally dictated price ceiling exists for the FY ’09 ships.
“This has been a complex negotiation,” Lockheed Martin’s Allen said about the FY ’09 contract, “with all parties wanting to ensure that the contract is fair to the Navy, the Lockheed Martin team, and most importantly, the American taxpayer. We’re continuing to work with the Navy to finalize the contract.”
General Dynamics’ DeMartini said, “We’re anxious for that (contract award) to occur.”
“There’s been a lot of give and take and a lot of discussion,” he said.
General Dynamics’ first littoral ship, LCS-2, is in “test-activation-integration phase” now, and the company expects to deliver is this summer, DeMartini said.
Officials from the Seapower subcommittee and Navy met yesterday for a closed LCS briefing on Capitol Hill, sources said.