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U.S. Navy Releases LCS Bidding Rules

Jan. 26, 2010 - 03:45AM   |  
By CHRISTOPHER P. CAVAS   |   Comments
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The latest round of bidding for the U.S. Navy's Littoral Combat Ship (LCS) program officially is underway with the release Jan. 26 of a request for proposals (RfP) to build 10 ships over the next five years.

The Navy did not immediately make the RfP public, but one source said bids from prime contenders Lockheed Martin and General Dynamics are due by March 29.

After evaluating the company proposals, the Navy plans to choose one design in late spring or early summer as the basis for up to 41 more LCS ships in future years.

The Navy had planned to issue the RfP last fall, but responses to a preliminary RfP came in at much higher prices than hoped for, causing the service in September to cancel plans to continue production of both variants and instead choose only one LCS design - moves intended to reduce the overall cost of the program. The final set of proposals had been expected to be released before the end of November, but was delayed as the Navy continued to tinker with the document.

Each company already has delivered one ship and is working on another. The Navy plans to buy 55 of the roughly 2,800-ton, 400-foot-long ships. If those plans hold up, by 2020 one in six ships in the Navy will be an LCS.

The two industry teams have produced very different ships - each of which, according to Navy officials, has been judged to meet the service's requirements. Lockheed and its shipbuilder, Marinette Marine, delivered a steel-hulled ship of relatively conventional design, while the contender from General Dynamics and shipbuilder Austal USA is an aluminum trimaran of a shape never before used for a naval combatant.

Cost will be the overarching determinant in deciding which design goes forward, top Navy acquisition official Sean Stackley told reporters last September. Congress has imposed a cost cap of $480 million per ship beginning in 2011, although the first pair of the 10-ship award will be bought using 2010 funds.

The Navy has not revealed its price goals as stipulated in the new RfP.

At its 2004 inception the program was to have produced each ship for $220 million, not including the cost of the mission-tailored modules, or equipment packages, the ships will use to fight submarines or surface ships or hunt for mines. But each of the first two ships quickly ran into dramatic cost hikes. A year ago, the Navy said the cost for Lockheed's LCS 1 was $637 million, while LCS 2, the then-unfinished first ship from GD, was listed at $704 million.

In December, the Navy revealed contract prices for each team's second ship. Lockheed's LCS 3, awarded last March, has a contract value of $548.9 million; while GD's LCS 4, awarded in May, has a value of $547.7 million.

While the winner of this year's competition will receive contracts for 10 ships, another competition will be held in 2012 for a second shipyard to build five ships over three years, with the stipulation that the second shipyard can't be associated with the first - a key ingredient to competing for future ships, according to the Navy.

Lockheed released a statement in reaction to the news the new RfP was available.

"The Lockheed Martin team's LCS incorporates a proven hull design that provides easy access to global ports, has a common combat system, and is fully supportable within the Navy's existing infrastructure. We are acutely aware of the Navy's emphasis on affordability and already have reduced labor costs on LCS 3 by 30 percent under a fixed-price contract that is on-cost and on-schedule. We anticipate improving on that in the future," Lockheed said.

General Dynamics declined to comment until officials had a chance to react to the Navy's documents.

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