I dont know if everyone saw this article. So Ill post it for those that missed it:
Littoral combat ship costs rise from $220M goal
By Christopher P. Cavas
Times staff writer
The cost of the Navy’s Littoral Combat Ships will jump as much as 44 percent, a revelation that casts new doubts on the service’s ability to estimate its shipbuilding expenses.
The ships were to have cost about $220 million apiece, but Navy figures released Feb. 27 show the price tag rising to $316 million in 2008, leading to an average of $307 million for each of the planned 55 ships in the class. The figures were revealed in a Feb. 6 “budget item justification sheet” to accompany the 2007 defense budget request to Congress.
As recently as last year, the service was still adhering to the $220 million price tag — the upper limit of a cost cap imposed last year by Congress.
But in the 2007 request, the Navy is asking for $520.7 million to buy two ships, or $260.4 million apiece.
“This is another disconcerting sign that there’s some sort of systemic problem in the Navy in estimating procurement costs,” said one congressional source.
Navy officials said the request complies with the cost-cap legislation, which allows extra spending to cover inflation and some other costs.
“The Navy remains firmly committed to a CAIV [cost as an independent variable] target price of $220 million per ship in 2005 dollars,” Navy officials said.
Both 2007 ships would cost $220 million, plus $12 million for inflation, plus $28 million for other costs, the officials said.
They said these other costs include:
• Tests and trials
• Logistics support
• Management support
• Engineering to speed construction and improving technology on future ships
• Post-delivery outfitting costs
• New technology
• Increases in the costs of steel and aluminum
• Improving combat survivability.
• Designing and installing the interface for the ship’s “mission modules,” the swappable equipment packages that allow each LCS to carry out various missions.
Both Navy and congressional officials said that the issue will need to be resolved before the 2007 budget is passed.
Cost Control in the Crosshairs Adm. Mike Mullen, chief of naval operations, has repeatedly noted that his plans for a 313-ship fleet depend on controlling costs.
In a brief Capitol Hill interview March 1, Mullen said the $220 million price remains a goal.
“We’re really geared to meet that goal: the $220 million plus the roughly $70 million for the mission module,” he said. “We’re concerned about any cost increases, and we’re going to work that really hard.”
The service faced withering criticism last year after civilian experts testified on Capitol Hill that the Navy’s shipbuilding plans were not affordable. In particular, the Navy’s $3.3 billion cost estimate for its new DD(X) destroyer was called unrealistic; the experts forecast the destroyers would eventually cost more than $4 billion apiece.
The Navy is asking for Congress to fund the first two DD(X) destroyers in the 2007 budget.
But LCS, at the lower end of the cost scale, “is intended to be the poster child for cost-control,” according to one congressional naval expert.
The Navy plans to buy 55 Littoral Combat Ships through 2018. The LCS concept envisions a small, relatively inexpensive ship — or “sea frame” in Navy parlance — whose removable mission modules allow them to take on anti-surface, anti-submarine and anti-mine roles. Proponents say the modules will help keep the ship up-to-date cheaply and conveniently.
The program has been in hurry-up mode since it was announced in 2001 by then-CNO Adm. Vern Clark; the recent Quadrennial Defense Review urged the Navy to accelerate the program. Lockheed Martin and General Dynamics are each building two ships to competing designs, with the Navy still undecided as to how many of each designs it will buy. Lockheed’s first ship, the USS Freedom, is scheduled to be launched this summer and delivered to the Navy in late 2007, and General Dynamics laid the keel for its first ship in January.
The Navy’s new budget figures do not differentiate between the two designs.
A General Dynamics spokesman declined to comment on the price increases, saying he was unfamiliar with them. Lockheed Martin representatives also declined to comment, adding they were asked by the Navy to withhold speaking on the issue.
Analysts: Trouble Ahead But several analysts asked to comment on the price increases said they would affect future programs.
“That’s not a good sign for the DD(X)/CG(X) program,” said the congressional source, referring to the planned CG(X) cruiser that will follow the DD(X) destroyer design.
“In terms of estimating costs, there’s less there to estimate with LCS,” he said. “It’s a simpler ship. How did they get that so wrong already?” The analysts said LCS program has several of the key attributes Navy leaders have said are necessary to get a handle on cost growth: two contractors, three shipyards, multi-year procurement and relatively stable design requirements.
The LCS cost growth is an indication of how likely Navy cost-reduction efforts are to work, said the congressional naval expert.
“If we’re not having success in the LCS program, what are the prospects for achieving all those cost-reduction efforts to make the 313-ship plan work?” he said. “If LCS is an indicator, the prospects are dim.”
One defense industry market analyst agreed with that assessment.
“If the Navy faces another credibility issue on the cost of LCS it raises broader questions about the 313-ship goal,” said Byron Callan of Prudential Equity Group. “Maybe the $220 million figure was an unrealistic number to start with.”
Another issue raised by the congressional source is the timing of making the new figures public.
“When did they know about this?” he asked. “They might have known at the time that Congress was marking up last year’s budget. I wonder if they withheld this news because they didn’t want to mess that up. Now that their program is firmly established — I’m wondering about the timing of that.”
Hi got this from JDW, not being a subscriber I don't know any more info and haven't easily found any other than its price has increased from $220 to $260 million a Hull for the first to. I thought the LCS was super cheap (minus mission packages) is it the mission packages that will be the problem?eg. all the Umanned Vehicles= Firescout, UUV etc, do you think slight or significant increases will effect acquisition numbers, so far what about 32-56