LCS: Over Budget, But Still a World-Beater
Defense News
Chris Cavas
March 18, 2008
Compared with warships being built by the rest of the world, the U.S. Navy's new Littoral Combat Ship (LCS) comes out a solid and cost-effective winner.
That's the conclusion reached by AMI International, a naval analyses group in Bremerton, Wash., in a study now being briefed to Navy leaders.
"LCS is a fabulous solution," said Guy Stitt, president of AMI.
"We demonstrated that the LCS is 26 percent cheaper than its European competitors," Stitt said. "It confirms to me that we in the U.S. are competent and effective shipbuilders." AMI's study showed that shipbuilders are responsible for only about 12 percent to 18 percent of a ship's cost.
"The real cost drivers of complex surface combatants are systems, not ship construction costs," Stitt said. "Items such as command-and-control systems, advanced radars and propulsion plants." AMI claims this is the first comprehensive study of the cost of the LCS compared with foreign designs.
"No ship exists that has these capabilities," Stitt said. "Nobody did a comparative analysis of what something like this costs." No ship exists that is designed to handle the mission modules that are the core of the LCS concept, so AMI had to "normalize" the design in order to properly compare it with foreign ships. AMI used the Lockheed Martin design rather than the aluminum trimaran of competitor General Dynamics, Stitt said, because the Lockheed monohull is more similar to foreign designs.
"We had to take out the modules and install permanent radars, a vertical launch system with Standard and Evolved Sea Sparrow missiles," Stitt said. "We used a standard frigatelike outfit and came up with a total cost of $500 million." That price figure formed the basis for comparisons with six current or recently proposed foreign designs. The competitors chosen were:
· From Spain, a design by Izar (now Navantia) for the Chilean Proyecto Fragata program.
· From Italy, the Fregata Europea Multi-Missione (FREMM).
· From the Netherlands, the Luchtverdedigings en Commando FregatbyDamen- Schelde.
· From France, the Frégate multi-mission (FREMM).
· From Germany, Blohm+Voss' MEKO 200 design.
· From the United Kingdom, a combination of the BAE/Yarrow's Nakhoda Ragam-class and Lekiuclass corvettes.
The LCS was about 20 percent cheaper than the next least expensive ship, the Spanish Proyecto Fragata design, and half the cost of the BAE/Yarrow corvettes built for Brunei and Malaysia.
"Competition is all relative," Stitt said. "You judge your greatness by how you compare to others - that's the significance of this comparison. The Spanish over the last four years have been the world's leading naval ship exporters. The LCS comparison shows we're 26 percent cheaper than them." Too much attention has been focused in the United States on ship builders as a source for high construction costs, Stitt said.
"When we talk about efficiencies in shipbuilding, and especially complex surface combatants such as the DDG 1000 destroyer or LCS, the major cost drivers aren't in the efficiencies of the shipyard, they're in the systems installed on the ship." A better understanding of systems costs is needed, Stitt said. "One way to get our cost down is to have some appetite suppressant in requirements."
Ship Characteristics Board
A good vehicle for getting a grip on requirements needs and chances, Stitt said, is a Ship Characteristics Board, an entity that Adm. Mike Mullen, previous chief of naval operations, called for in 2005. "This board worked well in the past," Stitt said, recalling the time from the 1950s to 1990s when the board was in charge of determining what kinds of ships the Navy needed.
"It's time we re-engaged that. Let's get some fleet guys to sit on that review board, arm them with good cost data, and drive requirements for all our future combatants," Stitt added.
At Mullen's direction, a Naval Capabilities Board was established in 2006, but its activities have not been publicized. The board, whose voting members are one- or two-star, flag officers or senior civilians, is charged with making decisions on Navy requirement and resource issues.
Criticism of the shipyards is misguided, Stitt declared.
"The criticism should go to who is in charge of choosing the requirements that go on our ships." The bottom line, he said, is that U.S. shipbuilders are performing credibly and at cost.
"We're a nation that's building the most complex ships in the world, and we're also comparatively very competitive. So get off the shipbuilders and focus attention on controlling requirements, controlling the costs of the systems," he said.
A Good First Effort
One analyst who agrees is Bob Work, a senior naval analyst with the Center for Strategic and Budgetary Assessments in Washington. "Instinctively, I would say AMI is right," Work said.
While the LCS program has received a steady barrage of criticism over the past year for cost growth and delays, Work noted that other programs experienced similar problems. Of the past 10 new ship designs, he pointed out, half of the first-of-class ships more than doubled their original cost targets.
"Even with all the risks the Navy took, and even with the extraordinarily ambitious schedule, in comparison to other ships, the first LCS ship of class wasn't that bad," Work said.
One problem with evaluating the LCS is the unrealistic original cost projection of $220 million per hull. The Navy revised that figure in early 2006 to properly include other costs, reaching a new figure of $297 million for the first ships. That price has recently jumped to $471 million, and a true comparison, Work said, should use a figure of $630 million to take into account costs for the mission modules.
The extent of the cost growth depends on which of the early numbers is used for comparison.
"If you compare the $630 million against the $220 million target, you're at about 186 percent, which is the worst of the runovers," Work said. "But against $297 million, it's only about 108 percent, which makes it the best of the five overruns." If the LCS concept pans out, Work said, the Navy should get a capable warship for about the cost of the ships it replaces.
"It looks like a pretty darn good deal regardless of its well-publicized troubles.
|