U.S. Navy Orders Two More Littoral Combat Ships

The U.S. Navy's Littoral Combat Ship program continued its shift into series production with the announcement March 17 that two more ships have been ordered.

Lockheed Martin and Austal USA each received new contracts March 17 to build an LCS ship. Lockheed's third ship, the Fort Worth, was launched in December at Marinette, Wisc. (Navy via Lockheed Martin)

The announcement follows by less than three months the previous award of two ships on Dec. 29.

Under the new contracts, Lockheed Martin received a $376.6 million contract modification to build the yet-to-be-named LCS 7. Based on the steel-hull design of LCS 1, the ship will be built at Fincantieri's Marinette Marine in Marinette, Wis. The work is expected to be completed by April 2016.
Austal USA's deal is for $368.6 million for LCS 8. Austal builds its LCS 2-class all-aluminum ships at Mobile, Ala., and work on that contract is expected to be completed by October 2015.
The contract awarded Dec. 29 to Lockheed for LCS 5 was for $437 million, while Austal's LCS 6 contract was for $432 million.
The contracts are far below the congressional cost cap of $480 million for LCS ships. Sean Stackley, the Navy's top acquisition official, said at the time of the December contract award that the average per-ship target price for Lockheed ships is $362 million, with a goal of $352 million for each Austal ship.
Congress on Dec. 21 approved the Navy's request to buy more ships of each design, shifting from the earlier plan to choose a single type. The Dec. 29 contracts to each shipbuilding team were for one ship, paid for with 2010 funds, with options for nine more. The March contracts are the first options to be exercised, and are funded under the 2011 continuing resolutions, which continue programs that were in effect the previous year.
Fort Worth (LCS 3) was launched Dec. 4 at the Marinette shipyard. Austal plans to launch the Coronado (LCS 4) this year.
Freedom (LCS 1), commissioned in November 2008 as the first Lockheed LCS, is at its home port of San Diego undergoing an overhaul, according to the Navy. The Independence (LCS 2), the first of Austal's breed, was commissioned in January 2010 and is undergoing tests and trials at Mayport, Fla.
The Navy intends to field a total fleet of 55 LCS ships.

USAF to Tightly Control Tanker Requirements Changes

U.S. Air Force leaders are taking draconian steps to ensure the service's prized Boeing KC-46A tanker program stays in line.

U.S. Air Force leaders said its KC-46 program will be scrutinized microscopically. (Boeing)

To protect the aerial refueling plane from ever-expanding requirements, changes will not be allowed except at the "highest level," Air Force Secretary Michael Donley told the Senate Armed Services Committee March 17.

Gen. Norton Schwartz, Air Force chief of staff, who was testifying alongside Donley, added that the KC-46 program would be scrutinized "microscopically" to make certain the "offeror delivers what he promised.
"The level of approval for engineering change orders is not going to be at the program office level," Schwartz said.
Though it has yet to be decided who will have final authority to approve such changes, it might be at the very top level of the Air Force leadership.
"It might be at our level," Schwartz said. "The bottom line is, we intend to maintain discipline on this thing."
Analysts applauded the Air Force's move. Historically, contractors would bid low to win competitions and then use the engineering change order mechanism to avoid fulfilling their contractual obligations, said Loren Thompson, an analyst at the Lexington Institute, Arlington, Va.
"It used to be a common practice in the industry that people would bid low and then try to use engineering changes to restore [profit] margins on the program," he said.
With the new approach, the Air Force cuts off that loophole for any potential contractor, Thompson said.
Byron Callan, an analyst at Capital Alpha Partners in New York, also applauded the move.
"That's pretty prudent on their part. … It's the only way they're going to keep the tanker at the cost that it was bid for," he said.
"It may not be great from a Boeing standpoint," Callan added.
However, in cases where a technology is particularly cutting edge, such an approach could backfire.
"If you were to limit engineering changes on something revolutionary like the F-35 [Joint Strike Fighter], you could really foul up the program," Thompson said.
Callan agreed that the new approach to the tanker program would not be a good idea if it were to be applied to all Air Force contracts.
"Trying to think you can just freeze a design that will last five or six years, that's locking yourself into obsolescence," he said.