EXCLUSIVE-UPDATE 2-Early tests show Lockheed LCS problems-report

* Lockheed ship seen having problems with stability, radar

* Lockheed and Northrop designs seen vulnerable in combat

(Adds General Dynamics comment)

WASHINGTON, Jan 20 (Reuters) - Early testing by the U.S. Navy showed that Lockheed Martin Corp's LMT.N first Littoral Combat Ship (LCS) did not meet Navy stability requirements and revealed problems with its combat system, according to a new annual report by the Pentagon's chief weapons tester.

Neither the Lockheed ship, a steel monohull design, nor a competing aluminum-hulled trimaran design built by General Dynamics Corp GD.N, was expected to "be survivable in a hostile combat environment," said the report prepared by the Pentagon's director of Operational Test and Evaluation.

A copy of the report’s section on the LCS program was obtained by Reuters.

The Navy is preparing to release the final terms for a multibillion-dollar competition between Lockheed and General Dynamics that will decide which of the two designs is used for the more than 50 additional ships the service plans to buy.

The report could raise concerns among lawmakers who have already imposed a $480-million-per-ship cost cap on the program after repeated cost overruns in the program’s early years.

The Navy commissioned the Lockheed ship in late 2008 and plans to deploy it for the first time later this year. It commissioned the General Dynamics ship last week.

The Pentagon’s chief tester cited concerns about the stability of the first Lockheed LCS ship and about its TRS-3D radar.

The report said early air target tracking tests revealed deficiencies with the performance of the Lockheed ship’s combat system and could “seriously degrade the ship’s air defense capability unless corrected.”

Plans to repeat the tests were thwarted when the radar power system failed repeatedly and the cause of the failures had not yet been identified, said the report.

It said the Lockheed ship also could face stability problems when fully loaded, which meant it could “sink sooner than expected,” the report said. The Navy plans to install external tanks to effectively lengthen the ship’s stern and increase its buoyancy before it deploys for the first time.

Lockheed spokeswoman Jen Allen said the ship met the Navy’s requirement to have a shock-hardened propulsion system that could survive damage and get the ship home safely.

She said there were always issues with the first ships of any new class, but any stability problems had been resolved, and the company was confident this was no longer an issue for its first ship, Freedom, or the LCS class.

The report said General Dynamics ship, Independence, had its builders trials delayed due to reported leaks at the gas turbine shaft seals, and more testing identified deficiencies in the main propulsion diesel engines.

General Dynamics declined comment, saying it had not yet seen the Pentagon report.

The report said the Navy intended LCS to be a Level I survivability combatant ship, but neither design was expected to achieve the degree of shock hardening required to meet those specifications.

Shock hardening, the ability to keep operating following an underwater explosive attack, is required for all mission-critical systems under the Navy’s Level I requirements, but only a few selected subsystems will meet those, it said.

“Accordingly, the full traditional rigor of Navy-mandated ship shock trials is not achievable, due to the damage that would be sustained by the ship and its many non-shock hardened systems,” said the report, which was submitted to Congress this week.

The report urged the Navy to continue its assessment of both ships to predict the degree of shock hardness and survivability that could be expected in a combat environment.

Chief of Naval Operations Admiral Gary Roughead on Saturday underscored the importance of the LCS program to his effort to expand the number of ships in the U.S. naval fleet, and said he was pushing for a contract award to one of the bidders by this summer at the latest.

(Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn, Richard Chang, Gary Hill)

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