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i 

54–408 2010

[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 
(II) 

SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE 

GENE TAYLOR, Mississippi, Chairman 

SOLOMON P. ORTIZ, Texas 

JAMES R. LANGEVIN, Rhode Island 

RICK LARSEN, Washington 

BRAD ELLSWORTH, Indiana 

JOE COURTNEY, Connecticut 

JOE SESTAK, Pennsylvania 

GLENN NYE, Virginia 

CHELLIE PINGREE, Maine 

ERIC J.J. MASSA, New York 

W. TODD AKIN, Missouri 

ROB WITTMAN, Virginia 

ROSCOE G. BARTLETT, Maryland 

J. RANDY FORBES, Virginia 

DUNCAN HUNTER, California 

MIKE COFFMAN, Colorado 

THOMAS J. ROONEY, Florida 

WILL EBBS, Professional Staff Member 

JENNESS SIMLER, Professional Staff Member 

ELIZABETH DRUMMOND, Staff Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2009 

Page 

HEARING: 

Tuesday, March 10, 2009, The Navy Littoral Combat Ship Program ................. 1 

APPENDIX: 

Tuesday, March 10, 2009 ........................................................................................ 43 

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.] 

(1) 

THE NAVY LITTORAL COMBAT SHIP PROGRAM 

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. 
2 

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. 
3 

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. 
4 

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? 
5 

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 followon 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. 
6 

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 re-
7 

garding 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. 
8 

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. 
9 

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 
10 

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. 
11 

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? 
12 

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. 
13 

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 
14 

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 highspeed, 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? 
15 

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 
16 

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 
17 

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 govern-
18 

ment 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. 
19 

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. 
20 

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 
21 

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 
22 

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 
23 

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 longterm endurance test, but they are required to meet that. 
24 

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. 
25 

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. 
26 

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, ob-
27 

viously, 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 
28 

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? 
29 

Admiral LANDAY. The program manager and his team would 

know that. 

Mr. TAYLOR. Could Captain Murdock give you an off-the-top-ofhis-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. 
30 

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. 
31 

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 distrib-
32 

uted 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. 
33 

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. 
34 

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 over- arching 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 
35 

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. 
36 

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. 
37 

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? 
38 

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. 
39 

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. 
40 

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 
41 

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.] 

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MARCH 10, 2009 

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