U.S. Navy studies slower but cheaper LCS ships

WASHINGTON Fri Mar 20, 2009 2:54pm EDT

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WASHINGTON (Reuters) - Under pressure to cut the cost of its Littoral Combat Ship program, the U.S. Navy is studying whether to lower the required speed and swap out fuel-hogging propulsion systems, said a former senior Navy analyst and another source informed about the effort.

The study, led by Naval Sea Systems Command, could lay the groundwork for a change in one of the key selling points of the new ships, which can reach speeds of over 45 knots, but whose costs have more than doubled since 2002, said the sources, who asked not to be named because of the sensitivity of the study.

Lockheed Martin Corp and General Dynamics Corp are working on separate designs of the new ship, which was initially slated to cost $220 million a piece. The first two ships are now due to cost well above $500 million.

The Navy wants to buy 55 LCS ships as part of its drive to expand the U.S. fleet to 313 ships. It will use the ships for missions including mine-hunting, reconnaissance, pursuit of terrorists and pirates, but naval analysts and even top Navy officials have questioned if the high speed is really needed and worth the price.

Even threats from speedy smaller boats would be countered with the ship's deck gun, or the unmanned helicopter on board, rather than by outrunning such a vessel, analysts said.

"It's all about the cost," said the former Navy analyst, when asked about the motive behind the new Navy study.

The Navy had no immediate comment on the study. Both companies said they were unaware of the Navy-led review.

Navy officials last week said no design changes were planned for the 2009 and 2010 ships, which should help stabilize costs, but officials were reviewing ways to cut the long term cost of operating the ships. They gave no details.

The former analyst said the new warships only needed to operate at high speeds above 35 knots for a few "operational scenarios," but the water jets needed to achieve such high speeds were generally less efficient at lower speeds.

SPEEDY BUT THIRSTY

Big gas turbines in the propulsion system also boost the fuel consumption of LCS ships compared to other Navy ships, which will increase their long-term operating costs.

Rear Admiral Thomas Eccles, deputy commander for ship design at Naval Sea System Command, has said the LCS ships "will drink a lot more fuel per ton" than other surface ships, according to a report by Inside the Navy, a trade publication.

At a conference in December, Eccles questioned whether higher fuel costs were "a price we ought to be paying" for the combat capability of LCS. But he acknowledged that high speed added "real mission value" and might justify higher costs.

Naval analysts were examining the effect of dropping the required speed of 40 knots by about 25 percent to a range in the low 30 knots, said a second source who was told about the study, but asked not to be named because of its sensitivity.

Ronald O'Rourke, a naval analyst with the nonpartisan Congressional Research Service, said that over the years, some people had questioned whether there ever was a "rigorous analytical basis" for the speed requirement of 40 knots.

"Navy officials can provide examples of things the ships can do with such a maximum speed, but that's not the same as saying that there was a rigorous analytical basis for the original requirement," he said.

The former Navy analyst agreed, saying that the focus on the high speed of the LCS grew out of former Defense Secretary Donald Rumsfeld's emphasis on "transformational" programs.

Aside from some quick studies done early on, the analysis that built the case for a fast, shore-hugging ship was done after Navy officials decided to move ahead with the program, said the analyst, who said he participated in that process.

CONGRESSIONAL CONCERN

Lawmakers have grown frustrated with the program's cost overruns, which the Navy blames on changes made after the program begun, higher material costs and lack of oversight.

The Navy is now pressuring the companies to lower the price in order to lock in follow-on contracts. The goal is to meet a congressional cost cap of $460 million each, beginning in 2010.

Congressional aides say they are not certain the Navy will get the money it wants for the program in fiscal 2010, that begins October 1, given lawmakers' lingering concerns.

Democratic Representative Gene Taylor, who heads the seapower subcommittee of the House Armed Services Committee, last week warned the Navy to get costs under control before his panel begins weighing the Navy's budget requests.

One Senate aide said changing the required speed of the ship at this point would add cost for design changes in the short term, and could raise eyebrows among lawmakers already frustrated by the Navy's inability to stick to requirements.

But such a move could cut the price of each future ship by tens of millions of dollars, helping the companies reach the congressional cost cap, said another congressional aide.

O'Rourke said changing the propulsion system completely could add cost initially, but scaling back the existing system by substituting lower power engines would take less work.

He said the freed up space and weight could allow the ship to carry more fuel, which would increase its cruising range.

Jim McAleese, defense consultant, welcomed the Navy study and said it could help avert a move by Taylor to open the program to competition from other companies, a move McAleese said would likely result in a two-year delay in the program.

"Anything you can do to pull requirements off that ship -- even if it means reducing the sprint speed -- gets you under $500 million a copy and closer to the congressional cost cap."

(Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn)

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