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Pentagon Cuts LCS to 40 Ships, 1 Shipbuilder

WASHINGTON — The US Navy's fight to buy 52 variants of its littoral combat ship (LCS) from two shipbuilders may have taken a fatal blow this week after the secretary of defense directed the service to cap its buy at 40 ships and pick only one supplier. The directive also orders the Navy to buy only one ship annually over the next four years, down from three per year.

Defense Secretary Ash Carter, in a Dec. 14 memo to Navy Secretary Ray Mabus, told the Navy to "reduce the planned LCS/FF procurement from 52 to 40, creating a 1-1-1-1-2 profile, for eight fewer ships in the FYDP, and then downselect to one variant by FY 2019."

FF is a Navy designation for frigate. Beginning with LCS 33, the Navy is planning to build a more heavily-armed LCS variant with the FF designation — the result of a 2014 directive from then-Defense Secretary Chuck Hagel to produce a more powerful ship.

The "1-1-1-1-2" profile would provide for one ship each year in 2017-2020 and two ships in 2021, the end of the current future years defense plan (FYDP). That revised build plan would cover ship orders up to LCS 33.

Carter, in the Dec. 14 memo, directs the Navy to reallocate savings from the LCS/FF cuts to buy more F/A-18 and F-35 aircraft, more SM-6 surface-to-air missiles, and support Virginia Payload Module (VPM) development for future Virginia-class submarines. The VPM is an extra hull section that would be built into Block V submarines and mount four large vertical payload tubes.

The directive to cut the LCS comes in the face of strenuous Navy objections. The service has argued that building a ship takes much longer than ordering a new aircraft or missile.

The Office of the Secretary of Defense (OSD), said one Pentagon source, wants "capability over capacity" in its changes. The Navy's argument, the Pentagon source said, is that "decisions you make on ships impact you for 5-10-20 years. Decisions you make on aircraft can be changed the next year."

Carter's directive is the latest in an increasingly acrimonious back-and-forth exchange over the fiscal 2017 defense budget, due to be sent, in the form of a Resource Management Decision, on Friday to the White House's Office of Management and Budget (OMB).

According to the Pentagon source, the Navy successfully fought back an OSD move to cut two destroyers from the shipbuilding plan.

The Pentagon also considered cancelling the third ship of the DDG 1000 class — Lyndon B. Johnson (DDG 1002) — but that issue appears to have been decided in favor of keeping the ship.

Not in the Navy or Pentagon request, but expected to be added by OMB, is a plus-up of more than $2 billion to develop the SSBN(X) Ohio Class Replacement submarine. The cost of that program is expected to place considerable pressure on Navy shipbuilding budgets through the 2020s.

It is not clear from where OMB is pulling the additional SSBN(X) funding.

Another directive from OSD, the Pentagon source confirmed, is to alter again the service's plan to withdraw from active duty 11 cruisers and upgrade them for further service as carrier anti-air warfare escorts. The complicated issue has been hugely contentious in Congress the last three years, undergoing multiple changes in committee. It remains a thorn on the Hill, where further changes are likely to be met with critical skepticism.

One defense official decried the LCS cuts.

"It's unfortunate that we find ourselves in this situation, because the Navy needs both an increase in ship numbers and a bump in warfighting capability," the defense official said Dec. 16. "In this case there is no right or wrong answer."

The Navy has long argued it needs ship numbers to keep up worldwide posture and presence. The fleet today stands at 272 ships, but the latest fleet plan shows a rise to 308 ships in the 2020s. The LCS fleet is a major component in keeping to that goal.

The LCS program is unique among Navy ship classes and features two entirely different designs, the 3,300-ton Freedom class is produced by Lockheed Martin, while the 2,800-ton Independence class is built by Austal USA. Six LCSs are in commission, at least 14 are in various stages of construction, and another six are under contract. Lockheed's ships are built at Fincantieri Marinette Marine in Marinette, Wisconsin, while Austal USA's shipyard is in Mobile, Alabama.

Two years ago, the Navy fought hard to fend off LCS cuts. Mabus personally made his case to Hagel to beat back acting defense under secretary Christine Fox's attempt to cut the program. Mabus saved the ships, but Hagel countered with a directive to develop a more heavily armed frigate version. The Navy is working through decisions of the frigate variant, and is expected to make some of those details public in the president's 2017 budget submission to Congress.

The Pentagon's Office of Cost Assessment and Program Evaluation (CAPE) also has repeatedly evaluated the program, often proposing alternative designs. At one point, CAPE reportedly favored a version of Norway's 5,400-ton Spanish-designed Fridtjof Nansen-class missile frigates fitted with a lightweight Aegis combat system. More recently, one source said, the group was considering an updated version of the 1,000-ton Badr-class frigates designed and built in the US in the early 1980s for Saudi Arabia.

"In the last two months, the third deck has gone in two directions, generally to cut the program," said the Pentagon source, speaking of Carter's offices on the building's third floor.

"In the last year we went through a study to upgrade the ship, make it more capable. Now in CAPE some are arguing for a less-capable hull."

The Pentagon source was unconvinced the LCS cuts will result in real savings.

"It is our contention that the savings the third deck tells us will be achieved by the LCS cuts won't happen. In the end, if you break a multiyear buy it's going to end up costing more, not less."

Additionally, the Pentagon source said, "the cuts will have industrial base impacts. And we are sending a message to Saudi, for example, of our confidence in the ship."

Saudi Arabia agreed this fall to buy four missile-armed variants of the Lockheed LCS frigate — the first international sales of an LCS design.

Ships vs. Aircraft

The jump in aircraft is good news for F-35 maker Lockheed Martin and Boeing, who makes the E, F and G variants of the F/A-18 Super Hornet.

Boeing is struggling to keep open its Super Hornet manufacturing facility in St. Louis. The Navy planned to end F/A-18 procurement in 2014, but Boeing — still hoping for a foreign military sales (FMS) deal— eked out 12 new aircraft in the 2016 budget deal approved Dec. 16 by Congress. The company has an agreement to supply Kuwait with at least 28 aircraft, but the Kuwaiti deal is hung up with several US FMS deals to Middle Eastern countries.

Meanwhile, the Navy is not expected to request any 18s in the 2017 budget, and Carter's directive provides aircraft no sooner than 2018.

The company, one industry source said, would need an additional eight aircraft in 2017 to avoid a production gap and resultant layoffs before work on the 2018 jets could begin.

The argument over ships or aircraft has been simmering inside the Pentagon, according to one congressional source.

"There is a big food fight between shipbuilding and aviation," the congressional source said. The Navy favors ships, while "the aviation advocate is someone in OSD."

Another Hill source noted that the moves to cut ships in a presidential election year could be "a calculated risk that Congress won't go along with it." Other sources agreed that a Republican congress could restore the ships, at least in the 2017 budget, even though the LCS program remains controversial.

Sen. John McCain, R-Arizona, chairman of the Senate Armed Services Committee and a longtime LCS critic, reacted cautiously to the news of the cuts.

"The Senate Armed Services Committee has not been briefed on any final decisions regarding the Littoral Combat Ship, and I will not be speculating on media reports," he said in a statement issued Thursday morning. "That said, my concerns with the LCS, from cost overruns to schedule delays to poor performance, are well known. I hope these reports are an indication that the Pentagon is thinking strategically about the size and composition of the future force, including the LCS program. I look forward to taking a close look at the Administration’s budget request."

Rep. Bradley Byrne, R-Alabama, in whose district Austal USA builds the Independence-class LCS, was quick to respond after seeing this story in Defense News.

"Our Navy is at risk across the world, and the weak and impotent Obama Administration seeks to further undermine our position with this ill-considered decision," Byrne wrote in an e-mail Wednesday evening. "Make no mistake about it, from Mobile to Marinette, from San Diego and Jacksonville, the bell has rung, and those in the Pentagon need to hear that this will not stand. Not just for our shipyards but also for our Navy and for the defense of the people of the United States of America."

Rep. Jackie Speier, D-California, like Byrne a member of the House Armed Services Committee, also issued a statement on the reported LCS cuts.

"I applaud Secretary Carter’s decision to downselect to one LCS variant and reduce the number of ships purchased," Speier emailed Thursday. "Common sense is finally catching up with the Littoral Combat Ship, and we know that a plan to keep purchasing two LCS variants indefinitely is not survivable in such an encounter. The LCS program has long been hobbled by hazy conceptual justifications and serious acquisition malpractice. We must be good stewards of taxpayer money and direct it to programs that will be the most effective at keeping our servicemembers safe and defending the American people."

Rep.Randy Forbes, R-Virginia and chairman of the House Seapower subcommittee, released a statement late Thursday on the decision to cap the LCS program. 

"Secretary Carter has framed this as a choice between capability and capacity, but the undeniable reality is that our Navy needs more of both," Forbes said in the statement. "We shouldn’t have to keep making these hard choices between LCS and submarines, presence and surge capacity, modernization and readiness.  All are important, and we need a balanced and appropriately-sized fleet that can mitigate the diverse challenges we face today while preparing for the threats of tomorrow.  

"Unless we provide more resources for our Navy," Forbes said, "it is not going to be able to keep meeting the demands that our nation and our national security strategy place upon it."

One political arena where the cuts are likely to quickly reverberate is in the presidential election. Most Republican candidates have cited a shrinking Navy is a critical need that needs to be addressed, and the factually-correct claim that "the Navy is the smallest since it's been since World War I" has become almost a mantra. A Democratic budget that reduces ship numbers is likely to become a lightning rod.

Carter's full memo is here. Note that the opening paragraph misstates the number of active duty ships in today's fleet, which is 272 ships

The first version of this story was published at 8 p.m. EST Wednesday evening.


Twitter: @CavasShips

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