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THE CREDIT CRUNCH AND SHIPBUILDING
World shipyards have a record order backlog. What effect will the global credit crunch have?

No effect
A slow down in new orders
Cancellation of some existing orders
Cancellation of many exisiting orders

Marine Log

April 3, 2008

LCS: a new RFP and a RAND study

RAND STUDY According to an AP report, the Navy has now issued a formal request for proposals to General Dynamics' Bath Iron Works and Lockheed Martin calling for construction of three Littoral Combat Ships to be carried out over the next several years. Meantime the RAND Corporation has just released a study on how the Navy can get the best from the LCSs when they eventually enter service.

In the new RFP, the Navy envisions a competition in which the winning bidder is awarded contracts for two of the ships while the other will build just one ship.

The Navy is operating under a Congressionally-imposed cost cap of $400 million per ship.

The Navy adopted a concurrent design-build strategy for the first two LCS seaframes, which has, noted a recent GAO report, "since proven unsuccessful."

The GAO report says the Navy expects the first two LCS to exceed their combined budget of $472 million by over 100 percent and anticipates lead ship delivery will occur nearly 18 months later than initially planned. As a result of these challenges, the Navy canceled construction of the third and fourth LCS and deferred construction of additional seaframes. The GAO report says the Navy plans to use funds previously appropriated for construction of the fifth and sixth LCS seaframes to pay for cost growth on the remaining two ships under contract.

All this led Rep. Gene Taylor (D.Miss.) Chairman of the House Seapower and Expeditionary Forces Subcommittee to declare that LCS "will go into the textbooks to train future acquisition officials how not to run a program."

Meantime, the LCS remains very much a part of the Navy's plans for the future fleet.

With a modular design, LCSs are a conceptual departure from traditional naval warships. All LCSs will share a hull and superstructure seaframe equipped with common equipment such as self-defense weapons, radar, communications, and unmanned vehicles. But at the same time, each vessel will be able to accommodate interchangeable, 20-foot cargo containerŠsized mission packages that allow the ship to be reconfigured for antisubmarine warfare (ASW), mine warfare (MIW), or surface warfare (SUW) missions.

Because seaframes and mission packages are new concepts, the Navy in early 2005 asked the RAND Corporation to help it evaluate operational, logistics, and cost trade-offs between the number of LCS seaframes planned for the fleet, the number of mission packages those seaframes would require to perform a range of missions, and the preferred number and locations of LCS homeports and mission package installation sites.

You can access the RAND research briefing here.

You can access the full RAND report here

Incidentally, one RAND computer simulation effort involved calculating the costs of LCS seaframes, mission packages, facilities, and related equipment. It resulted in estimates of the total cost of procuring LCS and mission package inventories and associated unmanned aerial vehicles and of constructing homeports and installation sites of $13.8 billion in the short term, $20.7 billion in the middle term, and $27.3 billion in the long term (all in FY2004 dollars).

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