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Highlights

The Navy's Littoral Combat Ship (LCS) is envisioned as a reconfigurable vessel able to meet three missions: surface warfare, mine countermeasures, and anti-submarine warfare. It consists of the ship (seaframe) and the mission package it carries and deploys. The Navy plans to invest over $25 billion through fiscal year 2035 to acquire LCS. However, recurring cost growth and schedule delays have jeopardized the Navy's ability to deliver promised LCS capabilities. Based on a congressional request, GAO (1) identified technical, design, and construction challenges to completing the first four ships within current cost and schedule estimates, (2) assessed the Navy's progress developing and fielding mission packages, and (3) evaluated the quality of recent Navy cost analyses for seaframes and their effect on program progress. GAO's findings are based on an analysis of government and contractor-generated documents, and discussions with defense officials and key contractors. This product is a public version of a For Official Use Only report, GAO-10-1006SU, also issued in August 2010.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense 1. To attain the level of knowledge needed to retire design risk and reduce construction disruptions, the Secretary of Defense should ensure changes identified in building and testing the first four ships are incorporated into the basic and functional design by the start of construction for future LCS seaframes.
Closed - Not Implemented
The department considers this recommendation closed, and has stated that both LCS seaframe designs are now stable, citing the minimal change activity to date for LCS 3 and LCS 4 and the continued availability of change order budgets for those ships. However, the Navy deferred several changes affecting key ship systems until post-delivery for LCS 3 and LCS 4 which has not yet concluded, meaning that any additional changes required may not yet be known. Further, as the Navy continues to address technical deficiencies affecting the lead ships -- generally through design changes -- the scope of deferred work for follow-on ships can reasonably be expected to grow. Finally, recent Navy announcements regarding possible increases to manning and the number of berths on the ships indicate that further redesign is forthcoming. Until the scope of these changes are fully identified -- and priced into LCS contracts -- the department cannot be fully confident that its budgets for follow-on ships are sufficient to offset the cost increases associated with performing work out of sequence. LCS 5 and LCS 6 began fabrication in August 2011, and LCS 7 and LCS 8, awarded in March 2011, began fabrication in November 2012 and June 2013, respectively. These fabrication start dates preceded completion of design changes for the first 4 seaframes.
Department of Defense 2. To provide a meaningful framework for evaluating seaframe and mission package performance, the Secretary of Defense should update the LCS test and evaluation master plan to (1) account for any early deployments of seaframes and the significant developmental challenges faced by key mission package systems and (2) identify alternative approaches for completing seaframe and mission package initial operational test and evaluation.
Closed - Implemented
The Navy updated the LCS test and evaluation master plan (TEMP) in 2013. This TEMP update reflects events that have occurred since our 2010 report, including the early deployments of LCS 1 and developmental delays to key mine countermeasures and surface warfare mission package systems. Further, the TEMP update identifies additional seaframes beyond LCS 1 and LCS 2 that will be used to support initial operational test and evaluation of both seaframes and mission packages.
Department of Defense 3. To safeguard against excess quantities of ships and mission packages being purchased before their combined capabilities are demonstrated, the Secretary of Defense should update the LCS acquisition strategy to account for operational testing delays in the program and resequence planned purchases of ships and mission packages, as appropriate.
Closed - Not Implemented
Since we issued this report, the Navy has significantly altered its planned acquisition strategy and no longer intends to award new block buy contracts in 2016. The Navy now plans to award contracts--with the acquisition strategy to be determined--for 3 ships in fiscal year 2017 and 3 ships in fiscal year 2018, and that it will award contracts for up to 20 of a new modified LCS in 2019. This revised approach alters the timing of our recommendation as written, but does not change our intention, which is to ensure that the Navy does not continue to commit to additional ships until it demonstrates that it has attained some level of knowledge related to, among other thing, operational testing of at least one of the mission packages on each variant. The Navy completed initial operational test and evaluation of the Surface Warfare mission package on the Freedom variant in 2015. However, initial operational test and evaluation of the Mine Countermeasures mission package on the Independence variant continues to be delayed, with testing currently planned for Fall 2015. At the time of this update, Congress was considering language to restrict LCS and Frigate funds in the FY 2016 National Defense Authorization Act (NDAA) until the Navy submits, among other things, an acquisition strategy for LCS 25-32. Similarly, the National Defense Appropriations Act for 2016 recommends an approximate $104.5 million reduction in the Mine Countermeasures mission modules.
Department of Defense 4. To provide a sound basis for future LCS investment decisions, the Secretary of Defense should ensure that future LCS cost estimates--including the program life cycle cost estimate currently planned for milestone B--are well-documented, comprehensive, accurate, and credible.
Closed - Implemented
In April 2011, the Navy completed a new program life cycle cost estimate for LCS seaframes in support of the program's Milestone B review. This estimate (and related materials) displayed several key tenets associated with well-documented, comprehensive, accurate, and credible estimates including (1) clear definition of purpose, program characteristics, and ground rules and assumptions; (2) developed estimating plans and approaches; (3) comparison to an independent cost estimate; and (4) completion of sensitivity and risk analyses.

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