Littoral Combat Ship in Context Can Also Be a Cost Effective Replacement

This isn't exactly a traditional guest author article, but it is the first part of an ongoing discussion I've been given permission to blog about. Just when you thought maybe this blog has said everything that could be said about the Littoral Combat Ship, something pops up on the radar screen too good to pass up. Special thanks to Bob Work, and indirectly Eric Labs at CBO, for enabling this conversation.

We observed a news report this week that the Navy is looking to raise the price cap of the Littoral Combat Ship above the Congressional mandated cap of $460 million.

The U.S. Navy is unhappy with the bids submitted by Lockheed Martin Corp and General Dynamics Corpfor three more shore-hugging warships and will ask both companies to go back and provide more information, said sources briefed about the Navy's plans.

At the same time, the Navy also is talking with lawmakers about modifying a $460 million cost cap imposed by Congress for new Littoral Combat Ships purchased in fiscal 2008 or later, said the sources, who asked not to be identified.

Some Navy officials have suggested in the past that the cap should be raised to as high as $560 million, said one congressional aide, who asked not to be named.

$560 million would be too much. $460 million would be great, if possible. The best estimate (no a Congressional staffer estimate is not a good estimate) we have to work with is the CBO figure, which is $550 million (PDF). In bulk buys, many people I have spoken to believe the CBO estimate of $550 million would be high, but for this exercise we will use the CBO number.

The current plan is for the US Navy to purchase 55 Littoral Combat Ships to replace 14 Avenger class Mine Countermeasures Ships, 12 Osprey class Coastal Minehunters, and 30 Oliver Hazard Perry class Frigates. The trade is 55 Littoral Combat Ships for 56 ships of three classes. There will also be 64 mission modules. The Navy intends to buy 16 ASW modules, 24 ASuW modules, and 24 MCM modules.

These numbers are from CBO. The average building costs for the Perrys, in FY 2009 dollars was $690; for the Avengers $262 million; and for the Ospreys $251 million. The amortized costs per hull for the 64 mission packages is $58 million apiece. Looking at these figures another way:

• FFG-7 4000 tons cost $690 million in FY09= $172.5 million per 1000 tons
  
• MCH 900 tons costs $251 million in FY09= $279 million per 1000 tons
  
• MCM 1320 tons cost $262 million in FY09= $198 million per 1000 tons
  
• LCS 3100 tons cost $608 million in FY09= $196 million per 1000 tons
  
• $608 million = $550 million hull + $58 million module
  

A lot of people don't think the comparisons are relevant, but I do. Cost per ton is the only way to compare costs of a new ship with an old ship. No one is suggesting that is the whole story, but it does give us something to work with when comparing costs. This is the argument Bob Work forwards regarding the entire LCS replacement plan.

When the LCS program was announced, the Navy operated 56 “littoral combat ships”: 30 Perry frigates; 14 Avenger MCMs and 12 MHCs. In essence, the Navy is replacing these three different ships with 55 modular, multipurpose LCS seaframes and 64 LCS mission packages. The LCS will come in at about 3,000 tons FLD. This is smaller than the Perry, but larger than the mine warfare ships. Its armament is equal to the Perrys FFs, and far superior to mine warfare vessels. It has a better aviation capability than the Perrys, and is relatively well armed: 57mm (vice 76 mm on Perry), Sea RAM (vice CIWS on Perry), and .50 cals. It can also carry 45 NLOS missiles and two 30mm cannon, or 135 NLOS missiles. Its ace in the hole is its mission payload bay. People who haven’t seen them just have no idea of their capacity. The mission bay in the GD version is large enough to hold 55+ Humvess or 34 trucks. LMs bay can carry less, but it is still HUGE. The ship is designed as a mothership for a variety of off board systems and sensors—RHIBs, USVs, UUVs, deployable sensors, UAVs, helos. I know there are a lot of questions over what these systems can do, but does anybody think that unmanned systems will not be important in littoral warfare the future? And, unlike the legacy fleet, 100 percent of the LCS fleet will be easily self-deployable.

The Navy will use a multiple crewing scheme on LCS: 4 crews for three hulls. This will allow the Navy to keep one LCS forward with three hulls. The composite ratio for single-crewed hulls is 5 hulls to keep one forward. This means the 55 LCSs will be the equivalent of an 87-ship LCS fleet with single crews. Here’s the math: Navy wants to keep 23 LCSs forward at all times. It intends to base 7 in Japan . 48 remaining divided by three = 16. For single crewed ships: same seven forward in Japan ; 80 divided by 5 = 16. So LCS fleet will provide far more presence than legacy fleet, and much more efficiently.

Even with 18 extra core crews and nine extra mission crews, it will take nearly 3,800 fewer officers and Sailors to man the 55 LCSs than the 56 legacy ships The LCS crew objective is 75 total (core and mission crew plus aviation det). Plans are core crew, 40; av det + mission crew, 35. Compares to average of 237 on a Perry with av det, 86 and 53 on Avenger and Osprey, respectively (these reflect the average of active and reserve ships). Even if experience convinces the Navy to increase the size of the LCS crew, the recurring manpower costs for the fleet will be far less than the legacy fleet. For example, lets say the LSC must be manned with 85 people. Still means Navy will save beaucomp money in crew costs.

Bob and I agree the LCS still has a lot to prove, the Navy still has a lot to learn. Bob and I disagree on the comparisons between the LCS and FFG-7, but between the FY09 CBO numbers of MCM and MHC costs, and the utility/flexibility gains of the LCS over those platforms I think there is a really good case for the Littoral Combat Ship as a replacement minesweeper. All indications, from the GAO analysis to the comments we read from those in field suggest the MIW module is very empowering over existing capabilities, and there is no question now is the time to take MIW seriously in the US Navy.

However, if we avoid the argument regarding the LCS replacing the FFG-7 being a trade of equal capability (a discussion we will return to tomorrow with much more), the price to build the 56 MCM, MHC, and FFG-7 ships the LCS is replacing comes to $27.38 billion. 55 LCS at $608 million a piece is $33.44 billion, and that is using the conservative $550 million number of the CBO.

We believe knowing the numbers for costs of the ships the LCS is replacing really opens up the conversation, because now we can compare more than just capabilities. The module numbers are useful as well. However, more than just numbers, all of this leads to a question we don't have a good answer to...

When is the last time that DoD replaced anything on a one-for-one basis, for around only 20 percent more, and with far more capability, flexibility, and less recurring manpower costs?