* Launch and recovery of smaller boats seen as major risk
* Neither shipyard meeting management system standards
* General Dynamics ship headed for dry dock repairs
(Adds responses from General Dynamics, Lockheed)
By Andrea Shalal-Esa
WASHINGTON, March 30 The U.S. Navy sees the
launch and recovery of smaller boats as a "major risk" to both
competing designs for its new Littoral Combat Ship program, a
congressional watchdog agency said on Tuesday.
The Government Accountability Office (GAO), the research
arm of Congress, said the Navy's risk assessment was troubling,
given that watercraft launch and recovery are "essential to
complete the LCS antisubmarine warfare and mine countermeasures
missions" for the new class of warships.
The systems for launching and recovering smaller ships had
not been fully demonstrated for either of the rival designs by
Lockheed Martin Corp (LMT.N) and General Dynamics Corp (GD.N),
the GAO said in its annual report on major weapons systems.
It also cited other problems with both ships designs,
including one that will send the General Dynamics ship to dry
dock repairs, and noted that neither of the shipyards had met
earned value management systems (EVMS) standards set by the
Pentagon's Defense Contract Management Agency.
Until they meet those requirements, the companies' cost and
schedule data "cannot be considered fully reliable," GAO said.
Lockheed won a contract for LCS-3 based on its steel single
hull design on March 23, 2009. General Dynamics won a contract
for LCS-4, based on an aluminum trimarin design by Austal
(ASB.AX) on May 1, 2009, or 10 months ago.
Austal and General Dynamics have split up for the next
competition, with Austal planning to submit a prime bid that
includes General Dynamics as a subcontractor for the ship
combat system. General Dynamics's shipyards hope to bid
separately for follow-on orders in 2012.
TOTAL COST OF PROGRAM TO DATE IS $5 BLN
The rival teams are due to submit their bids for 10 more
ships by April 12, a deal valued at over $5 billion, with Navy
officials eyeing a contract award in July. Over time, the Navy
plans to buy 55 of the new smaller, more agile warships.
GAO said the total cost of the LCS program so far,
including research and development as well as procurement
funding, was $5.1 billion, nearly 300 percent more than the
$1.3 billion cost projected in 2004.
It said the unit cost per ship was $730 million, up from
$331 million in 2004, but analysts said that included the first
ship of each design, which generally cost more to produce.
GAO said the Navy was conducting dynamic load testing of
Lockheed's LCS-1 ship, but integration with the Remote
Multi-Mission Vehicle was not due to happen before the ship's
so-called shakedown cruise, although it is a "physically
stressing system to launch and recover."
For LCS 2, testing of the crane used to launch and recover
smaller boats "revealed performance and reliability concerns
that were not fully addressed prior to installation."
Lockheed spokeswoman Kim Martinez said the company's first
LCS ship, the USS Freedom, had successfully completed its small
boat launch and recovery tests, and had used the capability
during Freedom's current deployment to catch drug traffickers.
GAO said the main propulsion diesel engines on the General
Dynamics ship had not completed a required endurance test due
to corrosion in the engines' intake valves, which had to be
replaced so the ship could complete acceptance trials.
The General Dynamics ship had also experienced pitting
and corrosion in its waterjet tunnels, an issue that the Navy
has temporarily fixed, but which will require welding work
during a future dry dock availability, GAO said.
Design changes were also made to the General Dynamics ship
to address the corrosion and pitting in its waterjet tunnels by
isolating the propulsion shafts from the waterjets, GAO said.
General Dynamics spokesman Rob Doolittle said issues
sometimes arose during construction of the first ship of any
class, but the company and the Navy had already addressed the
concerns raised in the GAO report.
He noted that LCS-2 had passed both builder's and Navy
acceptance trials, and was now under way from the shipyard in
Mobile, Alabama, headed toward the East Coast.
The GAO report also noted previously reported concerns
about the stability of Lockheed's ship if critically damaged,
but said the Navy had added external tanks to the rear of the
ship to allow it to meet the damage stability requirement.
The design for Lockheed's second ship was also modified to
lengthen its transom by four meters to improve stability.
Martinez said Freedom had proven to be very stable, and the
tanks were only needed in a severely damaged condition.
(Reporting by Andrea Shalal-Esa; Editing by Bernard Orr)