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Trump Administration ‘Supportive’ Of Second Littoral Combat Ship in 2018 Despite Only Including 1 in Budget

WASHINGTON, D.C. — The Trump Administration is “supportive” of buying two Littoral Combat Ships in Fiscal Year 2018 despite the federal budget request containing funding for only one, the Navy’s acting acquisition chief said this afternoon.

Allison Stiller told the House Armed Services seapower and projection forces subcommittee today that “the administration recognizes the criticality of our industrial base and supports funding a second LCS in FY 18,” even though yesterday’s budget rollout asked for just one and was widely criticized on the Hill today for putting at risk two American shipyards, Fincantieri Marinette Marine and Austal USA, which rely on procurement at a rate of three a year.

In a unprecedented move, the Trump Administration told the Navy mid-day on the day after the budget rollout, following a lengthy budget-crafting process, that it would support procurement of two instead of one LCSs.

“The administration is supportive of a second LCS. That was brought to us today, so that’s what I know,” Stiller told USNI News when asked about the second ship. Asked if the ship would come on top of the Navy’s topline or in lieu of some other spending priority, Deputy Chief of Naval Operations for Integration of Capabilities and Resources (OPNAV N8) Vice Adm. William Lescher told USNI News, “we don’t have those details.”

Several sources confirmed to USNI News that the decision to throw administration support for a second LCS in the Navy’s budget was intended to be presented in an earlier hearing before the Senate by Acting Secretary of the Navy Sean Stackley and Chief of Naval Operations Adm. John Richardson. Richardson and Stackley were aware of the shift before the hearing but the service had not yet worked out how it would address the issue.

Instead of the earlier hearing, Stiller was informed shortly before she was to appear before the seapower subcommittee that “OMB was supportive” of a second LCS in the budget, and she amended her oral statements shortly before she addressed the House panel, USNI News understands.

“The administration is supportive of a second ship in LCS,” Stiller told reporters after the hearing.
“I do not know the details. I do not know how that’s going to manifest itself.”

The revelation comes after Stackley and Richardson told the Senate panel earlier in the day that they could only afford one ship in their budget but that they would look to mitigate industrial base impacts in the 2019 budget.

“The three ships appropriated in 2017 with the additional ship requested in this year’s budget ensure continued production at both yards. This rate of production, however, only meets the minimum sustainment,” compared to the optimal production rate of three a year across the two years, Stackley said at a Senate Appropriations defense subcommittee hearing, “so we’ll continue to update our assessment of the frigate schedule, assess the effects of this and other shipbuilding contract awards on the industrial base, and make any appropriate modifications to our budget for 2019 to ensure healthy competition for the future frigate program.”

The Navy originally planned to compete variants of the two LCS designs for the future frigate contract but has since expanded the competition to include other domestic and foreign designs.

Stackley added later in the hearing that “right now we are procuring (LCSs) literally one year at a time. We are going to take the three ships [and] combine it with the 2018 ship that we have requested in order to go out with a single procurement of those two years to provide as much stability across the current LCS builders as we can, while we continue to refine the requirements and press forward with the design of the frigate because we want to keep the LCS and the frigate heel-to-toe as best as possible so that we have a healthy industrial base to compete for that future frigate program.”

Stackley told USNI News after the hearing that, given that FY 2019 procurement hasn’t been decided yet, the contract with Marinette Marine and Austal USA would likely cover the 2017 and 2018 ships and include options for additional ships, to give the Navy some time to decide its 2019 plans while locking in multi-ship pricing.

Sen. Tammy Baldwin (D-Wisc.), who represents the Marinette Marine shipyard, questioned Stackley during the hearing, noting that a reduction to two ships a year could lead to 450 layoffs at the yard, and a reduction to one ship could lead to 800 jobs lost.

Stackley told Baldwin that “the challenges that we have in 2018, our number one priority has been, and we’ve been emphatic about this, is to restore our readiness – not to do it at the cost of procurement and modernization, but in 2018 budget-wise we don’t have the capacity to grow in terms of procurement and modernization. That becomes a 2019 budget issue that we’ve got to deal with through the defense strategy review. The one LCS in 2018 only makes sense when you combine that one ship with the three ships in 2017 so that across the two builders they’re going to each get at least the one ship per year rate, which is below the optimal, which was the three across the two builders. … It’s below the optimal but it does meet the minimum sustaining” rate to keep the yards from shuttering.

He added that the two yards are looking at a backlog of work of 10 ships apiece, and so while the lower LCS procurement number in 2018 may cause some loss of skilled labor, particularly in the supply chain, the Navy would work with the builders to manage that backlog and minimize any layoffs at the yards themselves. Stiller clarified in her testimony on the House side that ship delivery dates could be postponed, for example, to stretch out work until the frigate transition takes place.

— Sam LaGrone contributed to this report

  • PolicyWonk

    “The administration is supportive of a second ship in LCS,” Stiller told reporters after the hearing.
    “I do not know the details. I do not know how that’s going to manifest itself.”
    ====================================================
    I can answer that question: it’ll manifest itself as an extension to an existing corporate welfare program, where the taxpayer once again gets minimum benefit for maximum dollar spent.

  • Corporatski Kittenbot 2.0

    Alas an order of one vessel is one too many.

  • DaSaint

    This was predictable.
    Seriously, there are so many ways to address this non-issue. There are lots of classes that have multi-year gaps. It’s unreasonable to expect to build multiple vessels per yard per year.

    These yards will be just as competitive as yards with no warship construction, and we know that won’t happen. Not for a new class frigate.

    This is between Ingalls and these 2 yards. NASSCO doesn’t build warships. Eastern is busy with the OPCs. Bollinger lost the OPC contract due to their FRC workload, plus they haven’t done a Navy combatant. That leaves Bath. I think they would rather keep up their proficiency on what they know vs a new class. It’s one of the three.

  • DaSaint

    Not disputing their expertise. Just saying that this is going to be a highly competitive competition. They just lost on the OPC, remember? Building outdoors and with more expensive labor puts them at a competitive disadvantage. The chances that they can 1) propose a completely new class or an acceptable French, Spanish, or UK design AND beat Ingalls with a spinoff of their NSC or either of the 2 LCS yards is slim.

    • tpharwell

      I lose many jobs I am better off without. What inference are you implying we should draw from this fact ? That the fact that Bath did not underbid someone reflects poorly on it ?? Sure they are good, you say; just not competitive. That is some sort of compliment.

      I am disposed to agree with you this chance is slim, but for different reasons, they being that the yard is small, GD is building other things there; among them is the DDG 1000 series; and GD has not given up on an extension of that program. But if you counter that the Zumwalt program is history, what then will GD have to keep Bath going “at full capacity” ? Tug boats ?

      GD has HI for competition when it comes to Burkes. Those orders don’t grow on trees. If as currently planned, the Zumwalt program is facing extinction, then Bath will soon start cutting back, and under that circumstance, most assuredly, GD will have the motive, the means, and the opportunity to be competitive in proposing to build a frigate from the USN.

      Take note that Canada is building a new frigate in Halifax that is based on the Danish design. Who is doing that for them, I wonder ? And what will it cost ? Might it be somewhat more formidable than the HI patrol frigate, not to mention an LCS gunboat ? Might it not make sense for the Canadian MoD and the DOD to collaborate on building a frigate based on a common NATO design ? And might it not make sense for GD to partner up with whoever is building the new Canadian frigate, and offer to build something similar in Bath ?

      So far as competitive advantage is concerned, HI is in the best position simply because it has something to offer to the Navy now – and has for the past five years or so. It is ready for this race. If that were all that matters, it would have won it by now. But I am afraid it is not, as the start of the race has been delayed for the sake of other contestants.

      Just remember this: you can never lose a design competition that never ends.

      • DaSaint

        So let me try to address your points. I think the inference is that capability is no longer the only significant factor in the decision-making process, and that cost is now more important than ever. If the Navy wants to build $1.2B frigates, then sure, Bath has as good a chance as HII, but then we’re encroaching on Burke-class type pricing. I don’t think that’s the desire of the USN. You state that Bath didn’t underbid someone, but ‘underbid’ presumes they know what the winning bid would be, and acted to undercut that bid – an underbid. That wasn’t the case with the OPC contract. All 3 finalists presented their best and final offer, but the tea leaves were clear in my opinion:
        1. Bath built expensive, and complex USN destroyers and cruisers. They were expensive due to their complexity, and sometimes over budget, the fact that the construction was weather dependent, and labor costs were naturally higher in a unionized environment.
        2. Bollinger built virtually all the USCG small to midsize Patrol Craft and was in series production of the FRC which would take several additional years to complete. Despite issues with Bollinger, costs were low, partly because of non-union labor, and construction took place indoors.
        3. Eastern Shipyards had never built a military vessel, but had built over 300 complex commercial vessels for the offshore industry, including for export. They were of a similar size to the OPC, and a similar degree of complexity, and virtually all their vessels were delivered on time and on budget.

        It was clear to me, that with the Coast Guard stressing cost and efficiency, that Bath could not compete, and it appeared logical that the Coast Guard wouldn’t want to put all their eggs in one basket. Therefore Eastern was the favorite, in my opinion, and they won.

        To remain competitive, Bath needs to continue to invest in it’s people, processes, and facilities, particularly indoor construction. GD was forced by the Navy to expand on their indoor bays for SSN and SSBN construction, and they did. The flight III Burks will be series produced for some time, the Zumwalts will need additional work, so Bath will remain a factor. More importantly, the Ticos will need replacement, and it seems reasonable to expect that additional Burke variants will be programmed for that purpose, to keep the yards going.

        Regarding the Canadian frigate, I was not aware that the Canadian navy selected a final design. Please provide that link. Regardless, Canada builds what it wants, and they too are expensive due to short runs and under capacity of their yards. It’s unlikely that the USN builds to a Canadian design, though it’s not a bad idea, but Canada’s requirements are not generally our requirements. It is more likely that a UK, French/Italian, or Dutch (DAMEN) design be considered for our Frigate program, though the Danish design does have some appeal especially on this blog. Unfortunately, there is no ‘common’ NATO design, but the French & Italians have used the same basic hull form for a while, though that seems to be ending.

        HII has the NSC production expertise and yard capacity for a FFG variant, and I would agree with you that it puts them in a good position. Plus they have great lobbyists. They were never really in contention for the LCS program, because I believe the requirements predated the NSC design, and again, politics had a role to play. Speed being the major factor, Austal, Incat, and the Italian-derived planning hull design used by the Freedom class were the focus.

        But Austal’s participation was foretold years before their actual award, and goes back to Streetfightr, the Navy leadership that spoke of a 600-ship navy, and even to the failed Hawaii Superferry program. And Lockheed was just smart, making some strategic moves to ensure they were a part of the prototype phase, which is what the first 4 vessels were supposed to be. Beyond that, there was significant lobbying and congressional input to keep both yards in the program, and the rest as we say is history.

        Who knows, maybe the FFG puts an end to that history, but I doubt it. Too many powerful forces at play.

  • Lazarus

    This is more about a general lack of $$$ available for new construction than anything to do with LCS. The navy has been suffering since the mid 1990’s from reductions in maintenance support. The defense budget in general suffers from competition from debt reductions and tax cuts needed to growth wealth and prosperity. Unlike Reagan, President Trump has apparently decided not to build the military using large amounts of deficit spending. The Goldwater Nichols act of 1986 has created an environment of “forced jointness” where every service is “entitled” to a certain amount of $$$, rather than have the Chairman force a budget focused on real service priorities. Finally, the absence of an admin Navy Secretary has created a critical disconnect between the professionals (uniform and civilian) running the Navy and the President’s agenda. SECNAV Stackley is an outstanding public servant to be sure, but President Trump needs his own person in the SECNAV slot to transmit his ideas on naval strength to the professionals.

  • DaSaint

    Bath’s only real chance is a stripped down version of a Burke hull, with fewer VLS.

  • DaSaint

    Why is it that every time there’s an article about the LCS, the Freedom version is displayed? Lockheed Martin marketing is really, really good.

  • tpharwell

    The Secretary of the Navy seems to have a math problem. Let me see if I can understand it. Here are the givens.

    1. First, let’s start by giving it a name. It is called the “Help me before I build another LCS” problem. The DON wants to stop building LCS, and some time in the future, build something else instead. But it likes building LCS. And being compulsive about it, will do just about anything to build another LCS. Hence the name.

    2. The DON currently does not know what it should build instead of LCS. 3 is the number of years it will take, it says, to figure that out. Currently.

    3. Whatever the Navy decides three years from now, it knows this for certain: it must be built in the United States. And whatever it is must be based on a vessel currently in production somewhere [in the United States]. (So that the DON can receive the benefit of competition from builders who….yada yada yada.)

    4. Shipbuilding programs which meet this criteria are as follows:
    i. LCS Freedom class
    ii. LCS Independence class
    iii. HI Legend class CG WMSL program
    iv. HI carrier replacement program
    v. Virginia class attack sub
    vi Other

    5. Items 4, iv-vi can be ruled out. Hence, only three firms, at most, will be eligible to offer up a replacement for the LCS program.

    6. In order to remain eligible, all contestants must remain in production, and in the case of the first two, at least, remain “at full capacity”, for elsewise, there will be extra delays, and start-up costs, et cetera, which will cause the firm in question to no longer be “competitive”.

    7. Hence in order to stop building LCS, LCS builders must continue building LCS. At full capacity. “Toe-to-heel” insists the acting Secretary of the Navy.

    8. 3 is the number of orders required yearly (on average) for LCS in order to keep both LCS builders fully employed building LCS. Per DON above.

    9. From this, the current rate of production “at full capacity” is derived. Full capacity implies an equilibrium condition achieved whereby completion rate = new order rate; hence no backlog. Taking the average of this, we find that each builder requires orders for 1.5 ships each year to remain at capacity, and further, that it requires at least one year to build 1.5 LCS.

    10. Restating this finding, on average, an LCS builder can build 3 LCS in two years – at the most. Assuming equilibrium conditions.

    11. Does this then mean that the LCS builder can maintain this rate of production “at full capacity” ? No, because, as reported, there is a backlog of 10 LCS orders. Hence the equilibrium condition is not met. Hence, on average, it takes an LCS builder longer than 1.5 years to build an LCS. Hence the builders, on average, are falling behind on production.

    12. How long, then, does it actually take to build one LCS ? Answer, about twice as long: 3 years and more to delivery.

    13. How long does it take HI to build one WMSL ? Somewhat less. How many remain to be built ? 3. How large is the backlog ? Zero. When will the current program end ? 2021, approximately.

    14. How many new LCS orders are authorized in the current Navy budget ? 3.

    15. How many are contained in next years current proposal ? 1.

    16. How many are required in order to meet the stipulated requirement to maintain production at full capacity ?

    Well, actually, it seems that number is zero, for on average, as reported, it seems the builders are having trouble clearing the orders they have received to date. They are either over-booked, or behind schedule, or both. Which is a good thing, I suppose; for them. And so, it would appear, they have not stopped taking orders.

    In fact, for the sake to staying busy, perhaps one can never have enough new orders, for capacity utilization may fall, and lay-offs ensue, despite the fact that one can not achieve an equal clearance rate, and a backlog thus arises. In fact, one might never finish building anything at all, and still fall below capacity without new orders ! Surely, that could not be happening in this case, could it ?

    Could the decision to put off the issuance of the frigate RFP have anything to do with this problem ? Might Navy be having trouble cramming more food down baby’s throat ?

    10 ships; one or two more; three years to build 2. Three years to RFP. Lay-offs ? Hmmm.

    • DaSaint

      Excellent analysis. The only thing you’re missing is the interval between each ship. But regardless, and following your logic, it would appear that the ‘backlog’ of 5 ships per yard will take longer than 2021 or even 2023 to complete, and that does not take into account the newly authorized vessels. So how then do those yards simultaneously compete for the FFG?

      In fact, If the FFG selection is a completely new design, I don’t see how they could interject this new line in their current facilities, while still cranking out the current LCS design. Which is why it’s either going to be won by HII with an NSC-variant, or it’s pretty much going to be variants on one or both of the current LCS designs.

  • RobM1981

    Double down on an inferior product?

    Nice decision, “Administration.”

    I hear that they are upgunning the LCS’s with the DAISY modification: a Red Ryder BB Gun mounted in a fully stabilized turret. It holds upwards of 300 projectiles in its magazine, but there have been problems reloading it in anything but a dead calm.

    Those little projectiles roll all over the decks once they get loose…

  • @USS_Fallujah

    The confusion about this and not using a budget amendment to declare it doesn’t speak well of how the DON is operating without a SecNav.
    I do think this is an intentional move by SecDef to prioritize O&M/Readiness over procurement in FY18, and if the appropriators want to add $500m-$1b to add 1-2 LCS, fine – we’ll take ’em, but that’s up to the Hill, not the Pentagon.

  • DaSaint

    Life cycle costs for a DDG are much higher than for a FFG. Have to get crew size to around 150. And in this day and age you can’t send a warship to sea without 2 helos/UAVs. You can’t.

  • Rob C.

    Administration doesn’t seem to fully know whats going on and relies on others fill in their inexperience. The design is failure, but they want numbers fill in things. Heck our allies are likely going get better ships because US Industry and the Congress is unable to workout better designs and balace what budget at same time. Something has to give

  • USNVO

    Was was no one alive in the 90s? Please review Clinton years, the bathtub effect, and budget submissions of those years.

    Let’s review, just like in the 90s, this year the DoD emphasized readiness and cut out acquisition. Why? Because you can bet Congress will not add any money for readiness. They will usually go with what the administration asks for, so no one can say they are against readiness later, but the won’t add money for it. What they will add money for is buying stuff. Do you think the esteemed Democratic Senator from Wisconsin would be saying anything if “her” shipyard had contracts and there was a shortfall on maintenance? Nope, but now she will work with other jilted Senators and Congresspeople to insert additional funds to buy another LCS. It is just a few hundred million dollars, a rounding error on the federal budget. The same is true for all the other things that were left out.

    Bottom line, it is a tactic to get a larger defense budget. DoD can say, “It is not our fault” and Congress can bring home the bacon, Win-Win, but if you start with not enough sustainment, no one cares. Risky, but usually effective.

  • Ed L

    Lets just send the LCS’s to the visit the islands china claims to be theirs.