Blame It on the Secretary

Navy Times is running an article this morning called "Shipbuilders may decline to bid on next LCS." Sounds catchy, and while it is possible, I think this is very unlikely. Basically it is a story how General Dynamics and Lockheed Martin aren't happy about the fixed cost contracts, and how both companies may not submit to the LCS RfP due May 30th. That is very unlikely, although I could se a scenario where the losing contractor declines to build one ship at the fixed cost, because until the kinks are worked out that might be a losing contract.

No, the real good stuff comes near the end, where the anonymous folks start bashing SECNAV Winter, and these are just a few of the good quotes.

Since taking office in early 2006, Winter has constantly harped on the need for the shipbuilding industry to become more efficient and cut costs.

“It is certainly understandable where the Navy wants to go,” the industry source said of Winter and his efforts to hold shipbuilders more accountable. “But to say the companies have to be taught a lesson, that they need cost gaps — it’s almost insulting. These are real people in these yards, and they have pride in their work. We would carry that into any product we made.”

A no-bid response from the shipbuilders might also be a way to wait out Winter’s term and deal next year with a new administration and a new service secretary.

“Maybe the best strategy,” the industry source said, “is to cool your heels, let the election clean these dudes out and deal with a new group.”

First it is likely both companies are simply holding their cards close and will bid the LCS.

Second, does anyone actually think a new SECNAV is going to matter that much? It is artificial how tough Winter looks because he canceled the two cheapest ships of his options. That's like ordering from the dollar menu then making a scene throwing food when you discovered it tastes bad. Nobody throws a $20 steak, but $1 burger can be used as a prop.

The cost cap of $460 million is important for the Navy, but it looks like the industry isn't happy with it. This appears to be their way to voice displeasure, but I still expect both companies to bid for the LCS regardless of the tough contract rules.