[House Hearing, 111 Congress]
[From the U.S. Government Printing Office]
[H.A.S.C. No. 111-18]
THE NAVY LITTORAL COMBAT SHIP PROGRAM
__________
HEARING
BEFORE THE
SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE
OF THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
MARCH 10, 2009
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SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE
GENE TAYLOR, Mississippi, Chairman
SOLOMON P. ORTIZ, Texas W. TODD AKIN, Missouri
JAMES R. LANGEVIN, Rhode Island ROB WITTMAN, Virginia
RICK LARSEN, Washington ROSCOE G. BARTLETT, Maryland
BRAD ELLSWORTH, Indiana J. RANDY FORBES, Virginia
JOE COURTNEY, Connecticut DUNCAN HUNTER, California
JOE SESTAK, Pennsylvania MIKE COFFMAN, Colorado
GLENN NYE, Virginia THOMAS J. ROONEY, Florida
CHELLIE PINGREE, Maine
ERIC J.J. MASSA, New York
Will Ebbs, Professional Staff Member
Jenness Simler, Professional Staff Member
Elizabeth Drummond, Staff Assistant
C O N T E N T S
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CHRONOLOGICAL LIST OF HEARINGS
2009
Page
Hearing:
Tuesday, March 10, 2009, The Navy Littoral Combat Ship Program... 1
Appendix:
Tuesday, March 10, 2009.......................................... 43
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TUESDAY, MARCH 10, 2009
THE NAVY LITTORAL COMBAT SHIP PROGRAM
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Akin, Hon. W. Todd, a Representative from Missouri, Ranking
Member, Seapower and Expeditionary Forces Subcommittee......... 3
Taylor, Hon. Gene, a Representative from Mississippi, Chairman,
Seapower and Expeditionary Forces Subcommittee................. 1
WITNESSES
Guillory, Rear Adm. Victor G., USN, Director, Surface Warfare
Division, N86, U.S. Navy....................................... 7
Landay, Rear Adm. William E., USN, Program Executive Officer,
Ships, U.S. Navy............................................... 8
Sandel, E. Anne, Program Executive Officer, Littoral and Mine
Warfare, U.S. Navy............................................. 10
APPENDIX
Prepared Statements:
Guillory, Rear Adm. Victor G., joint with Rear Adm. William
E. Landay and E. Anne Sandel............................... 54
Taylor, Hon. Gene............................................ 47
Documents Submitted for the Record:
[There were no Documents submitted.]
Witness Responses to Questions Asked During the Hearing:
[The responses were communicated verbally and are not
available for print.]
Questions Submitted by Members Post Hearing:
[There were no Questions submitted post hearing.]
THE NAVY LITTORAL COMBAT SHIP PROGRAM
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House of Representatives,
Committee on Armed Services,
Seapower and Expeditionary Forces Subcommittee,
Washington, DC, Tuesday, March 10, 2009.
The subcommittee met, pursuant to call, at 10:04 a.m., in
room 2118, Rayburn House Office Building, Hon. Gene Taylor
(chairman of the subcommittee) presiding.
OPENING STATEMENT OF HON. GENE TAYLOR, A REPRESENTATIVE FROM
MISSISSIPPI, CHAIRMAN, SEAPOWER AND EXPEDITIONARY FORCES
SUBCOMMITTEE
Mr. Taylor. The hearing will come to order. Good morning
and welcome.
Today the subcommittee meets in open session to receive
testimony on the Littoral Combat Ship (LCS) program.
Our witnesses today are Rear Admiral Vic Guillory, director
of surface ship programs for the chief of naval operations;
Rear Admiral Bill Landay, the program executive officer for the
surface ship structure; and Ms. Anne Sandel, program executive
officer for Littoral and mine warfare.
I want to thank our witnesses for being with us.
To call the LCS program troubled would be an
understatement. The fact of the matter is that this program has
so far delivered one ship--one ship.
But a look at the plan from just two years ago, we should
by now have at least four ships delivered, three more nearing
completion from a fiscal year 2008 authorization, six more
under contract from a fiscal year 2009 authorization, and today
we should be discussing the authorization of six more ships for
fiscal year 2010. That would be a total of 19 ships.
So instead of having 13 delivered or under contract, with
another 6 in this year's budget, we have 1 ship delivered that
will likely tip the scales well above two-and-a-half times the
original estimate, and 1 ship that might finish this summer
with similar, if not higher, cost growth.
The Navy canceled two previously authorized ships. No ships
were placed under contract for fiscal year 2008, and no
contract award has been made for the two ships authorized for
fiscal year 2009--all of this from the program that was hailed
as a poster child for its transformational and affordable
acquisition strategy.
It seems all the program has accomplished is transforming a
realistic goal of achieving a 313-ship fleet into a very real
disappointment in which neither competitor shows remorse for
being a year late and hundreds of millions of dollars over
budget.
And from what I can see, neither competitor has a plan or
even a desire to do any better, because they can count on the
Navy throwing more money at their problems.
This program is not just a lesson of over optimism, poor
management and lack of poor oversight, even though all those
things occurred in spades.
The fundamental lesson is flawed strategic planning, flawed
in the belief that the government can pass on to industry
decisions that are inherently governmental, flawed in the
belief that untested, unproven concepts, such as reconfigurable
mission modules, can be incorporated into an acquisition
program without testing and verifying the concept of surrogate
platforms, and finally flawed to the absence of a Plan B for
needed capability in the fleet.
I believe it is a lack of Plan B which has tethered the
Navy so completely to this program. Particularly in the area of
mine warfare, the LCS is the only future they see. Dropping the
LCS program to develop another mine warfare platform is viewed
as unacceptable on the schedule. And they might be correct.
However, because the Navy is at this moment stuck with
continuing the LCS program, it does not mean its current
strategy for buying these ships has to continue.
I have nothing against either of the lead contractors, but
I know this. They both contracted to build a ship for $220
million, and they did not even come close.
I understand the Navy was guilty of changing the design
specifications with the implementation of the Naval Vessel
Rules, but I fail to see how that resulted in more than
doubling the price and slipping 18 months of schedule.
I am also concerned that the Navy has not been able to come
to terms with the contractors for the ships authorized last
year. It appears to me the solution is simple. We need to bring
true competition to this program, not the pseudo competition we
currently have between the two poor performers, but true
competition based on price, schedule and quality.
I have been asking for over two years if our nation owns
the rights to the design drawings of the ships so they can bid
them out directly to any shipyard with the capability of
constructing the vessels. The answer seems to be yes and no.
I have got to believe at this point we should know every
inch of bar, angle iron and plate in those ships, every piece
of pipe. And every inch of weld ought to be on someone's CAD.
And if it isn't by now, I would like to hear why.
I understand the prepared witness testimony will address
this question. However, I would like the witnesses today, on
the record, to explain that position and answer in layman's
terms, not in the language of professional acquisition
executive, the exact claim the government has on the technical
design rights to both the sea frame and the combat system.
Then I would like our witnesses to explain how long it
would take, what organization would be responsible--in
particular who would be responsible--and how much it would cost
to develop the technical data package described in the prepared
statement that is required to bid ships directly to other
shipyards or to current shipyards divorced of their lead
contractors.
Ranges of cost and time are acceptable. What is not
acceptable is taking this question for the record.
So far I have discussed just one ship, just what the Navy
refers to as the sea frame. Today's hearing for the first time
brings in an official responsible for the mission packages that
are purported to give this vessel a multi-mission capability.
Although at least one of each type of mission modules has
been developed, I am very concerned that major components of
the overall mission package are still under development and
have not been thoroughly tested. Therefore, I would request
that Ms. Sandel update the subcommittee on the remaining
development and testing for all the mission packages.
I would also like to know if anything in existing Navy
platforms can operate with an LCS mission module as a stopgap
capability filler until sufficient LCS ships are constructed.
Everyone should understand that the current situation of
these vessels, costing in excess of a half a billion dollars,
cannot continue. There are too many other needs and too little
resources to pour money into a program that was designed to be
affordable.
I would also like to remind all of the parties involved,
particularly right now, that you do not want to be the program
that is breaking the bank. From what I read in the newspapers,
there are no protected programs in the ongoing debate on
affordability.
Of course, none of the witnesses sitting in front of us
today was responsible for the program when it began. They
inherited a mess, and they are doing their best to fix it. I
appreciate that.
Now is the time for frank talk on what needs to be done. We
need the best price and the best quality we can get for these
vessels, whether with the current lead contractors, after they
finally get the message, or changing course and bidding
directly with other shipyards.
Before I ask the ranking member for his remarks, I would
like to remind the subcommittee that competition sensitive
information, such as current estimates of prices, are protected
by statute.
However, the Navy has agreed to answer these types of
questions directly to individual members in an appropriate
forum and under the conditions agreed to by the Navy, general
counsel at our committee.
I now call my friend from Missouri for any remarks he may
wish to make.
[The prepared statement of Mr. Taylor can be found in the
Appendix on page 47.]
STATEMENT OF HON. W. TODD AKIN, A REPRESENTATIVE FROM MISSOURI,
RANKING MEMBER, SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE
Mr. Akin. Thank you, Mr. Chairman.
And welcome to the hearing. Thank you all for visiting us
on what is a rather substantial topic.
Today is my first opportunity to join the subcommittee in
overseeing the Navy's shipbuilding program. I have already
begun to grasp the many complexities unique to the acquisition
of battle force ships.
I recently had the opportunity to join Congressman Taylor
at Austal USA in Mobile, Alabama, where the LCS-2 is under
construction, and it is certainly an innovative ship. But even
a newcomer to shipbuilding can see that much remains to be
done.
I understand this program has faced many challenges, but a
simple principle seems to have gotten lost. The principle isn't
exclusive to shipbuilding: in sum, the importance of
transparency and accountability in acquisitions programs
grounded in sound strategy. And that cannot be overstated.
Sadly, in its early days the LCS program appears to have
lacked accountability. Many important steps have been taken to
rectify the situation, but the program still lacks a well-
conceived strategy.
At various times in the last two years, the Navy has
proposed a fly-off and down-select between these two flight
zero ships, to be followed by a redesign for a flight one ship,
investing in a class design services effort to convert the
selected design to build to print and recompeting the class,
redesigning the ships to include a common combat system in
both, and last, an apparent desire to procure both ships from
the existing teams with minimal changes.
We cannot reasonably expect the industry teams to make the
investments in facilities and designs for affordability we
demand, if we cannot articulate what we want to buy.
Further, we cannot reasonably expect the taxpayers to
continue to fund ships that we cannot definitively say what we
want. Even Obama's sweeping comments about cutting defense
spending and weapons programs, do any of us believe we can
defend a program for which we have no acquisition strategy and
for which we have long since surpassed the acquisition cost
target identified in the programs key requirements document?
Just last week, the president stated far too often that
spending is plagued by massive cost overruns and an absence of
oversight and accountability. We need more competition for
contracts, more oversight when they are carried out.
His goal is to save $40 billion a year, and many observers
have cautioned that this won't be possible unless he starts to
kill major Pentagon weapons systems.
Now, I am in no way advocating that the LCS program fall
victim to such a cut. I have every reason to believe that this
program represents a critical capability for our warfighters.
Despite the cost overruns, it can still become the most
affordable ship in the Navy's fleet.
But there remain many questions which have not been
answered to my satisfaction. I am going to list five of those.
First, is the LCS program still affordable within the
context of the overall shipbuilding program? That is, what
would we have to give up in order to afford 55 of these ships
at a cost of approximately half a billion dollars?
Second, although the Navy has pushed for buying the LCS in
substantial numbers prior to an operation evaluation of the
first ships, given that the operational valuation of these
ships will now be conducted within the next 18 months, would it
be prudent to wait to procure additional vessels until the
evaluation is complete?
Third, the high cost of shipbuilding frequently has its
roots in decisions we make to protect the industrial base.
These decisions have merit.
We want to ensure that this nation has surge capability and
doesn't lose the national treasure that is the shipyard worker,
but we need to be very cautious about increasing capacity for
which the Navy lacks the volume to support.
And the fourth question: When the Navy has canceled two
ships, failed to award the fiscal year 2008 ship before the
appropriations rescinded the funds, and has yet to reach
agreement on the 2009 ships, it has elected to incrementally
fund construction on follow-on vessels.
Again, these decisions may be expedient in the near term to
avoid layoffs, but will we lack here in two years discussing
root causes of cost growth for the follow-on vessels and citing
incremental funding?
Fifth, I want to applaud Secretary Stackley's determination
to control costs. He has wisely chosen not to award follow-on
contracts if the industry teams can't demonstrate they are on
the glide slope to $460 million.
He has also forced behavior changes on LCS-2 to prioritize
completion of construction. Yet if we accept delivery of ships
or award ships that do not have all systems fully integrated,
what bill are we leaving for a future Congress?
Lastly, the mission packages are really what make LCS a
valuable tool for the warfighter. The Navy has not taken
aggressive steps to integrate and test these mission systems or
train crews on the systems on other platforms.
I echo the chairman's strong concern that we cannot
continue to wait for LCS to be available in sufficient numbers
to develop and deploy these capabilities.
Mr. Chairman, thank you for holding the hearing today.
Admiral Guillory, Admiral Leahy and Ms. Sandel, I look
forward to your testimony and thank you for being with us.
Mr. Taylor. I thank the ranking member. We have been joined
by Mr. Stupak, who represents the Marinette area, so with
unanimous consent I would ask that he be allowed to join the
subcommittee for the day.
The chair now recognizes the gentleman from Michigan for
five minutes.
Mr. Stupak. Well, thank you, Mr. Chairman. And it has been
15 years since I sat on this committee. It is good to be back
on this side of the dais. And thank you for your interest in
the LCS program.
You know when you take a look at this program here from
concept to design to a functional ship--we built one up in
Marinette Marine, the first one, Freedom, which was actually
commissioned in Milwaukee, Wisconsin, on November 8, 2008, and
will be stationed at San Diego naval base--this is a whole new
ship, like I said, a new design, new concept.
Since 9/11 we have new adversaries. We have different types
of missions. So the Navy needed a new ship, and your target
started from scratch on a concept to a full ship that was built
and presented to the Navy, built up in Marinette Marine.
Lockheed Martin had to partner with Marinette Marine to
build the first LCS because of the strong advantage of
constructing a ship in a mid-tier shipyard. Mid-tier shipyard
shipbuilders facilitate competitiveness and establish
affordable approach to a program.
The chairman is right. We should have 19 more ships, and we
are happy to build the next 18 up in Marinette Marine.
But there has been some--because it was a new design, a new
concept, constantly changing it, there were delays, but in the
meantime as we built the first ship, since then we have had to
lay off 150 employees at Marinette Marine.
This week they were going to lay off another 200, but
because of a partial award of the LCS contract to Lockheed
Martin on February 27th, those layoffs have been--they are not
going to do the layoffs.
The full award of the contract and successful continuation
of the program would stabilize the employment in this region.
But the LCS is not only vital to the economy of northern
Michigan, it is also immensely--production prospects for the
U.S. and abroad--all of our allies are very excited about this
new ship, this new class of warfare ship.
We could bring in many, many more ships, more than just
what the Navy needs and being built and cruised here in the
United States. You know with the Navy there is also--besides
warfare, we see anti-piracy operations. We see humanitarian aid
operations, what this ship is suited for.
The recent award of the LCS contract, the one I just spoke
about that was partially awarded here on February 27th, has
taken some time to get these complex negotiations done between
the Navy and the shipbuilders.
There were many production standards that are shifting to
try to get these contract details without changing so we can
get the ship that can be built at the cost of chairman spoke
of, but not the first few.
The lead ships are always--a lead program on anything is
always more expensive than originally thought of, but as you
put more ships out, that price will go down.
As the Navy continues to fix the contract awards for ships
authorized and funded in fiscal year 2009, I encourage the
Navy, Lockheed Martin and General Dynamics to expediently
address the contract details so that construction can proceed
without further delays.
We are willing, ready and able and can produce the type of
ship that the Navy needs.
So with an experienced team in place and production
facilities on line, the program is ready for an early
transition to full rate production. Doing so will reduce the
costs and minimize the learning curves.
The LCS program is not only important to my Menominee
Marinette area, but also the future capabilities of the Navy
and to the defense of this nation.
So I urge the committee to consider not only the local
impact of the award and the shipbuilding technology that we
brought with this brand-new type of ship, but also to continue
its discussions regarding the future of the current contracts
and of the LCS program with the Navy, because this ship, which
is needed with our new adversaries and the new demands on our
country, the LCS is a ship that is appropriate to meet the
needs of the Navy.
And we are proud to be playing a part in building such a
ship for the Navy and for this nation.
Thank you, Mr. Chairman. With that, I yield back.
Mr. Taylor. The chair thanks the gentleman from Michigan.
Our witnesses today are Rear Admiral Victor Guillory,
Director of Surface Warfare Division, United States Navy; Rear
Admiral William Landay, Program Executive Officer for Ships,
the United States Navy; and Ms. Anne Sandel, Program Executive
Officer of Littoral and Mine Warfare.
The chair recognizes Admiral Guillory.
STATEMENT OF REAR ADM. VICTOR G. GUILLORY, USN, DIRECTOR,
SURFACE WARFARE DIVISION, N86, U.S. NAVY
Admiral Guillory. Excuse me. Chairman Taylor, Ranking
Member Akin, distinguished members of the subcommittee, thank
you for the opportunity to appear before you today to address
the Navy's Littoral Combat Ship program.
Along with Rear Admiral Bill Landay and Ms. Anne Sandel, we
thank the committee for its continued support and active
interest in the Navy shipbuilding programs.
We have prepared a written statement and asked that it be
entered into the record.
Mr. Taylor. Without objection.
Admiral Guillory. I would like to begin my remarks, Mr.
Chairman, by stating the Navy remains committed to the LCS
program. LCS fills warfighting gaps in support of maritime
dominance in the Littorals in its strategic chokepoints around
the world.
The LCS expands the battle space by complementing our
inherent blue water capability. The LCS program will deliver
capabilities to close validated warfighting gaps in mine
countermeasures, surface warfare and anti-submarine warfare.
In addition to LCS' inherent speed, agility, shallow draft,
payload capacity and reconfigurable mission spaces, the ship is
an ideal platform for conducting additional missions in support
of the maritime strategy to include irregular warfare and
maritime security operations, such as counterpiracy operations.
The strength of LCS lies in its innovative design approach,
applying modularity for operational flexibility. LCS has over
40 percent internal volume, giving reconfiguration capabilities
for up to 200 tons of equipment.
This ability to modify the LCS' physical configuration with
different mission packages give the operational commander
credible options for responding to changing warfighting
requirements.
The Navy also remains committed to procuring 55 LCSs. We
are systematically pursuing cost reduction measures to ensure
delivery of future ships on a schedule that affordably paces
evolving threats.
Affordability will be realized through a regular review of
warfighting requirements and applying lessons learned from the
construction and that test and evaluation of sea frames
admission packages.
The Navy, as part of its annual review of its shipbuilding
program, expect there will be sufficient force structure with
our existing frigates and mine warfare ships until LCS delivers
in quantity to meet deployment requirements.
Legacy mine warfare ships and frigates are planned to be
phased out gradually. These decommissioning to be balanced with
LCS mission package and sea frame deliveries to mitigate
warfare risk.
In summary, Mr. Chairman, the Navy remains committed to the
LCS program. A 55-ship LCS class will give our Navy the
advantage it needs to maintain dominance in the Littorals.
In the near term, the Navy continues to work diligently to
find efficiencies in construction and test and evaluation
phases so that the Littoral Combat Ships are delivered as
deployable assets in as timely a manner as practical.
We appreciate your strong support and the opportunity today
to testify before the subcommittee regarding the LCS program. I
will be pleased to answer your questions following the opening
remarks by Admiral Landay and Ms. Sandel.
Thank you, Mr. Chairman.
[The joint prepared statement of Admiral Guillory, Admiral
Landay, and Ms. E. Anne Sandel can be found in the Appendix on
page 54.]
Mr. Taylor. Thank you, sir.
Admiral Landay.
STATEMENT OF REAR ADM. WILLIAM E. LANDAY, USN, PROGRAM
EXECUTIVE OFFICER, SHIPS, U.S. NAVY
Admiral Landay. Chairman Taylor, Congressman Akin,
distinguished members of the committee, I would also like to
thank you for the opportunity to appear here today and discuss
the Navy's Littoral Combat Ship program.
I appreciate your personal attention to LCS, including
recent visits by members of the committee to some of our
shipbuilders.
When the LCS program was initiated, it had two overarching
goals: to address, identify and validate the warfighter in
requirements in the Littoral battle space and to challenge many
of the existing processes, procedures and conventions in naval
shipbuilding that many believed had become too slow, risk
adverse, and focused on a narrow set of solutions sets.
There was a belief held by some in both the Department of
Defense (DOD) and the shipbuilding industry that we needed a
different approach, one that allowed less conventional designs,
greater use of commercial standards, and be focused on adapting
existing systems available from throughout the world instead of
along the R&D development effort.
LCS was seen as a class of ship that would benefit greatly
from such an approach. Today we are 6 years into this effort,
and as we look back, the results are mixed.
In some areas we have been successful. We have the first
ship delivered 6 years after the program started, and based on
initial inspections and evaluation, it is performing as
required.
And we are close to delivering our second ship of a
significantly different design later this year, two ships
delivered in the time we traditionally would be completing
initial design studies.
These are ships with unique capabilities to support mission
packages, unmanned vehicle launch and recovery, open
architectures, and a number of proven Hull, Mechanical and
Electrical (HM&E) and combat systems from outside our
traditional sources.
The reduced crew size of this vessel and its reliance on
many practices from the commercial maritime industry drove us
to more aggressive use of electronic navigation, unmanned and
automated engineering spaces, improved focus on human interface
to reduce workload, and automated damage control systems
practices, which will have a great applicability to other ships
throughout the fleet.
These parts of the program we have executed well.
Unfortunately, there are other aspects of the program where
we have not had similar success. While we wanted to challenge
our practices and processes, in a number of cases we overlooked
hard learned, fundamental lessons of shipbuilding.
You must have a solid, mature design before you start
construction. You cannot be negotiating standards and adding
new technical requirements while you are building a ship. And
if you have to make major changes, you need to stop and get
them right, because rework kills productivity.
And you must have sufficient experience to management
dedicated to the program to be able to identify and deal with
rapidly emerging issues.
We have addressed these issues and LCS today in the
following ways.
The design for both ships is mature, and we are
incorporating revisions to specific areas based on lessons
learned from the construction of the initial ship, proposed
production improvements, acceptance inspections and early
stages of the post-delivery testing period.
These revisions will be in place by the start of
construction on the 2009 ships.
The Navy has increased the staff assigned to the program
office and at the shipyards to monitor performance. The program
staff has grown from eight to 20 personnel, with additional 12
billets assigned as the two lead ships complete delivery and
post-delivery milestones this year, and more ships are placed
under contract.
Similar increases have been made in the waterfront
oversight area.
The fiscal year 2009 and fiscal year 2010 options will be
fixed price contracts to ensure that costs and schedule
adherence remain a primary focus both to industry and the
government program teams.
There are no new technical or warfighting requirements
added to the fiscal year 2009 ships.
We have two shipbuilding teams, who have the experience of
building their initial ship, and we have worked to incorporate
the lessons learned from the first ship into their follow-on
production. Learning curve benefits should be evident on the
fiscal year 2009 and 2010 ships.
In closing, LCS brings a critical capability to our nation.
The Navy is committed to controlling costs and has taken
actions to correct issues in the program. These corrections are
in place, and we continue to work on improving our performance
and that of our industry teams.
There are challenges that still remain in this program as
we work to get to steady-state production, but we believe that
we are prepared to handle them as they emerge.
Again, thank you for this opportunity to appear before the
committee, and I look forward to your questions.
Mr. Taylor. Thank you, Admiral.
The chair now recognizes Ms. Sandel.
STATEMENT OF E. ANNE SANDEL, PROGRAM EXECUTIVE OFFICER,
LITTORAL AND MINE WARFARE, U.S. NAVY
Ms. Sandel. Chairman Taylor, Ranking Member Akin,
distinguished members of the subcommittee, good morning. My
name is Anne Sandel.
Mr. Taylor. Ms. Sandel, you going to either have to turn on
your mic or get closer to it.
Ms. Sandel. Good morning. Chairman Taylor, Ranking Member
Akin, distinguished members, I am Anne Sandel, the program
executive officer for Littoral mine warfare.
I welcomed the opportunity to be here today to testify
before the committee and to talk about the Littoral and Mine
Warfare (LMW) programs, which have made significant
contributions in developing and acquiring and maintaining
operationally superior and affordable systems, providing
assured access for U.S. and coalition forces to Littoral.
Our efforts are sharply focused to meet the joint
warfighting forces requirements for dominance and for system
access.
Today I am here specifically to discuss the LCS mission
modules program and share with you the progress we have made in
designing, developing, procuring, integrating and testing the
mission modules for the Littoral Combat Ship.
The Navy has completed the rollout for the first of each
type of mission package, has installed the mission package
computing environment within LCS-1, and has initiated American
Customer Satisfaction Index (ACSI) integration testing for the
anti-submarine warfare mission package.
Each package provides warfighting capabilities for the one
of three focused mission areas: mine countermeasures, which are
detection and neutralization of mine threats; surface warfare
for maritime security missions and defeating small boat
attacks; and antisubmarine warfare, countering the shallow
water diesel submarine threat.
These mission packages can be changed out over a 96-hour in
port period so the ship is reconfigured and optimized for a
different mission.
Mission package reconfiguration in LCS affords the
combatant commander of flexible response to changing
warfighting environments and is one of the signature design
elements of the LCS class.
The quantity of each mission package type differs, based on
analysis of projected operational requirements. Therefore,
mission packages are developed and procured separately from the
sea frame, a revolutionary concept to shipbuilding.
Employing an open business model facilitates upgrades to
the LCS to warfighting capabilities as the threats evolve, and
the open concept also helps us to reduce the total ownership
cost of LCS over the years to come.
Again, we appreciate the sport of the House Armed Services
Subcommittee, and I personally thank you for the opportunity to
talk to today, and I look forward to answering your questions.
Mr. Taylor. The chair thanks all of our witnesses.
Admirals, again, I very much appreciate your many, many
years of service to our nation and the hardships of your time
you spent away from your families, and the hardships you have
endured.
My frustration is not with your service records. My
frustration is with your program.
If 60 Minutes were to walk through your door, put a
microphone in front of you and say, ``Admiral, you got
something that was supposed to be a simple ship, mass-produced
for about $220 million apiece. They are 18 months behind
schedule, $300 million over schedule. Apparently every inch of
the second vessel was welded by hand rather than by machine,
and I don't see any plans that any future vessels are going to
be produced any cheaper or any faster. And by the way, the
competition that was supposed to be winner take all is now you
have basically said, `No, we are going to build some of each,'
so you got two D-minus students, who are being graded on a
curve, and so they have automatically got a C now, because they
are only competing against each other.''
Tell me how you would answer that question.
Admiral Guillory. Well, sir, I would like to start.
If, as you laid out, they walk through the door with a
microphone and asked me about LCS, I think I would start out by
reassuring them that the requirements for the ship was based
upon a lot of study and a lot of analysis.
It clearly focused on the capability gaps in three major
areas, as Ms. Sandel has laid out.
Mr. Taylor. Admiral, it is not about the need for the
vessel. It is about the delivery and the cost of the vessel. No
one is doubting the need. What we are doubting is whether or
not these vessels at the present time are affordable, whether
the next series is going to be any more affordable, that they
will be built on time, because these weren't built on time.
So what has changed between vessels one and two that gives
you, or more importantly, this Congress, which has to look the
American taxpayer in the eye, any confidence that any follow-on
vessels are going to be any closer to being on time and
anywhere near the original projected cost?
I ought to also remind you that the price of aluminum is
one-half of what it was two years ago, the price of copper is
down just as dramatically, that there are machine shops and
shipyards all over this country that are desperate for work.
And so the question would be, what makes you feel you owe
these two shipyards anything, as far as the future, and what
steps are you taking to broaden your base of suppliers and turn
some of these opportunities into savings for the taxpayer and a
fleet in the Navy saying sooner rather than later?
Admiral Landay. Mr. Chairman, let me take that part of the
question, since it is directed more at the acquisitions side.
I would tell you today we have far more confidence in our
ability to understand and have in fact mitigated the risk of
these ships, because we have in fact built one and are about 85
percent complete on the other second one.
Initially, as we have discussed before, we started a
design, and we started construction before our design was
complete. Our designs now are very complete.
We have learned a lot of lessons in the course of the
construction of the first two ships, from the imposition of
Naval Vessel Rules to changes to rework that. In some cases the
government required of them and in some cases the contractors
had themselves.
We have learned those lessons, and we have incorporated
those into the follow-on ships starting with the fiscal year
2009 ships.
We have implemented or seen the yards implement
infrastructure improvement, going to the modular manufacturing
facilities. We have seen infrastructure improvements being put
in place that will start to come online this year that will
continue to improve their processes.
We have spent a fair amount of time over the last year with
both of the companies, going back and looking at specifications
that we put in place that may have driven costs and having a
discussion with them on whether we would still leave those in
place or whether we could remove those.
We worked very hard with both companies to ensure that the
design package that will be in place for the second ship is far
more complete and incorporates many of the lessons learned that
we made during the course of the first ship.
So we have done a lot to ensure that what happened on the
first ship is not in place to happen on the second ship. And we
also know that across our history, shipbuilders, good
shipbuilders--and we believe both of these are good
shipbuilders--get better as they get to go to the second and
third ships in the series.
And so we do believe that the learning curve that we would
expect to see from any good shipbuilders we are going to see in
these two ships as they go down to the next set of ships.
Having said that, there is a very strong focus with us with
those shipbuilders to ensure they are focused on costs and they
are focused on price.
And one of the reasons why we have not yet awarded our
fiscal year 2009 ships is because we continue to have very
strong discussions with both shipbuilders in areas where we
believe there can be some cost savings or where they believe we
are driving costs into their program.
So I would tell you today we believe we are much more
confident that we understand these ships. The shipbuilder you
know, will get better over the next set of ships.
Mr. Taylor. Well, Admiral, since you said that, this
subcommittee has about $14 billion a year to build 10 or 12
ships, and that is what we have to do, assuming that those
ships are going to last for 30 years in order to get to a 300-
ship Navy.
We have to deal in hard numbers. So having said, you did
not mention the price of aluminum being down. You did mention
that you think the shipyards would do better next time.
So what do you anticipate the cost of LCS-3 and LCS-4 to
be? What should this subcommittee budget?
Admiral Landay. Well, sir, again, I am reluctant to talk
costs to you in this----
Mr. Taylor. Sir, we have to talk costs.
Admiral Landay. But I am in the middle of the contract
negotiations.
Mr. Taylor. You may be reluctant all day long, because at
the moment I have got to tell you, Admiral, I don't think this
ship is a bargain. I think these suppliers are taking advantage
of our nation, and I am very reluctant to allocate a dime.
Now, we are going to work with the will of the
subcommittee, but I think we need some reassurances that you
have prices under control, and that translates into hard and
fast numbers.
Admiral Landay. Well, yes, sir, and again, I would be happy
in a closed session to tell you what we think those numbers
are, based on the ongoing contract discussions.
What I can tell you is we understand that there is a cost
cap. And as Secretary Stackley talked to you, we are working to
ensure that we are driving both of these ships toward that cost
cap for fiscal year 2010.
Now, what we are going to--the cost of the ship is going to
be in fiscal year 2009 will be a function of what the end
results of the contract discussions are. But I will tell you
they are on a path to get toward the cost cap.
Mr. Taylor. The chair recognizes Mr. Akin.
Mr. Akin. Thank you, Mr. Chairman.
I have a couple of bites and quick questions, and then
maybe some little longer. The first thing is in terms of this
program, is it really clear that there is one person in charge
of this program?
Admiral Landay. Yes, the program manager and then the
Program Executive Officer (PEO), the job that I have, are
responsible for executing the acquisition part of it.
The Chief of Naval Operations (CNO), Admiral Guillory, as
part of N86 (Surface Warfare Division), is responsible for
setting the requirements consistent with the way that we do
most ship classes.
And then Ms. Sandel has the mission packages under the
broad auspice of my responsibility as PEO ships and the program
manager.
Mr. Akin. One of the things that I learned early on--I used
to work for IBM--is if you have something that is really an
important project, you need to have one person, who has got the
responsibility for it, held accountable for it.
And so when I am looking at something, which is more than
100 percent over budget and 18 months late, it says to me
somewhere along the line something went wrong.
I guess maybe backing up a little bit, was the $250 million
ship--was that something that was just a pipedream to begin
with?
Were these things low bid by both builders, knowing that
the thing would go up, and they just basically said, ``Hey, the
way the game is played, quote a low number, get the contract,
and then jack it up.''
Is that the way we do it? Or is there anything that we have
to prevent bidders from doing that?
Admiral Guillory. Sir, I will start with that question. The
220 number that was initially estimated for the cost of the
Littoral Combat Ship, the sea frame, the ship itself, was based
upon a number of factors.
Those factors included the fact that it was being built on
commercial standards. The strategy was to look at what would be
commercially available, propulsion, hull mechanical and
electrical systems, and take advantage of the attributes that
have been demonstrated in the commercial sector and deliver to
the ship the high-speed, shallow draft warship that we----
Mr. Akin. So stop just a minute. So what you are saying is
that 220 was based on a commercial hull design, not the Navy
higher requirements type of hull design. Is that right?
Admiral Guillory. Yes, sir. That is correct.
Mr. Akin. Okay. Then we made the decision to go from a
commercial type hull to a hull that had all kinds of additional
capabilities, take shock and everything like that, so it is
much different and heavier than a commercial hull would be. Is
that correct?
Admiral Guillory. Yes, sir. Naval Vessel Rules----
Mr. Akin. And who made--so as soon as you do that, you make
the hull much more expensive, right?
Admiral Guillory. There is cost associated with
strengthening the ship.
Mr. Akin. So who made that decision to go from the
commercial to a Navy standard hull, then?
Admiral Guillory. Well, that was a Navy decision, and it
was a decision made based upon the recommendations from the
technical community. It was based upon the survivability needs
for a warship that is going to go in harm's way and
survivability requirements for a ship to do that, which
commercial standards could not meet.
Mr. Akin. Okay. Okay. So what you have already--what you
are telling me is is we started with one idea, which was a
commercial type hull. Then we threw that strategy aside and
went to a more robust kind of hull.
I am not questioning whether which one is better or not. I
don't know. But I know one thing, and that is you are changing
your mind as you are going along, right? You start with a
commercial hull. Now you say we are going to go to a more
robust kind of hull that will cost more money.
Were there other major kinds of changes in the design,
which also resulted in this more than doubling of its cost?
Well, if you had to pick the three things that kept us from the
$200 million to the $400-something million, what are the three
biggest contributors to those costs increasing?
Admiral Landay. Well, I would say the change to Naval
Vessel Rules----
Mr. Akin. The hull design, basically?
Admiral Landay. The hull design. Yes, sir.
Mr. Akin. Okay. The second thing would be what?
Admiral Landay. We did that while we were getting ready, or
had already awarded the contract and were in fact in the early
stages of construction, so it required us to do a lot of
concurrent design change as we were going, which ends up
driving you into a lot of rework into the program.
Mr. Akin. Which is still the same point, which is we
changed the hull design.
Admiral Landay. Yes, sir.
Mr. Akin. Okay. So that is the biggest single one. What is
the second biggest single one?
Admiral Landay. Again, the rework, as I mentioned, kind of
related to that.
I would say that the third key piece of this is in any new
program, the cost growth, the unknown unknowns were more
significant than we expected. We always expect that there are
going to be some. I think we found there to be more than we had
expected in both of these yards--again, not unique to those
yards----
Mr. Akin. What were those unknown unknowns connected with?
What were the main ones?
Admiral Landay. I would say that, again, the design, the
use of American Bureau of Shipping standards, which is a new
process that we had in place, and some confusion initially as
we build our business rules on how we would look with American
Bureau of Standards, which drove a fair amount of re-look and
multiple looks at the design, which then slowed the design
down.
On LCS-1 we had a problem with the reduction gear
initially. It turned out to be much longer than we thought,
which again caused us to do some concurrent redesign. You know
so that I would say would be the second key piece that we found
in it. And then----
Mr. Akin. That was LCS-1. You had something in the
reduction gear.
Admiral Landay. Yes, sir. In the initial design----
Mr. Akin. How big is that compared to just this completely
redesigning the hull?
Admiral Landay. It ended up being about a 26-week
implication and a fair amount of rework.
Mr. Akin. So timewise, it hurt us.
Admiral Landay. Yes, sir. And then----
Mr. Akin. Cost?
Admiral Landay. And then as a result of that, what we did
at the time--again, not understanding how long I think that
total delay was going to be--we tried to continue concurrent
construction around that and then got ourselves in a situation
where we had to come back and do a fair amount of rework as
that period stretched out.
Mr. Akin. It seems to me that what I am seeing, and I don't
want to overdo my time here, Mr. Chairman, but what it seems
like to me, there is a pattern from the start, and that was
that we have been changing our mind as we go along. And that,
as you know, is deadly to a project.
Admiral Landay. Yes, sir.
Mr. Akin. You start with the concept we are going to go
with a more commercial, cheaper hull, and then just when you
get that started building, then you go and change it to a more
robust warfighting kind of, which is a different design, and it
is going to raise the cost of whole lot.
And now we have gotten to the point where we have built two
different trial ships, and we are talking about building some
more of them. And the Navy is even saying now, ``Oh, we kind of
like both of them.'' You know we are going to have every single
ship. The Navy is going to be a custom ship, if we don't have
discipline to say, ``You have got to make a decision. You are
going to have to stick with it.''
If we keep changing the requirements, we haven't even had a
chance to test either one of them. We are going to start to buy
more of them. It seems like from just a couple of weeks since I
took the trip, it seems like it is a little hazy as to exactly
what is our acquisition strategy.
We are going to get--you know we have got this one started,
the other one partly started. We have got to buy some of it. We
are going to buy four, and then we are going to test them. We
are going to partly test them. And we are going to get both of
them. Do the Marines like--what--one better than the other?
It seems like there are a lot of questions, where there is
not a clear-cut this is where we are starting, this is what it
is going to look like, and it is clearly defined. It doesn't
seem like we are nailing things down.
And the indecisiveness seems like it is costing us a whole
lot of money. Do you want to respond?
Admiral Landay. Yes, sir. Well, I would certainly tell you
in the 2009 and the fiscal year 2010 ships, what we have told
both of the shipbuilders, and what we have put in our request
for proposal, is we are going to build exactly the same ship we
built for LCS-1 and LCS-2, that we are not changing
requirements in that either--technical requirements or
warfighting requirements--and that there are some, you know,
things we learned in shipbuilding that would tweak the design.
So to your question of a lot of change which drove it, we
clearly recognize that. That is not going to be the case in
fiscal year 2009, 2010----
Mr. Akin. But we are not getting much of a bargain on the
third and fourth ships, are we? They are about the same cost as
the first two, aren't they?
Admiral Landay. Well, again, there is, we believe--I mean
we are working with the companies to drive that cost again
toward the goal of $460 million in the cost cap----
Mr. Akin. Are they going to----
Admiral Landay. I think we are going to----
Mr. Akin. Before they are going to give you a real good
price, they are going to want to know how many they are going
to build of these.
Admiral Landay. Absolutely. Yes, sir.
Mr. Akin. And it seems like to me I am not quite sure why
we are going to build the third and the fourth till we know
which one of the two we are going to choose.
And I am a little reluctant to say you know when you say,
``Well, we want to buy both of them.'' Now again, you--what you
are doing, you are making decisions, which just drives the cost
of ships up.
And somewhere along the line, we got to--I don't want to
overdo the questions, but you can see why we have some concerns
about what is going on, I think.
Admiral Landay. Yes, sir.
Mr. Akin. Thank you, Mr. Chairman.
Mr. Taylor. The gentlewoman from Maine is recognized now
for five minutes.
The gentleman from Maryland, Mr. Bartlett, for five
minutes.
Mr. Bartlett. Thank you very much.
Clearly, these ships were very much over cost and behind
schedule. And the reasons for that are both the industry and us
here in Congress. We have already talked about the Naval Vessel
Rules increasing the cost and probably stretching out the
schedule.
But a second thing that we in this committee were really
complicit in was agreeing to the original schedule on how soon
we put the ship in the water that enormously increased cost and
stretched out the schedule, because a lot of things that that
should have been upside down were now done in the water, which
is very much more expensive and stretches the thing out.
So mistakes are made on both sides, and it is a little
unfair to lay all of this increase in costs and stretch out of
the schedule to the industry, because we were complicit in some
of that.
Well, we now have the first Freedom class Littoral Combat
Ship delivered, and I am told that the crew is pretty happy
with its performance.
But clearly, affordability, as our chairman so aptly
pointed out, remains a critical objective for this program. No
matter how desirable it is, there comes the cost at which it is
too expensive to afford, and we are going to put the money
somewhere else.
I understand you have continued to work with the industry
teams to refine the design and drive down the cost. Other
successful surface combatant programs, such as the Arleigh
Burke-class, achieved a significant savings by streamlining the
production process.
Understand that the acquisition of specific long lead-time
items could reduce the ship construction schedule by as much as
20 percent, which would be about 10 months.
What are your thoughts regarding an advance procurement
that would acquire long lead materials to expedite this much-
needed ship?
Admiral Landay. Yes, sir. We believe advance procurement is
a vital tool to continue to drive the cost of this program and
any program down, the ability to buy long lead material or
specialty material certainly an example.
Had we used a long lead or an advance procurement (AP)
strategy on the reduction gear on LCS-1, we would have run into
the same problem, but we would have seen it much earlier in the
process, or even before we started. So we certainly agree that
an AP strategy is one that will help us as we go forward.
Mr. Bartlett. Multi-year procurements have proven to be a
sound investment strategy. They permit industry to accomplish
long-term planning and result in significant savings to the
government and the taxpayers. Most importantly, they introduce
the stability that many of our acquisition programs need.
Have you evaluated the savings that could be achieved on
the Littoral Combat Ship program by implementing multi-year
procurement? What would the Navy want--when would the Navy want
to begin implementing such an approach?
Admiral Landay. Well, yes, sir. We definitely have looked
at multi-year procurements, block buy procurements, the
economic order quantity (EOQ) savings that you potentially get
out of such a strategy. And one of our goals is to get to those
kinds of strategies as quickly as possible.
One of the key things we want to make sure we do in our
fiscal year 2009 ships is ensure that we do in fact have the
design issues resolved as we had proposed.
And so our current strategy right now is to tie our fiscal
year 2009 and fiscal year 2010 ships together in a common buy
to start getting some pressure and quantity savings through
those ships.
And so it would be in the fiscal year 2011 time period that
I think we would be looking to go to a block, multi-year, or
somewhere in that timeframe is where we would see that from an
acquisition strategy perspective.
Still having some of the discussions within the Navy on
exactly where you want to go, but that would be the timeframe
that I would see us looking at it.
Mr. Bartlett. Thank you. When the Littoral Combat Ship was
first pitched to the Congress, it was a revolutionary idea,
where you would have a ship that was capable of multi missions
and that its mission could be changed during the fight. You
wouldn't have to leave the fight and steam to port somewhere to
put on the new mission packages.
Now that is an impossibility, because we do not have a
medium lift helicopter that is large enough to change these
mission packages during the fight.
And so the utility, the capabilities of the Littoral Combat
Ship I think have been enormously diminished, because we now
have to leave the fight, steam to port to change the mission
packages, and then come back to the fight.
I know the argument is made that, gee, a larger medium lift
helicopter wouldn't fit on the deck, and it is just because we
designed it. We could easily change that. It now fits the 60.
We could easily change that so that it would fit a medium lift
helicopter.
Don't you think that the absence of this ability to change
the packages during the fight seriously degrades the overall
capabilities of the Littoral Combat Ship?
Admiral Guillory. Yes, sir. I would like to answer that
question. The requirements for the LCS to change mission
packages in response to an operational commander's tasking is
to do it in a 96-hour period, and then the Concept of
Operations (CONOPS) is designed to do it in port.
That includes changing out the mission packages and also
doing the required testing in that period, to then return the
ship to sea and to the fight.
The 60 Romeo and 60 Sierra series aircraft are designed to
support that mission area, and those aircraft meet the
requirements for the ships, sir.
Mr. Bartlett. That maybe your program now, sir, but that is
not what was pitched to the Congress when the Littoral Combat
Ship was first sold to us. They were going to change the
mission packages during the fight. You now cannot do that, and
so you have to steam away and come back.
It wasn't 96 hours before. It was just a few hours, very
few hours, when this thing was pitched to us.
Thank you very much, Mr. Chairman.
Mr. Taylor. The chair thanks the gentleman.
The chair now recognizes the gentleman from Washington, Mr.
Larsen.
Mr. Larsen. Thank you, Mr. Chairman.
First, for Ms. Sandel. On page eight of the testimony, it
is noted that contract options for mission modules to be
exercised annually.
My understanding one of the themes of the LCS, one of the
themes of this hearing, as well as themes of the several
previous hearings on LCS, has been the whole idea of
controlling the requirements or understanding the requirements.
So what can you tell us about the mission module
acquisition strategy that gives us some comfort that there will
be some control on the requirements, especially as--if we are
going to be going on a year-to-year annual contract, that the
next contract after year one won't add, you know, the next five
things to the contract that things will be really neat and
really cool to have as part of the mission module package, and
then year two to year three, and year three to year four?
Ms. Sandel. That is an excellent insight, and I am going
to----
Mr. Larsen. Can you like just get right into that
microphone?
Ms. Sandel. Yes, sir.
Two pieces to that I believe that we have identified in the
way that this acquisition is structured for the procurement of
the mission systems and then for the mission packages.
The mission systems, which comprise the mission packages,
each have their own independent industry partner or warfare
center procuring agent that we have identified, so there are at
least about 22 different mission systems comprising the three
separate mission areas that ultimately end up being a package.
So that is one level of indenture that we have the ability
to drive down and to cost and schedule and award these on
separate contracts for each mission system. And that is another
level of detail we could certainly be due either to walk you
through.
So that is one particular area of control with regard to
requirements creep and scope growth that those particular
mission systems, without the--often have sponsors you know--or
the fleet encouragement and direction, we would not drive cost
or schedule or scope increase.
The second piece to that is the annual award or the re-
award with the addressing the mission package integration
production and award of the integrator that produces the
package itself.
So you have the system that comprises it with the support
equipment, all the infrastructure, all the things that happen
that have to become a mission package.
That is the production and assembly contract that has been
awarded in 2006. And that then becomes an annual event that we
re-look and determine have they met the cost and schedule.
Mr. Larsen. Is there a cost cap on that contract?
Ms. Sandel. Yes, sir. Currently, it is a $159 million
value, and that 10-year period of performance is predicated on
past performance. So if they don't meet their warranty
requirements and term requirements for that year, they will not
be continuing into the future.
Mr. Larsen. $159 million per year? $159 million per year?
Ms. Sandel. A $159 million ceiling complete.
Mr. Larsen. Per year.
Ms. Sandel. No, sir.
Mr. Larsen. Okay. Overall?
Ms. Sandel. Yes.
Mr. Larsen. Okay. Okay. Over 10 years.
Ms. Sandel. Yes.
Mr. Larsen. All right.
And just remind me. Is that then going to be run much like
the--so is a contract awardee a system integrator?
Ms. Sandel. He is not a system integrator in the sense that
we have typically grown up with. It is a package production and
assembly, so it is a greater role, taking multiple disparate
mission systems, putting them together within the container,
the computing environment, all the handling equipment.
So it is a level of detail and experience required that we
are working closely together with the individual and the
organization.
Mr. Larsen. Okay.
Mr. Chairman, the reason I asked those questions, and I
know that in the grand scope of a $460 million, $500 million
ship, this might not be the greatest cost driver, or
potentially greatest cost driver, but it would remind us that
we are going to use the ship without mission packages that
are--you know, that were and are affordable. So I think we are
going to have to watch that aspect of it as well.
Admiral Landay, are you responsible for the assessment of
the frigate and minesweeper availability and capabilities to
fill in the gap left from the lack of LCS deployment?
Admiral Landay. No, sir, not me. That is really an Office
of the Chief of Naval Operations (OPNAV) function.
Mr. Larsen. Then could you talk to that plan?
Admiral Guillory. Yes, sir. The frigates will--of which we
have 30 in inventory right now, active ships--begin leaving the
inventory in our 30-year shipbuilding plan beginning in 2010,
and throughout the next decade, they are decommissioned.
The mine countermeasures ships reach their service lives
near the end of the decade, approximately 2016, 2017 timeframe,
and then they begin to exit the inventory or are
decommissioned.
LCS, as it comes aboard, is not a replacement for the
frigates, but will do many of the missions that frigates do
today. It will execute those missions with a 40-man crew, as
opposed to a nearly 200-man crew that the Oliver Hazard Perry-
class guided missile frigates (FFGs) currently have when they
go to sea.
Of course, the mine countermeasure ships that we have today
responding to combatant command (COCOM) combatant commander
demand signals around the world, the Littoral Combat Ship with
the mine countermeasure mission packages would essentially take
up the watch in those areas.
And so we are closely examining the 30-year shipbuilding
plan and the decommissioning plan to ensure that it's balanced
and that we ramp up the capacity of LCS mission packages sure
as the decommissioning of frigates and mine countermeasure
ships occur.
Mr. Larsen. And I understand that. We are not talking about
a one-to-one replacement, but we are certainly talking about
capabilities replacing capabilities.
And so what are you thinking in terms of frigate
decommissioning and the capabilities that frigates have
compared to the LCS capability that would, let us call it,
supplement or complement it?
Are we going to be delaying frigate decommissioning in
order to accommodate the delays in the LCS capabilities?
Admiral Guillory. I believe that we will continue to
examine the decommissioning plan and the ramp-up plan of LCS. I
mean, as we have all recognized, we have had delivery
challenges with Littoral Combat Ship.
And we will have to continue to monitor that as we go
forward to ensure as LCS is delivered and are deployable ready,
that is matched up with what the frigates--as frigates are
leaving the inventory, because many of the missions that the
frigates do today, LCS will also do.
And so at this point we believe we have it right, that the
decommissioning plan is balanced with the Littoral Combat Ship
delivery and the mission package delivery. But that is under
constant review, continual review.
Mr. Larsen. Oh, it is still under review.
Admiral Guillory. Yes, sir.
Mr. Larsen. Yes. Okay. Thank you. Yes, sure.
Admiral Landay, in your testimony you kept talking about
the package of ships over 2009 and 2010 is the exact term you
used, but over 2009 and 2010 we will do this, or over 2009 and
2010 we will do this, but then when you talk about warfighting
capability, you actually didn't mention 2010 ships.
You said there would be no new warfighting capabilities on
the 2009 ships, but then you neglected to talk about ships in
2010. Are you telling us that you are going to be adding
different, new capabilities on the 2010 ships?
Admiral Landay. No, sir. Right now our strategy about,
again, the 2009 ships or the key contract ones, but our
strategy is basically to get the shipbuilders into serial
production, where we can drive the efficiencies in production
and cost, the recurring cost out of those programs as fast as
we can.
There is right now and nothing on the horizon that would
cause us, that we see, to put either warfighting or additional
technical requirements into those packages.
And in our request for proposal that is out on the street,
we ask them to bid us the fiscal year 2009 baseline and the
same baseline as options for the fiscal year 2010 ships. So
right now we do not see any additional requirements that will
come into either of those two ships.
Mr. Larsen. Okay. A broader question is we noted in our
separation memo for the securing, and I haven't heard it being
interesting questions were being addressed in testimony, the
vessels currently are too expensive to build at a rate
necessary to fulfill the goal of 55 vessels without forcing
other trade-offs.
There is an interesting headline in one of the dailies here
on Capitol Hill about the Air Force budget, the debate about
tankers and long-range bombers, which I have a direct somewhat
of an interest in.
But the question, though, remains is what kind of trade-
offs are you making? I mean if we are going to get to 55 LCS by
a certain date to get to a 313, 319-ship Navy, what are the
trade-offs that are being made? And the most obvious one within
the Navy shipbuilding is the Arleigh Burke-class guided missile
destroyer (DDG-51) versus the Zumwalt-class guided missile
destroyer (DDG-1000).
I just would be interested to understand what the Navy's
position is today on that trade-off.
Admiral Guillory. Sir, I think I would say it is not a
trade-off as more as it is a all hands effort to continuing to
look at the requirements, to look at the cost versus
capabilities, and to review that in a transparent way to take
every opportunity to weigh those requirements and perhaps
reduce requirements, if it makes a ship more affordable and
still not compromise the warfighting requirements for the ship.
That process, just in my domain as director of surface
warfare, is one that I spend a lot of my time involved with,
preparing assessments, preparing recommendations to review the
requirements, the individual key performance parameters and key
attributes for the ship, to ensure that we have it right to
meet the warfighting requirements, but perhaps if it is
reducing those requirements are changing those requirements
would make the ship more affordable in the near term or
lifecycle costs, to also make sure the leadership has that to
make a determination and try to continue to drive down the
cost.
You know it is not a destination so much as it is a
something that it is part of will we do now all the time with
LCS. And again, it is a commitment I think for the long-term,
sir.
Mr. Larsen. Well, I will just end here. I think that we are
going to continue to provide guidance to help the Navy with
some decisions, and I will also note that we don't sometimes do
a very good job of providing that guidance on what I would yet
call trade-offs.
If we are going to have a $14 billion shipbuilding budget,
then in our world I think there are--we do look at it as trade-
offs, because it is a limited amount of dollars, and what the
Navy builds over a certain period of time to get to a certain
number of ships is going to require some tough decisions not
just by you, but by us on this side of the microphone as well.
Thank you.
Admiral Landay. Sir, and if I could just add in to what
Admiral Guillory said, you know the other piece of it from the
acquisition side is, as we have talked about, for us to
continue to drive the cost of those ships down.
Now, as Mr. Bartlett mentioned, certainly when they get to
multi-year procurements, Economic Order Quantity purchases
(EOQs), there are acquisition opportunities that drive some of
those costs now. We, equally and very closely with the N86
folks, are looking at cost trade-offs, the cost of
requirements, what we may be doing to impact those.
So I would tell you there is a very ongoing and rigorous
and vigorous affordability initiative that is in place that I
think will continue to key up as we go.
And we have been successful on many programs when we start
doing that--Virginia, DDG-51 is a good example of as you get
into serial production, there are more opportunities to
continue to go after some of those affordabilities, and we are
doing that as well.
Mr. Larsen. Thank you.
Thank you, Mr. Chairman.
Mr. Taylor. The chair recognizes the gentleman from
Virginia, Mr. Wittman, for five minutes.
Mr. Wittman. Thank you, Mr. Chairman.
Admiral Landay, in looking at the specifications on the
second Littoral Combat Ship, I see that it is outfitted with a
foreign manufactured main propulsion diesel engine, and I was
wondering have these engines been certified by the American
Bureau of Shipping, and do they meet the Navy's specifications
as outlined in the contract.
And if not, can you tell us when these engines would be
brought into compliance with the Navy's specifications and when
they would be certified by the American Bureau of Shipping.
Admiral Landay. Yes, sir. They are required under Naval
Vessel Rules in our contract with the prime General Dynamics to
Meet American Bureau of Shipping Naval Vessel Rule
requirements.
So the engines will in fact be classed and certified under
that. The engines have been through just about all of those
certifications. There is one additional test that is ongoing
right now, but the company is required to meet that test, and
the prime contractor will ensure that they do meet that test.
So they will comply with Naval Vessel Rules as outlined by
American Bureau of Shipping and concurred with by the Navy
technical authorities.
Mr. Wittman. So that is going to be taking place. He said
they are in the process of doing that. Do you have a hard stop
time when that is to be achieved?
Admiral Landay. Well, sir, the remaining test is what they
call a 1,500-hour run test. You know basically it is about a
60-day test by the time you do it.
Obviously, as sometimes happens in those tests, something
will come up. They will have to stop the test, kick something,
look at it, and then start the test up again.
But we anticipate that they should have that test completed
at or close to delivery of the ship. They have already passed
through 500-hour tests, a number of other tests on there. This
is the long-term endurance test, but they are required to meet
that.
And if they don't meet that, it will be under--you know by
the time we take delivery, it would be a warranty item to the
manufacturer and the prime contractor.
Mr. Wittman. Thank you.
I am also concerned about the suggestions for moving this
LCS program to other shipyards. And this process in the past
has cost more than $100 million when executed on previous
surface combatant programs. And as you know, it has resulted in
significant schedule delays.
And I was wondering what is your estimate of the additional
cost and further delays that would result on the program, if
the acquisition strategy were significantly changed?
Admiral Landay. Obviously, any time, as we have talked
before, that you change your acquisition strategy or your
process in midstream, there are some implications to that.
We, as we have looked at bringing a second source in as a
possibility, we have looked at what we did back in previous
days with you know some of our other destroyers.
I would tell you a very broad, raw estimate of this would
be on the order of about $60 million per ship, and probably
about 18 months to 2 years per sea frame in order to have in
place a package that we think we could compete very
effectively.
Then obviously, the next issue is it becomes another the
yard in a--or lead ship in a new yard. It will be a function of
how well that yard is able to ramp up.
The advantages at this point we wouldn't anticipate
bringing new design, new package to that yard. It would be a
pretty solid design.
But obviously, as with anybody, there is a ramp up when you
start the first shipping go to the second one.
Mr. Wittman. I want to go back and talk a little bit more
about acquisition strategy. In looking at the acquisition
strategy, it appears that there is not a clear or approved
acquisitions strategy for LCS.
And I know that the Navy has proposed several different
strategies over the last three years from a fly-off between two
ships followed by a down-select, to a fly-off and possible
down-select, to converting the selected design, to build a
print and recompeting the class, to buying both vessels from
the existing teams.
And I was wondering with the increasing emphasis on
acquisition reform, and we just had a meeting this morning
talking about how we perform that process, why should the Navy
continue to procure vessels for which there is no acquisition
strategy?
And again, we have been back and forth on this. I know
there is a lot of consternation about those portions of the
program where we have had some problems.
But it seems like to me if we are ever going to get to a
point to clearly move forward this program, there has to be a
clearly defined acquisition strategy.
And I am just wondering where are we going with that, and
when will that acquisition strategy be defined?
Admiral Landay. Well, obviously, as I mentioned, we have a
strategy for the fiscal year 2009 and 2010 ships, as I talk to
you.
One of the discussions that we will have as we go forward
in our acquisition strategy is are we in fact going to go and
down-select to a single ship, or are we going to stay with the
two-ship design?
Each design brings--because of the way that we did that--
brings capabilities that we think have real value to us. When
you talk a 55-ship class, and you potentially talk 25, 27,
depending on how split that up, potentially of each one of
those, there is still a pretty sizable class and enough
opportunity in there to get learning and to get benefit out of
that.
So I would tell you right now it is not a specific time
where we would look at a down-select or going to a single one.
It is really getting the ships out to the fleet and to getting
input from the fleet, from the operators, balanced always, of
course, to the cost of the ships.
You know if we find out one ship turns out to be
significantly more expensive than another, then that becomes
part of the discussion in our acquisition strategy.
But as we have always said before, one of the key inputs we
want to make sure we get is get both designs out there
operating so that we can get a good assessment of the pros and
cons of each one of the designs.
Admiral Guillory. Sir, if I may just add one additional
factor, that while the first two ships do give us a learning
opportunity, and not only for the sea frames themselves, but
for the mission package development and the launch and recovery
systems, we appreciate the committee's support for the 2009 and
2010 ships, because those ships address the capacity issue, the
fact that we need the ships today for missions that we have
today.
And if those ships were here today and deployable ready
today, I would have little doubt that they would not find
themselves perhaps off the coast of Somalia or other places in
the world where econo-piracy threatens our ships and our
commercial traffic.
So there is prudence in learning from the two ships, and
there is a plan to do that. However, there is also a compelling
need I believe, certainly from my perspective, to address the
capacity and capability gap that we have today.
And the ships in 2009 and 2010 will go a long way to
addressing that, sir.
Mr. Wittman. Thank you, Mr. Chairman.
Mr. Taylor. The gentleman from Michigan, Mr. Stupak, for
five minutes.
Mr. Stupak. Thank you, Mr. Chairman. And thank you again
for your courtesy in allowing me to do this, sitting in on this
hearing today.
Admiral Landay, you spoke in your testimony about solid and
mature design. Do you believe you have that solid and mature
design now for the LCS?
Admiral Landay. Yes, sir, we do, certainly for LCS-1, which
we are taken through the initial acceptance testing. We believe
we have a solid design there. Now, there are pieces of the
design package that we are continuing to work through.
We believe we have a solid design for LCS-2, and we will
assess that when we get that ship delivered and go through
testing as well.
Mr. Stupak. LCS-1 Freedom was just built up in my neck of
the woods there--Menominee Marinette area.
When you look back at that design, now that you have been
through the first one, is it realistic to expect that the ship
can be purchased at $220 million or $250 million?
Or now that you have a design down, when you have gone from
commercial to your Navy standards for the hull and propulsion
issue, is it realistic with hindsight not to say that the ships
are going to cost only $220 million or $250 million?
Admiral Landay. Well, no, sir. I think as we look at the
ship as we currently have it designed today, we would not be
able to build that ship for $220 million. That is a true
statement.
We believe we can build it for less than the first ship
cost, as we get in those production efficiencies and
affordability. But yes, sir, I do not think we would be able to
build that for $220 million.
Mr. Stupak. When you talk about your production
efficiencies and long leads, so ship number 20 should be
significantly less than ship number one. Ship number 40 should
be less than ship number 20, on down the line, correct?
Admiral Landay. Yes, sir.
Mr. Stupak. Freedom LCS-1, which is already--it is in San
Diego right now--any problem with the workmanship, the quality
of that ship?
Admiral Landay. No, sir. Actually, she is in Norfolk right
now doing a post-delivery. She will be going to San Diego later
on. We still have additional testing to do with her here on the
East Coast before we send her over--and testing, I mean things
we were unable to do in the Great Lakes do because of
requirements and restrictions of there.
You know all the ships have issues that pop up. That is why
we do a pretty thorough shakedown and testing, but we have not
heard anything from the crew or our process with it.
Mr. Stupak. So as far as the craftsmanship, there is no
problem there. The problem with the first one was design
changes, different standards that the Navy had put in on the
ship, then. This is not a problem with the yard.
Admiral Landay. Well, yes, sir. I mean obviously then there
is also production efficiencies, and you know I think in some
cases both yards assumed they could build the ship more
efficiently than it turned out that they could in a lead ship.
I think they have learned from that, and we certainly
expect that the next ship--they would produce it more
efficiently.
Mr. Stupak. Okay.
Let me ask you this question. Both shipyards have planned
to improve their production capabilities. And hopefully, this
will lower the cost of the ships.
What other benefits does the Navy realized by using the
same yards to build the ships? Could you just in layman's
terms? What other benefits are there besides repeat in
production? Do we see a taxpayer savings?
Admiral Landay. Well, obviously, as you mentioned, the
repeat and the learning curve, as we call it, as the yards get
more efficient, as the production process is improved, as the
workforce see opportunities to streamline the process is one of
the key issues, obviously, as you get more production in a
yard, there is a tendency in that yard to put more
infrastructure in place themselves to support the continued
moving down the production line.
Obviously, if there is additional Navy work that goes into
a yard as they perform well in one program and maybe have an
opportunity to compete for other, there is a sharing of
overheads and other things across those yards.
Mr. Stupak. In your testimony or answer to a question, you
indicated--or maybe it was the other admiral--with the frigate,
you have 200 people on, and LCS you are going to 40 people.
Is that cost savings figured in over 30 years, the life of
the ship, as to the value to the Navy? And is that part of what
cost factor you look at?
Admiral Guillory. Yes, sir. That was part of our calculus,
considering the lifecycle cost of the ship. From my experience,
manpower continues to be the most expensive single element of a
program over the life of that program.
And it is just amazing to think that the missions and the
capability this ship will be able to deliver with essentially a
40-person crew--and many of the missions we have today are done
by frigates--is a huge step forward, and I think it will be
reflected in the overall lifecycle cost of that ship.
Mr. Stupak. Do you have any estimation what is the cost of
going from 200 to 400 sailors on a ship?
Admiral Guillory. No, sir, but we can provide that
information to you, sir.
Mr. Stupak. Then may I ask one more question, if I may, Mr.
Chairman?
You indicate there is much interest in the LCS by other
countries, our allies. Have any of the allies placed an order
for any of the ships, or appear to be working with you to place
such an order?
Admiral Landay. No, sir. There are no orders currently
placed by any other country. There has been significant
interest from a number of countries.
So there have been discussions, answering questions with
them, you know through the typical process, but so far there
has not necessarily been an order. I think they are waiting to
you know see the performance of the ship as we go through our
post-delivery test and trials.
But I can tell you there is significant interest. We have
had riders on the ship, and there continues to be great
interest in it.
Mr. Stupak. Thank you. I have no further questions.
Mr. Chairman, again, thank you for your courtesies.
Mr. Taylor. The chair thanks the gentleman from Michigan.
Admiral, on my visits to the yards, I have seen Captain
Murdock there, and I would presume Captain Murdock's job is to
make sure that the ribs, the frames, the scantlings are all
there, that he has got some sort of a set of specs that he is
checking, that he has an original set of plans that he is
checking against what is being done to make sure that what the
shipyard is doing is matching what you have on paper. Is that
correct?
Admiral Landay. Yes, sir. And the design is actually the
shipyard's design. The design is endorsed by the American
Bureau of Ships (ABS) under the Naval Vessel Rules, and then
both ABS and the Navy supervisor shipbuilding ensure that the
ship is built to the design that we certified.
Mr. Taylor. Does he use computer-assisted drafting in order
to generate those specs that he uses to ensure that the
shipyard is following?
Admiral Landay. Yes, sir. They use commercial computer-
aided design (CAD) programs that are available.
Mr. Taylor. Okay. So I would think using that, he ought to
know every pound of aluminum that goes into one and every pound
of steel that goes into the other. Is that correct?
Admiral Landay. Yes, sir.
Mr. Taylor. So what percentage of the cost of those vessels
is materials--raw materials--not engines, just steel and
aluminum to get the hulls?
Admiral Landay. I don't know that off the top of my head,
sir. I could get that for you. I just----
Mr. Taylor. Well, Admiral, the point that I hopefully am
making is anyone who can read the commodities section of the
paper knows what the price was and the price of aluminum is
one-half of what it was two years ago.
We have a nation that is $11 trillion in debt mostly
because we are not doing a good enough job in trying to find
some bargains for the taxpayers. So who in your organization is
responsible for putting a pencil to how much actually goes into
those vessels and how much we ought to be saving now over 2
years ago?
Admiral Landay. Well, part of that is the ongoing contract
discussions with both----
Mr. Taylor. No, sir. Who in your organization? I would like
a name, Admiral.
Admiral Landay. Well, the program manager and then myself
as the final source selection authority for the next contracts.
That is one of the things that we have in there.
One of the discussions we have had with both companies in
the original bids that they gave us for the fiscal year 2009
ships, you know they were based on a certain timeframe in which
we would have got the prices.
We asked both companies to go back and see what they could
get, reductions in those prices based on new prices of the
material.
At the same time, there are affordability initiatives that
we work with both of the companies to try to drive the
neighbor, manpower and even material out of it.
Mr. Taylor. One thing at a time.
Admiral Landay. Sir?
Mr. Taylor. So if I called your program manager and said,
``What did you pay for this deal a couple of years ago, and if
you had to buy it again today,'' he could give me an answer
this afternoon?
Admiral Landay. Sir, he should be able to.
Mr. Taylor. Okay.
What percentage of LCS-1 was welded by hand, as opposed to
on a panel line?
Admiral Landay. I could get that for you. I don't know.
Mr. Taylor. Who in your organization would know that?
Admiral Landay. The program manager and his team would know
that.
Mr. Taylor. Could Captain Murdock give you an off-the-top-
of-his-head estimate?
Admiral Landay. We could get it for you, sir. We can get
it. We can get it for you. He doesn't necessarily----
Mr. Taylor. Well, would you say 100 percent was done by
hand?
Admiral Landay. No.
Mr. Taylor. Okay. Would you say 90 percent was done by
hand?
Admiral Landay. I think about half.
Mr. Taylor. Okay.
On the Austal ship, which is LCS-2, what percentage of that
ship was welded by hand?
Admiral Landay. Certainly higher than that. I think it is
closer to about 70 percent.
Mr. Taylor. Okay. You are now speaking with the shipyards
about building 3 and 4. Marinette would get 3. Austal would get
4.
What percentage of LCS-3 do you expect to be welded by
hand, and what percentage on a panel line?
Admiral Landay. Certainly, we would expect LCS-3 to be
less. Again, I would have to go back into the contract
discussions in your bids.
Mr. Taylor. Well, how much? Admiral, what is your goal?
Admiral Landay. Pardon?
Mr. Taylor. If we can see things like panel lines save
money over hand welding----
Admiral Landay. Right.
Mr. Taylor [continuing]. Speed the process----
Admiral Landay. Right.
Mr. Taylor [continuing]. Wouldn't it be reasonable that the
Navy is telling the contractor this is how much I expect to be
done by machine next time?
Admiral Landay. No, sir. What we tend to tell the
contractor is that we want to see the ship built at the
cheapest cost consistent with your processes and infrastructure
at the time.
Mr. Taylor. Admiral, with all due respect, we have opposite
challenges. Their goal is to make as much money as they can for
the shareholders. Our goal should be to deliver a first-class
ship to the Navy at a reasonable cost to the taxpayers. Those
are different goals.
Admiral Landay. But both of us have the same goals, because
they will deliver a good cost to their shareholders, and be
able to deliver a good product to our ships, if in fact they
continue to drive the cost of their ships down, we get
ourselves into serial production.
In fiscal year 2010, they have an opportunity competitively
to potentially win some more ships, so it is definitely in
their interest to drive the target price of their ships down
consistent with----
Mr. Taylor. Admiral, with all due respect for your many
years of service, I respectfully disagree. I really have seen
no effort on the part of either contractor to try to improve
their process, because right now all they got to do is compete
with that other guy, who is also not doing much to improve his
process.
And if the Navy isn't going to step in and say you have to
do a better job, who is?
Admiral Landay. Well, we have told them that they have to
do a better job. We have not stepped in and told them
specifically how to build their ship and their process. In
Austal, as an example----
Mr. Taylor. But, well, Admiral, wait. Admiral, if I may,
because the subcommittee also funds the David Taylor Research
Center. And we spent a lot of money out there, and there are a
lot of very smart people out there.
Admiral Landay. Right.
Mr. Taylor. And I thought the purpose of their research
center, one of the many purposes, was to find more affordable
ways to build more ships.
Admiral Landay. Right.
Mr. Taylor. So why isn't the expertise of David Taylor
being turned loose to find a more affordable way to build what
was supposed to be an affordable warship that is now 18 months
late and 100 percent over budget?
Admiral Landay. Specifically on David Taylor, again I think
there are processes as we develop them through our ManTech
program or our research and development (R&D) program through
the National Shipbuilding Research Program (NSRP) and those
organizations that moved those R&D concepts out into their
shipbuilders, now there is an avenue to do that.
Mr. Taylor. When I walked through Austal shipyard a couple
of weeks ago, I saw absolutely no effort being made to save the
taxpayers a dime.
Admiral Landay. Well, I----
Mr. Taylor. Like Orange County choppers when we ought to be
kicking out Hondas.
Admiral Landay. You are talking about down in Austal, sir?
Mr. Taylor. Yes, sir.
Admiral Landay. I can tell you in Austal there is over a
$100 million investment going on in there to get them to a
modular manufacturing facility. That facility will be online in
the May timeframe. It is about halfway done.
If you remember coming into the yard, off to the left you
saw a big building that was being built. Many of the processes
that we expect them to be able to do in that modular
manufacturing facility, which we think will have a significant
improvement in their productivity, we are testing out right
now, and some of that work that you saw in the back part of
that shop.
There is a major investment going on in that yard, and
there is a significant investment planned for the other yard to
work many of those specific areas.
Mr. Taylor. And Admiral, did Austal make that investment,
or did the taxpayers make that investment?
Admiral Landay. I believe it was the state made the
investment.
Mr. Taylor. State taxpayers.
Admiral Landay. Yes, sir.
Mr. Taylor. And if I am not mistaken, some of that was also
Katrina money.
Admiral Landay. Yes, sir.
Mr. Taylor. Okay.
Admiral, I asked in my opening statement how long would it
take and what organization would be responsible and how much
would it cost to develop the technical data package that is
required to build the ships directly in a free and open
competition.
Admiral Landay. Yes, sir. And our estimate at this point,
as we have looked through that, is on the order of about $60
million per ship, probably 18 months in order to have that
package ready to go, from when we snap the baseline.
And one of the key issues, when you want to get to a build
to print concept, where basically we are going to contract with
a shipyard, and we are going to evaluate the shipyard not on
the performance of the ship, but on the performance of the
specific work package that I gave him under the contract, is to
ensure that we have incorporated all of that change.
So under a build to print concept, for example, we would
not want to go into build to print contract until we had been
through our post-shakedown availability through all of our
testing, all of our evaluation, to ensure that the ship that we
would put under that contract has got a very solid baseline,
and we understand what it is.
Now, having said that, there are a lot of things that you
got to do in preparation for that.
One is to clean up the drawing. So in a new ship--you know
first of a class, you have a drawing. The shipyard came up with
the drawing. We start to build that ship. We find issues,
interferences, changes, whatever it is. We annotate. The
shipyard does those drawings.
When you get done, what you want to go back in is clean up
all those drawings, make sure all those changes, revisions,
modifications are fully incorporated into the drawing.
We are doing that right now with the fiscal year 2009 in
both of the shipyards, so we are taking those first steps. But
what we would really want to do before we would get to a build
to print concept is to define what that baseline is, because
any change I make after that baseline is all going to be change
on me, and it is going to be change to the target, not change
on the share lines.
Mr. Taylor. Okay. So just for clarification, if this
committee wanted to reserve all of our options as far as a free
and open competition on follow-on ships, we would have to
allocate approximately $60 million per design.
Admiral Landay. Yes, sir. That would be our estimate at
this point.
Mr. Taylor. To be expended at David Taylor, or where?
Admiral Landay. We haven't necessarily decided where it
would be. Well, there are a couple of ways that we could do it.
One of them would be to go out. Some of that is this. Some of
that would be to the individual shipyards to clean up, as I
said, the work packages they have in place.
And then we would have either a subsequent design agent
that could be Naval Sea Systems Command (NAVSEA) or that could
be a contractor like Gibbs & Cox or somebody like that, who
builds then that design package for us out of the designs that
we get.
So when you think build to print, you have got to remember
that it is going to be more than just the hull of the ship and
the distributed systems. It is really the entire integrated
ship that you want to look at, so it is the combat systems
implications, the cables, the testing.
You know how do you test that ship? How are you going to
put all that in? That all becomes part of an integrated data
package, if we are going to go to build to print for the entire
ship.
But it would be a third-party source in our mind, who
would--you would take that design responsibility, and whether
that would be the Navy under NAVSEA or whether that would be
you know one of the other design houses, we haven't decided
that yet.
Mr. Taylor. Admiral, given that, what are the chances that
the mission modules will be ready prior to LCS-2 going to sea?
Admiral Landay. The mission modules? Well, there are some
mission modules that are currently ready right now.
Ms. Sandel. Yes, sir. If you would allow me, we delivered,
as you are aware, initial mission modules in each system with
Anti-Submarine Warfare (ASW) and mine countermeasures and the
Surface Warfare (SUW).
We are in varying levels of technical maturity and testing
in every one of those areas, so we have timed ourselves to be
in sequence to the sea frame.
We have intentionally slowed down in some areas of design
and development and testing in order to pay this sea frames so
that we are not delivering ahead of need, but having them
available for the testing required to be able to support the
requirements.
We have intentionally taken the same steps back to go ahead
and pace ourselves to not buy things in advance and having them
sitting on the dock awaiting a sea frame. So we are in lockstep
as far as alignment of schedules.
Mr. Taylor. Has any thought been given to putting those
modules on other platforms?
Ms. Sandel. Sir, we have been asked by your organization to
take a look at alternative platform studies, and that is in
process right now, and Admiral Guillory may want to speak to
that little bit more.
But we have analysis ongoing, as well as experimentation to
design the desire. How will we do this, and if it is feasible,
and how would you go about it.
Mr. Taylor. And when should we expect an answer on that?
Ms. Sandel. The language requested it be submitted with the
submission of the fiscal year 2010 budget.
Mr. Taylor. So we should already have it?
Ms. Sandel. It is in process to be submitted. Yes, sir.
Mr. Taylor. The chair recognizes the gentleman from
Pennsylvania, Admiral Sestak.
Mr. Sestak. Thank you, Mr. Chairman. I apologize. I was at
another committee on healthcare, which is kind of why I
initially got into this line of work.
I wanted to ask--and if these have been asked, I would
apologize. I jotted down a few notes while I was in the other
hearing--at the end of January, you had said you were going to
award a contract for the two fiscal year 2009 ships, and they
were going to be bundled into the three that will be the fiscal
year 2010.
Does a delay on that have to do it all with that they are
having problems meeting that cap, the $460 million cap, for the
fiscal year 2010 ships?
Admiral Landay. Well, I will say that the real focus on the
fiscal year 2009 ships and the way we had proposed that was we
wanted the fiscal year 2010 ships to be options when they
provided us their bids for the fiscal year 2009 ships.
And the intent is to try to get both more pricing pressure
and more economic or the quantity opportunities for the
shipbuilders buy them potentially being able to look at four--
you know, four, three, two or one, depending on how that
worked.
So right now the delay--and again, our goal had been in the
January timeframe. It was really going to be function of when
both sides could come to agreement. The delay has been as much
in trying to continue to work through affordability and cost
reduction efforts on both sides on the 2009 ship----
Mr. Sestak. Does the delay have anything to do with their
having problems meeting that cost cap fiscal year 2010 ships?
Admiral Landay. Well, we will see when we get their final
work. But, yes, sir, that is one of the key drivers that we are
working very hard, is that we are on a path to do that, and
everybody understands that is one of the requirements.
Mr. Sestak. I guess is LCS-2--has the price--have you had
any budget growth on that since what was in the fiscal year
2009, what was presented in the fiscal year 2009 budget?
Admiral Landay. We will be able to deliver the ship for the
money that we had in the budget. Yes, sir. I mean there have
certainly been some cost growth that eating into the program
manager's reserves into the program.
Mr. Sestak. About how much?
Admiral Landay. I can get it to you, sir, separately.
Mr. Sestak. Do you think it would--in a GAO study that was
done and other times, they have talked about the aircraft
carrier being funded at a confidence level of less than 40
percent and ships being funded--and I understand perhaps the
LCS initially--at less than 50 percent confidence factors for
the prices that you provide Congress in the budget.
Do you think at this stage of the game with the issues that
have been attendant to the LCS in costing, confidence, as you
come forward again, that we should cost it now to at least 80
percent costing factor?
What is the downside of telling us we have got an 80
percent confidence factors, that that is what the real price
is?
Admiral Landay. Yes, sir. I think at an individual program
level--you know if you just looked at LCS stand-alone,
certainly you would like to do that. When you look across all
of the shipbuilding programs and the balance, obviously, that
the department needs to do in terms of risk versus capability,
I think that is really the trade that we have to make.
Mr. Sestak. So is the $460 million--is that at 80 percent
confidence factor in your pricing right now?
Admiral Landay. No.
Mr. Sestak. What is it?
Admiral Landay. I would say it is probably 50 percent.
Mr. Sestak. So there is a 50 percent chance at best that we
might hit the $460 million.
Admiral Landay. As we currently, yes, sir, as we currently
have the ship designed, absent any affordability--now, again,
you get into multi-years and EOQs, and that helps to drive that
cost down.
Mr. Sestak. I will ask you a question. I guess that my
overarching question is the Navy has been able to afford $12
billion to $14 billion per year for Navy shipbuilding, but you
came forward last year and said we now need $20 billion, which
is I guess about an 80 percent or so increase.
With 50 percent confidence factors coming forward and less
on other types of vessels, what kind of confidence do you have
that if we almost double your procurement budget, that is going
to get us--I mean how are you going to afford all this?
I mean what is the confidence of having come forward last
year and told us that your procurement budget has to leap from
$12 billion, $20 billion or $22 billion, and yet we are kind of
getting confidence factors of 50 percent or less when you come
forward?
How comfortable are you with that $22 billion?
Admiral Guillory. Sir, the question you ask certainly goes
beyond the information I am prepared to provide a response to.
And I think we will take that for the record and get back to
you on that.
But if I may say that, the confidence factor also reflects
the maturity of the program, too.
And if you look at the Arleigh Burke-class and the--you
know as we are still in building 1/08 it is coming down. The
building wait is now--the confidence factor in funding that
ship is certainly different than the confidence factor of
funding an LCS, and that is pretty understandable.
So it is a combination of statistics and numbers, but it is
also a confidence factor based upon the maturity, and also the
priorities of across the shipbuilding portfolio.
And ideally, certainly as a resource sponsor, I would be
very grateful if all my ships were funded to the 80 percent
level or some higher percentage. However, I do recognize that
that is----
Mr. Sestak. Excuse me. I wasn't talking about funding at
that level. I was just asking should you come to Congress and
let us know that when we buy the new aircraft carrier, it is
only at a 35 percent confidence factor. That was my only
question, not to what funding.
Let me then bring it back to LCS, one final question. What
is the status of the Navy's stated intentions in the July 2007
testimony to move to a common combat system for LCS? I may have
missed that in the----
Admiral Landay. No, sir. We continue to look across the
board at opportunities to go common across the two sea frames.
We did in fiscal year 2007 do an initial study on a common
combat system. The look at the time, based on the assumptions
that we used in that study, was about a wash.
The savings that you would get lifecycle from a training
infrastructure perspective were offset by the impacts from a
nonrecurring engineering of making changes to the ships.
We currently have a second study that we have just started,
as the Navy has gone to its objective architecture, which
should give us more flexibility. We are going back and taking
another look at that.
So we are continuing to look at those opportunities, but
unless we see there to be a significant trade-off, we right now
don't have anything in place on the fiscal year 2009 or 2010
ships to go to that.
However, I would say in our fiscal year 2010 contract, one
of the things we have asked shipyards to give us, in addition
to the price for a ship, is also to break that price down and
give us options to buy essentially a core sea frame without a
combat system, the cost of buying a combat system, and then the
cost of buying a combat systems equipment in there as a----
Mr. Sestak. So you may or may not go to a common combat
system. Is that what I should take up?
Admiral Landay. Well, in fiscal year 2009 or 2010, I do not
expect----
Mr. Sestak. But then perhaps maybe later.
Admiral Landay. We are looking at it. And it all depends on
what the business case will play out.
Mr. Sestak. Thank you.
My question--I didn't mean to ask the question that you
really weren't here for testimony. I guess the reason I asked
it is that I have been quite struck by the demands of the
Nation for accountability and clarity of the mortgage security
issues on Wall Street.
I wonder if we ourselves in the Defense Department here in
Congress might want to have more of that transparency upfront
on how confident are we about this mortgage we are actually
taking out on our future for our children. How good is that
price you know in a sense, that you come forward with all the
time?
And I was quite struck by the GAO study, although I was
cognizant of it in a prior life, of how good these confidence
factors are, because we tend to sometimes berate people for
coming forward and telling us it is going to cost more, but
maybe for you upfront that LCS would come in for less than 50
percent confidence factor, we might approach it differently.
But thanks for your comments.
Admiral Landay. Yes, sir.
Mr. Taylor. The chair thanks the gentleman.
The chair now recognizes the gentleman, the ranking member
from Missouri, Mr. Akin.
Mr. Akin. Thank you, Mr. Chairman.
I just have a couple of quick questions. First of all, is
this ship mostly viewed as a Navy ship in terms of its use, or
does the Marine Corps have a sense that this is something that
they would be using as well?
Admiral Guillory. This is a Navy ship, and with its payload
capacity, it is certainly--there are opportunities perhaps to
bring Marines aboard and execute missions, but right now it is
essentially a Navy ship. Yes, sir.
Mr. Akin. I understand that all the ships are Navy ships,
but I just got to think that there has got to be a difference.
Some of them are specifically designed for the Marine Corps.
This is not specifically designed for Marine Corps use. Is that
right?
Admiral Guillory. No sir.
Mr. Akin. Okay. So there may be some cross applicability.
You might be able to put some Marines on board, but it is being
used as a Navy platform for naval use, as opposed to Marine
use. Is that correct?
Admiral Guillory. Yes, sir. That is correct.
Mr. Akin. Okay.
Second thing. I think I heard in terms of these different
missions packages, I thought what I heard you saying was that
these things will be ready to plug in, and they will be fully
integrated when we take acceptance of the ship. Is that
correct, or did I misunderstand?
Ms. Sandel. If I may, yes, sir, it is at varying levels of
technical maturity. As the program was originally envisioned
and laid out, there was a spiraled development of the mission
packages themselves.
So the systems that comprise those mission packages many
times were developmental items or engineering design models or
a low rate initial production, so we have always understood
that we took the design as it was in progress, and it was being
tested and developed, and then ultimately going to be fielded.
So when we get to the point that we have the mission
package for the mine countermeasure system, for instance, it
will have the systems embedded in it that have been designed to
interface standard. It will have the supporting equipment, and
it will be ready for testing on the sea frame and in accordance
with the sea frame schedule.
However, the interesting part is, like we have talked about
controlling costs on the contract, this is also one aspect,
that this is unusual. We have the ability to test the very
detailed level of testing on these mission systems, which are
individual programs of record, prior to their being
incorporated into the mission package.
So each program is walking through its testing regime as it
comes to the sea frame. So we have gotten a delivery of an
asset that has been fully tested, understood to perform, then
is integrated into the package and delivered for the end-to-end
testing to make sure the interfaces are all available and
forming.
Mr. Akin. I thought I heard sort of a yes and a kind of yes
and a kind of no answer, I think.
What I am hearing you say is, yes, the mission packages
will be available and integrated, and they can be plugged into
the ship, but they are in a state of spiral development, which
means that they may or may not work or may be changed
significantly over a period of time. Is that correct?
Ms. Sandel. I would state that slightly differently. Yes to
your first part. Second, they will work, because we will not
deliver a component or mission system to the package for end-
to-end testing that wasn't performing.
Mr. Akin. How many different separate mission packages are
there total?
Ms. Sandel. In individuals, we have the mine countermeasure
mission package, the surface warfare mission package, and the
anti-submarine mission package. They are comprised of
individual numbers and quantities, depending on the
requirements and the sponsor.
Those are comprised of 8 to 10 systems in each area, so you
have a complexity level where you are delivering systems to be
integrated to be tested in a mission package.
So you are going to have technical development as you move
forward and----
Mr. Akin. So there are three missions packages at this
point, totally?
Ms. Sandel. Yes, sir.
Mr. Akin. Okay.
I come back to the first question I asked the beginning of
the hearing, and I felt like I got a kind of maybe, sort of
answer.
My question is, is there one person who is being measured
and held accountable for the delivery or, from the Navy point
of view, who is in charge of this program, makes all the
decisions and can say, ``Yes, I understand you want to do this,
this and this. We have looked at it all, and this is my
decision. This is what we are going to do, and this is how we
are going to move forward.''
Is there any one person in charge? I understand the idea of
the team concept of leadership. I understand it is good to get
a lot of input from different people. I understand breaking a
project into component parts.
But ultimately somebody has got to be held accountable, and
somebody has to make the decisions. Is there one person who
this is their baby, and they are held accountable for it in the
Navy?
Admiral Landay. Yes, sir. The acquisition----
Mr. Akin. What is his name, and what position is it?
Admiral Landay. Captain Jim Murdock, sitting behind me, who
is the acquisition program manager at this point, is the person
responsible for delivering the LCS program.
Now, Captain Murdock does not have the authority, for
example, to change requirements of the program. Captain Murdock
does not have the authority, nor do I, to change the missions
of the program.
His job is, as we build the ship as it has currently been
laid out by OPNAV folks to those requirements, and if we cannot
do that, then we will go back to the OPNAV folks and explain to
them what the issues are, and then that will be keyed up.
But in terms of do their bring the ship to the capabilities
that have been given to us by the CNO, the program manager is
the one person responsible for the ship.
Mr. Akin. So can the mission requirements or parameters or
specifications on the ship be changed?
Admiral Landay. Yes, but not by Captain Murdock. Captain
Murdock would go back to Admiral Guillory, and collectively we
would go to the senior Navy leadership and say, ``The cost of
this requirement to get there is far more than we expected.
There is an impact.'' And we would have that discussion with
them.
This is part of the process that has changed as a result of
early LCS lessons learned.
Mr. Akin. Who is it who is--so there is no one further up
the line, then, that basically is in charge, that could
basically make that decision. It is all a group decision
whether or not you are going to change a requirement of this or
that. Is that right?
Admiral Guillory. No, sir. For general requirements
generation, I am responsible for staffing back and taking it
forward to the chief of Naval operations----
Mr. Akin. Right.
Admiral Guillory [continuing]. Admiral Roughead.
Admiral Roughead is authorized to approve key attributes
for the ship. Key performance parameters are approved by the
Joint Requirements Oversight Council (JROC), the Joint Staff,
the chairman of Joint Chiefs of Staff, and of which the ship
has 10 key performance parameters.
It has 37 key attributes. Attributes include launch and
recovery of aircraft, what type of sea state that the ship
ought to be able to do that in. Those are the authority of the
chief of naval operations to approve or to change.
Mr. Akin. I guess what I am getting at is I don't
understand your organizational structure that well. Maybe it is
all just crystal clear to you who is responsible for what, but
from my point of view, when I look at the big picture, this
thing looks like the rudder has been shot out of it, and it is
just drifting all over the place as a program.
And it seems like, because of the fact that you start with
one number and one set of parameters and you change it, and it
doubles the cost of the ship.
And then now we have got these two different ships, and it
is not quite clear which one you are going to buy, and yet you
still want to build more both of them. It just seems to me like
the whole thing is wandering some.
And it seems to me that there should be one person, who
ultimately has got to have to make those decisions and have a
game plan and start moving forward with it.
And what you are telling me is well, it is sort of yes and
sort of no. And I understand there needs to be input, but
somebody's got to be in charge of it. And it seems to me like
it is drifting.
Maybe I am mistaken, but at least the data seems to suggest
there is a lot of changes that have been moving through this
program, which have been very expensive.
I will let you respond.
Admiral Landay. Well, I would say on the acquisition side,
clearly--and we have identified that up front--there have been
some changes to this program, which drove costs.
One of the outcomes of that is, as we went back and looked
at our process and we said as these changes were coming into
the program, how did senior Navy leadership understand and were
informed and had the ability to influence and make decisions on
those changes?
Before, our process was probably not as clean, so the
secretary has put in a what I call six-gate two-bat pass
process to where now we periodically on the acquisition side
will go back to the larger organization, which includes the
Assistant Secretary of the Navy for Research, Development and
Acquisition (ASN (RD&A)), the U.S. Secretary of the Navy
(SECNAV) acquisition representative and the CNO staff, or the
commandant if it affects the Marine Corps, and we walk them
through that.
So you know Mr. Sestak's comment about confidence. We would
have those discussions with them. If we come in and sat now and
say, ``The cost of this ship is growing, because we can't
figure out how to get through a certain requirement,'' instead
of just continuing to grow the cost, we now have a mechanism, a
better mechanism to go back and have that discussion with
Admiral Guillory and the OPNAV.
But in the end there is two pieces of it. There is a
requirements levied by the operational side, the CNO. The
acquisition community under ASN (RD&A) is responsible for
executing that. And together at that point, CNO, SecNav, ASN
(RD&A) as a staff is where those two pieces come together.
So if there is a requirements trade, the CNO has to be part
of that. If there is an acquisition implication of that, then
the acquisition side of it. So it is the way that the process
is set up to work.
Mr. Akin. Thank you very much.
Mr. Taylor. I guess I will open this up to the panel. Will
the second LCS be delivered with a functional combat system?
Admiral Landay. Yes, sir. It is our goal right now that we
would deliver that ship to meet with all the capabilities that
it needs. As you know, we----
Mr. Taylor. Do you have the time set for that, Admiral?
Admiral Landay. We are looking for delivery in the
September timeframe.
Mr. Taylor. So by September it is going to have a
functional combat system.
Admiral Landay. Yes, sir.
Mr. Taylor. Admiral, several of us have touched on it, but
I am going to give you an analogy that I continue to be
troubled with.
I guess all of us at one time or another have hired someone
to paint our house. Sometimes you do it by the job, or if you
trust the person, you do by the hour.
I am getting the impression we hired someone to paint our
house on a fairly trust--you know I trust you, he trusts me.
But I come to my house, and he is using a one-inch brush, and I
am paying him by the hour.
I think it is every bit my right to say, ``You know what?
You are not trying to save me any money. You are trying to drag
this out.'' That is the impression I get with both of these
builders.
And I have seen--again, I want to give you this opportunity
while we still have time, to tell me what they are doing--not
building additional buildings to get people out of the weather,
but what are they doing to automate their processes, because we
know a huge portion of the cost of this vessel is the welds--in
addition to the metal, the welds. And there are a heck of a lot
of welds on that Trimaran.
So what steps, concrete steps, are being taken to automate
that process, because I will use the analogy. The subcommittee
visited the Hyundai yard about two years ago. It was fortunate
to spend about four hours in that yard.
In the four hours I was there, I saw them doing everything
from making propellers on-site, shafts on-site, bearings on-
site, making the engine on-site. And every Saturday, another
hull was launched.
The four hours I was there, I never heard a grinder, which
meant that every well was being cut perfectly, so someone
didn't have to go back and fix it. Every cut of the metal was
being done perfectly, so someone didn't have to go back and fix
it.
When I visit Austal, when I visit Marinette, I hear a lot
of grinders. I hear a lot of mistakes getting fixed by somebody
doing manual labor to undo it.
So what is being done, and particularly who in your
organization is walking through there, knowing that we are
basically their only customer and saying, ``You know what?
There is a better way to do this, and we expect you to do
that.''
Who is doing that?
Admiral Landay. I would tell you that the key--the overall
program team is doing that combination of our supervisor of
shipbuilding, who is our lead waterfront technical
representative in the program office.
So we have lots of discussions with the companies. We, for
example, just recently put together a team about 2 months ago
that was program folks, shipyard folks, and outside
shipbuilding experts to walk stem to stern both of those ships
with the companies and look for opportunities where we would
propose back to them and say, ``There should be a better way to
do this. You are welding too much pipe. You need to start
bending pipe. You are doing too much effort in here.''
And so there is a very aggressive effort to--with them--I
mean they are a part of this--to look for those opportunities.
We have seen in what has been proposed to us in the fiscal
year 2009 program. We have seen where they have also proposed
production efficiencies.
We have seen where the companies have told us under some of
their company award or in capital expenditure (CAPEX), if we go
down that path, additional equipment that they would buy, be it
pipe bending machines or other things to improve their process.
The Austal facility that I mentioned to you, that modular
manufacturing facility, is not just a building. It is to take
that facility and walk down similar lines that you saw before
in the Hyundai plant that you talked about, about getting us
into a more logical, leaned out manufacturing process.
There are always going to be additional things we can do,
but the first step of this that we thought was particularly
critical, and we see both companies doing, is looking to
improve the lean processes they have in place to make this more
modular, to get the production inefficiencies out of their
process.
And then from there, if there are additional investments
that they need to make in terms of infrastructure machines, the
companies have both indicated plans where they would go forward
and do that.
But from the Austal, you know what you saw in that one shed
it is exactly those processes that we see the company working
very hard to improve and the result of why they went to this
modular manufacturing facility.
Mr. Taylor. Okay, for the record it is my understanding
that the materials for LCS-3 and LCS-4 have already been
purchased, so we are not really going to get any savings as a
result of the price of commodities going down.
But for the record, should we want to continue with these
programs, I would like to know the difference between what we
paid for the first two ships--that is for each--and what it
would cost if we bought those materials today.
For the record, I would like to know what percentage of
each of those vessels was welded by hand, what percentage was
done by machine, and what is your target for vessels 3 and 4
and vessels 5 and 6.
Admiral Landay. Yes, sir.
Mr. Taylor. Okay. When should I expect those answers,
Admiral?
Admiral Landay. We should be able to get you percentages of
ships of 1 and 2, I would say by today; 3 and 4 and 5 and 6 I
just need to go back and you know take a look through the
contract. I would say by the end of the week I should be able
to tell you what those are.
[The information referred to was communicated verbally and
is not available for print.]
Mr. Taylor. Okay. Thank you, sir.
Mr. Akin.
Again, we want to thank our witnesses. In fairness to the
workers at Marinette, I do want to say that I had the
opportunity to visit LCS-1 in Norfolk. The commanding officer
of the ship was ecstatic with its performance. And I think in
fairness to those workers, they should know that.
In fairness to the taxpayers, it was 18 months late and
over twice over budget. It is the latter that we need to
improve, and it is the latter that I hope the Navy is focused
on improving.
But I want to thank our witnesses for being with us.
This hearing is adjourned.
[Whereupon, at 12:05 p.m., the subcommittee was adjourned.]
=======================================================================
A P P E N D I X
March 10, 2009
=======================================================================
PREPARED STATEMENTS SUBMITTED FOR THE RECORD
March 10, 2009
=======================================================================
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