Defense Acquisitions: Plans Need to Allow Enough Time to Demonstrate Capability of First Littoral Combat Ships
Released: 2005-03-01T00:00:00

Letter

Background

According to Navy guidance, the Navy is required to project power from the sea and maintain assured access in the littoral regions, which for naval vessels refers specifically to the transition between open ocean to more constrictive shallower waters close to shore—the littorals. “Anti-access” threats from mines, submarines, and surface forces threaten the Navy’s ability to assure access to the littorals. The LCS is being developed to address these missions. The LCS design concept consists of two distinct parts, the ship itself and the mission package it carries and deploys. For LCS, the ship is referred to as the “seaframe” and consists of the hull, command and control systems, launch and recovery systems, and certain core systems like the radar and gun. A core crew will be responsible for the seaframe’s basic functions. Operating with these systems alone offers some capability to perform general or inherent missions, such as support of special operations forces or maritime intercept operations. The LCS’s focused missions are mine warfare, antisubmarine warfare, and surface warfare. The majority of the capabilities for these missions will come from mission packages. These packages are intended to be modular in that they will be interchangeable on the seaframe. Each mission package consists of systems made up of manned and unmanned vehicles and the subsystems these vehicles use in their missions. Additional crew will be needed to operate these systems. Each mission package is envisioned as being self contained and interchangeable, allowing tailoring of LCS to meet specific threats. Table 1 shows examples of LCS’s focused and inherent missions.

Navy Plans an Aggressive Schedule for LCS

The Navy characterizes the schedule for acquisition and deployment of LCS as aggressive. To meet this schedule, the Navy is pursuing an evolutionary acquisition strategy. Rather than initially delivering a full capability, the program is structured to deliver incremental capabilities to the warfighter. To support this, LCS acquisition is broken into “flights” for the seaframe and “spirals” for mission packages in order to develop improvements while fielding technologies as they become available. The initial flight of ships, referred to as Flight 0, will serve two main purposes: provide a limited operational capability and provide input to the Flight 1 design through experimentation with operations and mission packages. Flight 1 will provide more complete capabilities but is not intended to serve as the sole design for the more than 50 LCS the Navy plans to ultimately buy. Further flights will likely round out these numbers. Flight 0 will consist of four ships of two different designs and will be procured in parallel with the first increment of mission packages—Spiral Alpha. Flight 0 ships are currently being designed, and construction on the first ship will begin in 2005. Due to the accelerated schedule, Spiral Alpha will consist primarily of existing technologies and systems. Spiral Bravo mission packages will be improvements upon these systems and are intended to be introduced with the Flight 1 ships. Figure 1 shows the two designs chosen by the Navy for Flight 0, one by Lockheed Martin and one by General Dynamics.

The Navy and Lockheed Martin signed a contract for detailed design and construction of the first Flight 0 ship in December 2004, and the ship builder is expected to deliver the ship to the Navy in fiscal year 2007. The Navy will then begin testing and experimenting with the ship, using the first mission package—mine warfare. A date for any deployment with the fleet has not been determined. Detailed design and construction for the first General Dynamics design ship is scheduled to begin in fiscal year 2006 and delivery is scheduled for fiscal year 2008. The delivery of the first antisubmarine and surface warfare mission packages are aligned with the delivery of the second Flight 0 ship. Figure 2 shows the Navy’s current acquisition timeline for Flight 0, Flight 1, and their mission packages.

The development of Flight 1 will proceed concurrently with the design and construction of Flight 0. In early fiscal year 2006 the Navy will begin consideration of several preliminary designs for Flight 1. The Navy will choose designs for further development in fiscal year 2007. Selection of a design to start construction of the first Flight 1 ship will be in early fiscal year 2008. Flight 1 and future follow-on designs will be the basis for the LCS class of ships, which the Navy currently estimates could number between 50 and 60. Under the current acquisition strategy, detailed design and construction of the first Flight 1 ship will begin about 12 months after delivery of the first Flight 0 ship. The last two Flight 0 ships will not be available before detailed design and construction of Flight 1 begins. The second Flight 0 ship and the first mission packages for antisubmarine and surface warfare will be delivered just as detailed design and construction of Flight 1 is set to begin. Delivery of the first mission packages in Spiral Bravo will be aligned with delivery of the first Flight 1 ship.

Navy Conducted Detailed Analysis of LCS Requirements, but Surface Threat Risk Is Unclear

Recognizing that it lacks a number of key warfighting capabilities to operate in the littorals, the Navy began to develop the concept of LCS as a potential weapon system before it had completed formal requirements. Normally, a major acquisition program should include an examination of basic requirements and an analysis of potential solutions before a new system is decided upon. The Navy eventually conducted a requirements development process and analyzed a number of alternative solutions to a new ship but concluded that the LCS remained the best option. However, the Navy’s analysis of one area of littoral operations—the surface threats facing U.S. forces in littoral waters—did not include consideration of the potential impact of all threats the LCS is likely to face.

Navy Began to Develop LCS before Fully Examining Alternatives

The Navy has known about the capability gaps in the littorals for some time, particularly threats from mines and submarines in shallow waters. As we previously reported, the Navy has acknowledged that it lacks a number of key warfighting capabilities it needs for operations in the littoral environs. For example, it does not have a means for effectively breaching enemy sea mines in the surf zone or detecting and neutralizing enemy submarines in shallow water. The Navy has had programs under way to improve its capabilities in each of these areas for many years, such as systems designed to provide the fleet with mine detection and limited clearing capabilities, but progress has been slow. Additionally, the Navy has identified the threat of small boats, such as the kind that attacked the U.S.S. Cole in 2000, as a potential hindrance to operations in the littorals. The Navy has decided that the LCS is to accomplish these three critical littoral missions.

After recognizing the need to address known capability gaps in the littorals, the Navy conducted a series of wargames to test new concepts for surface combatant ships. One such concept, a very small surface combatant ship called Streetfighter, was incorporated into the Global 1999 war game. The concept was envisaged as a small, fast, stealthy, and reconfigurable ship, which included many characteristics similar to LCS. The Navy’s war-fighting assessment processes confirmed gaps in capabilities for mine warfare, shallow water antisubmarine warfare, and surface warfare against small boats. In July 2001, the Global 2001 war game further examined the concepts and potential benefits of modularity—such as using mission packages—and use of unmanned vehicles for littoral missions. As a result of the wargames the Navy continued the process of analyzing a variety of new surface combatant ship concepts to address the threats in the littorals.

In 2002, the Navy established an LCS program office as it began to further identify concepts and characteristics for a new surface combatant ship. In December 2001, the Naval War College was asked to develop and define characteristics that would be desirable in a littoral combat ship. The college used a series of workshops that included operational and technical experts from throughout the Navy to compare three types and sizes of surface combatant ships and describe desirable characteristics that such a ship should have. The experts examined such characteristics as speed, range, manning, and the ability to operate helicopters and unmanned vehicles. The workshop participants also concluded that a potential littoral ship should be capable of networking with other platforms and sensors, be useful across the spectrum of conflict, be able to contribute to sustained forward naval presence, be capable of operating manned vertical lift aircraft, be capable of operating with optimized manning, have an open architecture and modularity, be capable of operating manned and unmanned vehicles, and have organic self defense capabilities.

The results of the Naval War College study, which was completed in July 2002, were used as a baseline for further developing the concepts for LCS.

At this point the Navy’s analysis was focused on a single solution to address littoral capability gaps—a new warship along the lines of LCS. Between April 2002 and January 2004, the Navy conducted an analysis of multiple concepts to further define the concept that would address gaps in the littorals. The analysis began by examining five different ship concepts for LCS (later focusing on three concepts for another stage) and provided the Navy with insight into the trade-offs between features such as size, speed, endurance, and self defense needs. The analysis was performed by the Naval Surface Warfare Center, Dahlgren Division, and drew upon expertise throughout the Navy.

The Office of the Secretary of Defense and the Joint Staff were concerned that the Navy’s focus on a single solution did not adequately consider other ways to address littoral capability gaps. Based on these concerns, in early 2004, the Navy was required to more fully consider other potential solutions. The publication of new guidance on joint capabilities development in June 2003, also led the Navy to expand its analysis beyond the single solution of the proposed new ship to include other potential solutions to littoral challenges.

As part of its resulting analysis, the Navy defined littoral capability gaps, developed requirements to address those gaps, and identified and examined 11 nonmateriel and 3 materiel solutions across the joint forces that could be used to mitigate gaps in the littorals. Nonmateriel solutions refer to the use of different operational concepts or methods to meet requirements without buying new assets such as additional ships; materiel solutions are those which involve developing equipment or systems, such as ships and aircraft. The solutions were analyzed to determine the feasibility and risk in mitigating the gaps. The Navy’s assessment of feasibility centered on the extent to which each solution addressed the mine, antisubmarine, and surface capability gaps. The Navy’s assessment of risk centered on the impacts of each solution on (1) the success of potential operations in the littorals, (2) the sensitivity of diplomatic considerations, such as the military support of other nations, and (3) the financial considerations involved in choosing that solution.

Two additional materiel solutions, that centered on maritime patrol aircraft and modified DDG-51 destroyers, were added to the Navy’s analysis as a result of input from the Office of the Secretary of Defense’s Program Analysis and Evaluation office and the Acquisition, Technology and Logistics office. The Office of the Secretary of Defense and the Joint Staff also provided specific questions to the Navy for further clarification of the Navy’s ongoing analysis. With these additions, the Program Analysis and Evaluation office approved the Navy’s completed analysis as satisfactory to meet the requirements of a full analysis of alternatives for the LCS program. Table 2 shows the materiel and nonmateriel solutions presented in the Navy’s requirements analysis and the results of the Navy’s analysis of operational feasibility, as well as operational, diplomatic, and financial risk.

Based on its analysis, the Navy concluded that the materiel and nonmateriel solutions they examined would not provide better operational and cost effective solutions than the proposed LCS to perform the littoral missions. A number of factors were analyzed, including the feasibility of using other surface and non-surface force solutions and the risk associated with those options. Four nonmateriel solutions were considered to be partially feasible for mitigating the gaps in the littorals, while seven other solutions were considered not to be feasible. Partially feasible nonmateriel solutions included the use of maritime patrol aircraft, submarines, and a mix of air and sea assets from carrier and expeditionary strike groups. The most feasible solution considered using a combination of existing forces from carrier and expeditionary strike groups. However, the Navy determined that during a major combat operation, this solution would not be feasible because other mission objectives focused on directing operations onto shore would take a higher priority. Some of the materiel solutions included expanding existing forces, upgrading existing forces, or procuring a new class of platforms tailored for focused missions.

Using a number of studies of threats and analyses of potential military operations in the littoral regions, the Navy developed requirements for the LCS that addressed the identified capability gaps and likely threats in the littorals. This analysis supported revised DOD and Joint Chiefs of Staff requirements for shipbuilding acquisition programs. The Navy identified capability gaps in the littorals by measuring the ability of the current and programmed joint forces to accomplish a number of tasks across a range of operating conditions and standards. The Navy concluded that based on completing the tasks in the littorals under the established measures of effectiveness, it lacked sufficient assets and technology to fully mitigate the gaps. For example, under mine warfare the task for clearing routes for transit lanes covering a specific area within a 7 day period creates a capability gap because the Navy concluded that its force structure lacked the number of assets (mine countermeasures ships, destroyers with remote mine-hunting systems, and the appropriate mine countermeasures helicopters) to fully mitigate the gap in the littorals under the operational timeline of seven days. Table 3 shows examples of tasks for each focused mission, the measures of effectiveness, and the capability gap that exists under the current and programmed force structure.

LCS Requirements Analysis Did Not Cover Some Threats LCS May Face

We analyzed the requirements the Navy developed to address littoral capability gaps and used to support the LCS program, tracking each requirement in the mine, antisubmarine, and surface warfare areas back to the capability gaps and threats identified by the Navy in their requirements development process. We found no inconsistencies in the specific requirements for LCS illustrated in the documents required as part of the joint capabilities integration and development system. However, the requirements the Navy arrived at for LCS’s surface warfare capabilities were focused on small boats, and this did not include an analysis of the impact of larger surface threats in the littorals. The Navy focused the surface threat on swarms of small boats, characterized as Boston Whalers, capable of operating at high speeds and employing shoulder mounted or crew served weapons, such as light machine guns. These boats can conduct surprise, simultaneous, short range attacks from or near shorelines. The Navy measured its current and programmed capabilities against defeating swarms of small boats in high numbers. For example, to determine the capability gaps and measures of effectiveness for escorting ships through choke points, the Navy measured its force structure against defeating large numbers of small boats. However, larger threats, such as missile-armed patrol boats and frigates, are also identified in the Navy’s LCS concept of operations and threat studies as threats that LCS may face in the littorals. Such vessels may be armed with medium caliber guns, torpedoes, and antiship missiles. These threats could present additional risk to LCS operations.

Some DOD and Navy officials have raised concerns about the extent to which the LCS may face larger threats than it is capable of defending against. Navy officials agreed that the surface threat was focused exclusively on swarms of small boats and told us that LCS is not intended to combat larger threats. The Navy found no capability gap with respect to the larger surface threat, because there is sufficient capability in the existing fleet to counter the threat. Further, Navy officials stated that if a larger surface threat were encountered, LCS would be able to call upon the assistance of other U.S. forces in the area, such as tactical aviation or larger surface warships. In a major combat operation, LCS squadrons would be able to draw upon assistance of those nearby Navy or joint forces in the face of a larger surface threat in the area. However, according to the LCS concept of operations, in addition to operating with other U.S forces on a regular basis, LCS is intended to operate independently of those forces, depending on the type of mission and circumstance. When operating independently, such as during routine deployments to littoral waters, LCS may not be able to call upon assistance from larger U.S. forces. This may impede LCS operations, such as forcing the LCS to withdraw from an operating area, a situation contrary to the Navy’s goals. Since the Navy did not analyze the impact of larger surface threats on LCS operations, the extent of the risk and the impact on U.S. operations is not known.

A Detailed Concept of Operations Has Been Developed for LCS but Faces a Number of Challenges in Implementation

Although there are no formal criteria for developing a concept of operations, the Navy has developed both a broad concept and more detailed plans as to how the LCS and its mission systems will be used to meet requirements. The concept of operations also includes several challenges that, if not met, may increase the risk in actual LCS operations. However, the Navy has not yet fully considered the LCS concept of operations in the force structure and procurement plans for the MH-60 helicopter, which is critical to all LCS missions. The Navy has recognized these risks and is attempting to address them. However, if these efforts are not successful within the time constraints of the schedule, the Flight 0 ships may not provide the planned capability or the level of experimentation needed to inform the Flight 1 design.

The Navy has developed a broad concept of operations document for LCS. Though there are no formal guidelines that describe how the concept of operations should be written or the level of detail it should contain, it is a high level requirements document that describes how the user (in this case, the Navy) will use the weapon system to address mission needs. The concept of operations can also be used as guidance in developing testable system and software requirements specifications. In particular, the LCS concept of operations describes how the ship will contribute to U.S. Joint Force operations in countering threats in the littorals. These include mine warfare (detecting and neutralizing mines), antisubmarine warfare (detecting and engaging hostile submarines), and surface warfare (detect, track, and engage surface threats). In addition to these focused missions, the LCS concept of operations discusses how the LCS can perform inherent missions, such as support for special operations forces, maritime interception operations and supporting homeland defense related missions. For example, the LCS concept of operations for maritime interception operations envisages use of the ship’s core crew, and any additional personnel in case of operations in higher threat areas, to provide boat crews and boarding teams to board suspect vessels as well as using an embarked helicopter for assistance. The concept of operations is directed at Flight 0 but also provides a vision for follow-on ships. The document has also been used to build consensus among warfighters, the acquisition community, and the various industry teams involved in building LCS as to how the ship is intended to be used.

The development process for the LCS concept of operations began with the Navy Warfare Development Command in late 2002 when it created the first version of the Concept. The document described the projected threat context, capabilities, and operational employment of LCS to help industry with their designs. The Command based this version of the concept of operations on their experience with various pre-LCS studies and war games that employed fast, small ships with modular payloads. The Navy subsequently updated and expanded the concept of operations with new information that related to critical areas that impact, and are impacted by, LCS operations, including doctrine, training, and personnel. The Navy approved the LCS concept of operations in December 2004.

The Navy is also continuing to refine concepts for how LCS and its mission systems will be used to address anti-access threats. These efforts include a Concept of Employment, which describes the way mission package systems are intended to be used to meet warfare requirements, and an analysis of performance data for individual systems in order to inform experiments on the actual operation of LCS mission systems. In addition, the Navy will incorporate lessons learned from Flight 0 operations into future versions of the LCS concept of operations.

We compared the LCS concept of operations to the approved requirements for the ship and the capability gaps identified by the Navy and found that each of the capability gaps and LCS mission requirements were addressed in the concept of operations. For example, the requirements to address the mine warfare capability gap call for mines to be detected, identified, and neutralized. The concept of operations discusses how the LCS will address these requirements by using a combination of helicopters and unmanned vehicles to detect and identify mines, and either a helicopter or an explosive ordinance disposal detachment with unmanned underwater vehicles to neutralize mines.

The LCS concept of operations includes several operational and logistical challenges that may increase the operational risk for LCS. One challenge is to reduce the numbers of sailors required to operate the ship’s critical mission systems. This challenge is exacerbated by the limited space on the ship. If this cannot be achieved, the Navy may have to make significant changes to the design or capability of follow-on ships. Another challenge is the logistics support required to meet the Navy’s goal of changing LCS mission packages within 4 days of arriving at an appropriate facility. A number of factors frame this challenge, including where packages are to be stored, how they are to be transported, and the proximity of LCS operating areas to ports required to swap mission packages. Any of these factors could increase the time required for a change in LCS mission packages once the decision has been made to do so. Other challenges include training; command, control, communications, computers, and intelligence; survivability; and the impact on the Navy’s force structure.

The two versions of the MH-60 helicopter intended for use with LCS embody a number of these challenges. The helicopter is vital to each of the LCS’s focused missions as well as some of the ship’s inherent missions, such as maritime intercept operations. In order to operate a helicopter from LCS, a detachment of flight and maintenance personnel are required. The Navy’s current helicopter detachments on surface warships each number at least 20 people. When combined with the ship’s core mission crew, this number could exceed the capacity of LCS to house crews, thereby limiting the ability of LCS to operate other mission package systems and reducing the ship’s operational effectiveness.

Additionally, the Navy’s plans for buying and fielding MH-60s do not yet include the quantities needed for the numbers of follow-on LCS ships the Navy intends to buy. Since the helicopter is critical for LCS’s concept of operations, the ship’s operations will be significantly limited if the helicopters are not bought and made available. To do this, the Navy needs to plan for the numbers of helicopters needed, modify its procurement plans, obtain the funds, build the helicopters, deliver them, conduct operational evaluations, and train the crews.

The Navy recognizes these risk areas and has mitigation efforts underway in each area. For example, in the risk area of manning reduction, the Navy is using the “Sea Warrior” program to cross train sailors so that they are more able to multitask and perform a wider set of duties. The Navy is also conducting additional analysis to validate the maximum number of crewmembers needed and will make changes to crew accommodations if necessary. Further, the Navy is analyzing ways to reduce the size of helicopter detachments and is currently reevaluating its helicopter force structure and procurement plans to provide the MH-60s needed for LCS. In addition, the Navy has established an LCS risk management board to track and manage each of the risk areas as well as monitor the effectiveness of risk mitigation efforts. Table 4 lists the challenges for LCS and examples of Navy mitigation efforts.

None of these challenges are insurmountable, given enough time and other resources to address them. However, if the Navy is unsuccessful in mitigating the risk areas by the time the first Flight 0 ships are delivered, LCS may be unable to meet even the limited mission capability planned for Flight 0. The Navy plans for a period of about 12 months between the time of delivery of the first Flight 0 ship and the start of construction for the first Flight 1 ship, provided the first Flight 0 ship is available on time. Further, only one mission package (mine warfare) will be available for testing and experimentation during that time. The last two Flight 0 ships will not be available before detailed design and construction of Flight 1 begins. The second Flight 0 ship and the first mission packages for antisubmarine and surface warfare will be delivered just before detailed design and construction of Flight 1 begins. Delays caused by any of the risk areas discussed above might further reduce the already limited time to adequately experiment with one Flight 0 ship in order to integrate lessons learned into planning and designing for Flight 1.

Immaturity in Mission Package Technologies Could Decrease the Experimental and Operational Utility of Flight 0 Ships

A number of the technologies chosen for the LCS mission packages are not mature, increasing the risk that the first ships will be of limited utility and not allow sufficient time for experimentation to influence design for follow-on ships. Our work has shown that when key technologies are immature at the start of development, programs are at higher risk of being unable to deliver on schedule and within estimated costs. The remaining technologies are mature although some may require alterations to operate from LCS. Other issues beyond technology maturity could prevent some systems from being available in time for the first ship. Some technologies still in development face challenges going to production, while other mature technologies may not be available for LCS due to other Navy priorities. Challenges remain for technologies included on the LCS seaframe, including those for communications, software, launch and recovery, and command and control of off-board systems. As a result, the first Flight 0 ships may not be able to provide even the limited amount of mission capability envisaged for them. These factors could also impair the Navy’s ability to experiment with the Flight 0 ships and adequately gather and incorporate lessons learned into the designs for the Flight 1 ships.

In order to perform its focused missions of finding and neutralizing mines, submarines, and small boats in the littorals, LCS will deploy mission packages consisting of helicopters and unmanned vehicles with a variety of sensors and weapons. Each of the interchangeable mission packages is tailored to a specific mission and is optimized for operations in the littorals. By using a mix of manned and unmanned vehicles, program officials hope to increase the areas covered and decrease the time required by existing systems. The use of multiple mission packages is to be enabled by the design of the ship itself which will use a number of common connections or interfaces that will work regardless of the individual technologies or systems used in the mission packages.

In order to speed the development of the first LCS, the Navy planned for the mission packages to comprise technologies that are either already demonstrated in an operational environment and used by the Navy, and therefore fully mature, or very close to the end of the development cycle and near full maturity. However, in some cases the program office chose technologies that have not completed testing and are not considered mature. Some of these technologies will be delivered to LCS as prototypes or engineering development models and may not be fully mature. The program office has used an informed process in choosing which technologies to pursue for Flight 0, tracking the maturity of technologies and the plans for further development. Those technologies selected by the program that lack maturity are being monitored and decisions about their inclusion are made based on results of further testing. Once initial choices were made, the Navy used an independent panel of experts, consisting of Navy and industry technology experts, to reassess the maturity of technologies and the efforts needed for risk reduction. The assessment paid particular attention to technologies at low levels of readiness, such as the Non-Line-Of-Sight missile launching system (also referred to as NetFires) and the environment in which the technologies are to be used.

The first mission package to be developed will focus on mine warfare and will align with the delivery of the first ship in January 2007. The systems within this mission package contain both mature and immature technologies, although some mature technologies, like the remote mine- hunting vehicle, may need modifications to operate from LCS. Table 5 shows the maturity and availability of mission package technologies for mine warfare, based on the Navy’s current assessment. The first mission package is intended to be delivered with the first Flight 0 ship in fiscal year 2007.

A number of critical mine warfare systems are not mature or will not be ready due to the unavailability or immaturity of subsystems. This could have a negative effect on LCS as the loss of certain technologies leads to a decrease in capabilities. The MH-60S helicopter is a key system for mine warfare employing technologies for both the detection and the neutralization of mines in shallow water. While the helicopter has proven its ability to detect mines, two of the technologies for neutralization lack maturity. Testing on neutralization technologies continues but is not expected to complete until after delivery of the first ship, limiting the ability of LCS to destroy sea based mines. One system which could fill the gap in this area, the unmanned surface vehicle, also lacks maturity in key systems and ultimately may not be available.

The first systems for antisubmarine and surface warfare packages of Spiral Alpha are scheduled to be available at the time the second Flight 0 ship is delivered in fiscal year 2008. Of these technologies, few are currently mature. Two of the systems used for detecting submarines, the unmanned surface vehicle and remote mine-hunting vehicle, lack maturity in key subsystems and will be delivered to LCS while still experimental. If these systems fail to meet requirements, LCS may have to depend on the MH- 60R helicopter to find submarines. The MH-60R is an important system in both these missions, and while fully mature in the antisubmarine warfare configuration, it has not yet completed testing for surface warfare and is not expected to do so until September 2005. The helicopter has potential capability in both detecting and neutralizing surface targets, such as small boats, due to the types of sensors and weapons it carries. Tables 6 and 7 show the maturity and availability of mission package technologies for antisubmarine and surface warfare, respectively. These packages are scheduled to be delivered with the second Flight 0 ship in fiscal year 2008.

In addition to challenges posed by the lack of mature technologies, there may be other challenges in obtaining some mission package systems in time for the first ships. The unmanned surface vehicle, a system used in all three mission packages, is being developed through an advanced concept technology demonstration and does not yet have a planned production schedule. The current development program for the unmanned surface vessel ends in fiscal year 2005 and seeks only to prove the military utility of the vehicle. In order to procure the systems needed for LCS, a new program will have to be established to conclude development, finalize design and start production of vehicles.

Other technologies have planned production schedules but need to complete significant demonstrations and tests before they are able to deploy operationally. The vertical takeoff unmanned aerial vehicle, another system used in all mission packages, underwent a major redesign, and the first deliveries to LCS will not represent a final design. The remote mine-hunting vehicle only recently began development as an antisubmarine warfare platform and remains in development as an advanced concept technology demonstration. These factors could jeopardize the dates established for the delivery of the LCS mission packages and may ultimately affect the ability of LCS to execute many of the missions assigned to it.

Other technologies, while mature, may not be available to LCS in time for the ship’s deployment due to other Navy priorities. For example, the MH- 60 helicopters, in both the MH-60R and MH-60S configurations, are scheduled to complete testing in fiscal year 2007, but may not be fully available until fiscal year 2009, assuming the Navy makes them available for LCS, because of training requirements. This could have an impact on LCS capabilities in all missions. The MH-60S is a key system for mine warfare, and the lack of this helicopter results in the loss of some capability, in terms of detecting some mines, and limitations in the ability to neutralize others. While LCS will still be capable of detecting and destroying mines in littorals without the helicopter, it will do so more slowly, which minimizes operational effectiveness. If the MH-60R is unavailable, the ability to neutralize submarines from LCS is severely compromised as no other mission package system is planned to provide a neutralization capacity. Older, less capable, versions of the MH-60 helicopter can be used in this mission but changes would be needed in the ship’s communications systems. The Navy acknowledges that no helicopters will be available for LCS operations until fiscal year 2009 and are working to align crew training schedules to permit operations with LCS.

Challenges also remain for systems on the LCS seaframe, including technologies for communications, software, launch and recovery, and command and control of off-board systems. Further tests of these systems are expected before ship installation.

In addition to limiting the operational capability of the Flight 0 ships, technology maturity and availability issues could limit the time available for the Navy to adequately experiment with operation of the seaframe and mission packages and gather valuable lessons for incorporation into Flight 1 ships. Detailed design and construction of the first Flight 1 ship is currently scheduled to begin in fiscal year 2008. Spiral Alpha mission packages for antisubmarine warfare and surface warfare are not scheduled for delivery to the Flight 0 ships until fiscal year 2008, just as detailed design and construction for Flight 1 is set to begin. If technology immaturity causes any of the mission packages systems to slip to later delivery dates, the opportunity to experiment and gather lessons learned from these systems aboard the Flight 0 ships would be lost, unless the time allowed for such experimentation is extended. If the helicopters are not available for operations until fiscal year 2009, input on the full impact of their operations could be lost as well.

Procurement Cost Estimates Are Uncertain

The cost to procure the first flight of LCS ships remains uncertain, particularly regarding the mission packages. The basis of the procurement costs for the LCS seaframe appears to be more defined because the Navy has conducted a series of cost analyses to investigate the challenges in detailed design and construction. The Navy seeks to stabilize seaframe costs by establishing a $220 million cost target and working to meet this target by trading between capability and cost while assuring that seaframe performance meets threshold requirements. Nevertheless, seaframe costs could be affected by changes to ship design and materials that might be necessary as a result of changes to naval ship standards. As many of the systems for the mission packages lack maturity, cost data for these technologies are not as firm. Other mission package costs are not covered by LCS program cost analyses. For programs like LCS, an independent cost estimate by the Office of the Secretary of Defense normally provides additional confidence in program cost estimates, but such an estimate will not be done on LCS until Flight 1. In addition to issues with procurement costs, nonrecurring development costs for the LCS could expand, as systems both in the mission packages and the seaframe remain in development.

The Navy’s procurement cost target for Flight 0 is about $1.5 billion (fiscal year 2005 dollars). The cost target for each of the four Flight 0 ships is approximately $370 million. This includes $220 million for the seaframe and approximately $150 million for mission packages (the cost of six packages averaged over four ships).

The Navy currently estimates that the mission packages for Flight 0 will cost approximately $548 million, which is approximately $137 million for the six packages averaged over four ships. This is about $13 million below the mission package target. Table 8 shows the current cost estimates for the mission packages for Flight 0. The estimated cost for seaframe detailed design and construction is considered competition sensitive and is not discussed in detail in this report.

The Navy has conducted a number of cost reviews for procurement of the LCS seaframe and mission packages to support decision making at key points in the program. One of the most detailed of these reviews took the form of a cost assessment used to support the program’s initiation. In this assessment the program office analyzed cost data, provided by the contractor, to establish a preliminary cost and challenged some assumptions behind these costs. The Cost Analysis and Improvement Group of the Office of the Secretary of Defense also performed cost assessments for Flight 0. More recently, a cost estimate for procuring the seaframe and mission packages of Flight 0 was performed by the Navy and became the official program estimate. A cost estimate differs from an assessment in that it goes into greater depth in challenging assumptions behind costs provided by the contractors and may use different methodologies and assumptions to arrive at a final number. As a result, the program estimate may differ from the price provided by contractors and offers a more detailed cost analysis for decision making.

The basis of the procurement costs for the LCS seaframe appears to have become more defined over time as successive cost analyses have been developed to anticipate the challenges in detailed design and construction. Analyses included recommendations to add funds to mitigate changes to seaframe design as well as firm fixed price quotes for some materials. In addition, the Navy seeks to manage seaframe costs by establishing a $150 to $220 million cost range, which the Navy considers aggressive, and has been working to meet this range by trading between capability and cost while assuring that seaframe performance meets requirements. Any capabilities in the seaframe that exceed the requirements established by the Navy are considered trade space areas, in which less expensive systems may be substituted at the cost of lower performance. Each trade is analyzed for impact to cost and operational capability by a team of program officials and is fully vetted through the chain of command.

One factor that increases risk to seaframe cost estimates is applying the current changes in the naval vessel rules for design and construction of surface ships. The unconventional hull designs and materials used in both Flight 0 LCS designs reflect new types of ships the Navy has not hitherto built. Changes to the rules are occurring at the same time as development of the LCS. The process of meeting these rules could lead to changes in the designs and materials used. Such changes may increase uncertainty in seaframe procurement and life-cycle costs.

The costs for the first spiral of mission packages are less defined, as many of the technologies are not mature. For example, the unmanned surface vehicle remains in an advanced concept technology demonstration program into fiscal year 2005. This program seeks only to prove the military utility of the vehicle. Any cost data that emerges as a result of tests and construction of test vehicles does not accurately represent the final cost of the system and is thereby preliminary. The vehicle may also use different subsystems or have different capabilities when used on LCS. This would further change actual procurement costs.

Additional confidence in a program’s costs is usually gained through an independent cost estimate done outside the Navy. According to a DOD acquisition instruction, an independent cost estimate should be completed as part of the process that normally authorizes the lead ship, referred to as the Milestone B decision. For programs like LCS, an independent group, like the Cost Analysis and Improvement Group, is required to perform such an estimate. While this group performed assessments of Flight 0 costs, it has not yet performed a cost estimate for LCS. On the LCS program, the Flight 0 ships are considered to be predecessors to the Milestone B decision. The Milestone B decision will authorize the first Flight 1 ship. The Navy considers this to be the point at which an independent estimate is required. An independent cost estimate is thus planned for authorization of Flight 1 in January of 2007. While DOD would not have been prevented from conducting an independent estimate for Flight 0, given the short time in which the Navy solicited and selected designs for Flight 0, it is unclear whether there was enough time to do so.

Other mission package costs are not covered by LCS program cost analyses but could have an effect on the broader Navy budget. For example, mission package costs do not include procurement costs for the MH-60R and MH-60S helicopters utilized in LCS operations. The Navy estimates that the procurement cost for each MH-60R is about $36 million and the cost for each MH-60S is about $23 million. The number of helicopters acquired by the Navy is determined by the helicopter concept of operations, which has not yet been modified to reflect the deployment of LCS. Given the reliance of LCS mission packages on these platforms, costs for these systems, or number needed for operations, could increase.

The developmental nature of the mission package technologies may affect more than the procurement, or recurring, costs of LCS. Development and integration of technologies on many of the mission package systems is not complete. Testing for these systems will continue, in some cases, up to the delivery date of the mission packages. Should these tests not go as planned, or if more time and money is needed for integration and demonstration, development costs could rise. Since the development of mission package systems is only partially funded by LCS, the costs for continued development could spread to other programs. Alternately, the decision maybe made to reduce the quantities of certain technologies aboard LCS, as was the case with the Advanced Deployable system. Some seaframe technologies remain developmental as well, such as the launch and recovery systems. Unlike the mission packages, the LCS program office would assume any increase in development funding that occurs on seaframe systems.

Conclusions

The Navy has embarked on a plan to construct four Flight 0 ships, complete development and procure multiple mission packages, experiment with the new ships, and commit to the construction of follow- on ships in a span of only four years. The Flight 1 and follow-on designs form the basis of a class of ships that may eventually total more than 50. At this point, we see three risks that could affect the success of the program.

First, because the Navy focused the surface warfare threat and requirements analysis exclusively on small boat swarms, the risks posed by larger surface threats when the LCS operates independently from nearby supporting U.S. forces have not yet been assessed.

Second is the availability of the MH-60 helicopter in light of its criticality to all LCS missions. Experimentation with the MH-60 will provide key information on mission performance, operations issues such as manning, and technology maturity. Thus, it is essential that the helicopters, equipped with the systems needed for LCS missions, be available for testing on the Flight 0 ships. In addition, if the quantities of MH-60s are not available for the Flight 1 ships the Navy’s ability to deploy these ships operationally as intended, would be reduced. Making the MH-60s available requires meeting a number of challenges, including developing requirements, force structure planning, budgeting, delivering, and training air crews.

Third, the Navy intends to begin considering multiple designs for Flight 1 in fiscal year 2006 and to begin detailed design and construction of a single design in fiscal year 2008. By 2007, only one Flight 0 ship will be delivered, and only one mission package will be available, providing there are no delays for either ship or mission package. While maturing technologies and evaluating potential designs for Flight 1 while Flight 0 ships are being delivered could be beneficial, committing to a single design for follow-on ships before gaining the benefit of tests and experiments with the two Flight 0 designs increases the risk to the Flight 1 design. The current schedule allows about 12 months for the Navy to conduct operational experiments to evaluate the first Flight 0 seaframe design; the mine warfare mission package; and the doctrinal, logistics, technology maturity and other operational challenges the Navy has identified before committing to production of follow-on ships. The Navy’s schedule does not allow for operational experimentation with the other three ships or the antisubmarine or surface warfare mission packages before Flight 1 is begun. Setbacks in any of these areas further increases the risk that the Navy will not be able to sufficiently evaluate and experiment with Flight 0 ships and incorporate lessons learned into the design and construction of the Flight 1 ships.

Recommendations for Executive Action

To help the Navy assess and mitigate operational, force structure, and technology risks associated with LCS, we are making the following three recommendations:

To determine whether surface threats larger than small boats do pose risks to the LCS when operating independently and to mitigate any risks the Navy subsequently identifies, we recommend that the Secretary of Defense direct the Secretary of the Navy to conduct an analysis of the effect of a surface threat larger than small boats on LCS operations and the impact on other naval forces in support of those operations.

To address challenges associated with integrating the MH-60 helicopter into LCS operations, we recommend that the Secretary of Defense direct that the Navy include in its ongoing evaluation of helicopter integration with LCS (1) evaluation of the numbers and budget impact of helicopters required to support future LCS ships and (2) examination of how to address manning, technology, and logistical challenges of operating the helicopters from LCS.

To allow the Navy to take full advantage of the technical and operational maturation of the Flight 0 ships before committing to the much larger purchases of follow-on ships, we recommend that the Secretary of Defense direct the Navy to revise its acquisition strategy to ensure that it has sufficiently experimented with both Flight 0 ship designs, captured lessons learned from Flight 0 operations with more than one of the mission packages, and mitigated operational and technology risks before selection of the design for an award of a detailed design and construction contract for Flight 1 is authorized.

Agency Comments and Our Review

In written comments on a draft of this report, DOD generally agreed with the intent of our recommendations. DOD discussed steps it is currently taking as well as actions it plans to take to address these recommendations.

In response to our recommendation that the Navy analyze the effect of a larger surface threat on LCS operations, DOD indicated that, in addition to efforts it already has underway to analyze elements of the threats facing LCS, the Navy will assess the impact of larger surface threats on LCS as part of the capabilities development process for Flight 1. Using the analyses required in this process should help the Navy clarify the extent to which a larger surface threat poses a risk to LCS operations.

In commenting on its plans to address helicopters’ needs and challenges, DOD indicated that it is currently assessing the helicopter force structure including both manned and unmanned aerial vehicles. While this may clarify the Navy’s helicopter force structure requirements, we continue to believe that due to the importance of helicopters to LCS operations and the numbers of LCS the Navy plans to acquire, the Navy should also analyze the budgetary impact of potential helicopter force structure changes.

In response to our recommendation that the Navy revise its acquisition strategy to ensure time to experiment with Flight 0 designs, DOD stated that, before award of Flight 1 contracts, it will review the acquisition strategy to ensure the strategy adequately provides for experimentation, lessons learned, and risk mitigation. DOD stated that it is balancing the acquisition risks with the risk of delaying closure of warfighting gaps that LCS will fill. It also stated that mission package systems will potentially be spiraled with a different cycle time than the historically more stable hull and systems that comprise the seaframe. We believe the separation of development spirals for the mission packages and seaframe has merit. However, decisions leading to the award of a detailed design contract for the Flight 1 seaframe must go beyond technology risks. Because the Navy plans to begin design of the Flight 1 seaframe with a new development effort and competition, it is important to gain experience with the two Flight 0 seaframe designs that are being acquired so that the benefits of this experimentation can be realized in the design and development of a new seaframe. Experimentation with Flight 0 in terms of basic mission performance, swapping mission packages, actual manning demands, and operations with multiple LCS are all factors that could have a significant effect on the Flight 1 ship design.

DOD also noted that its plan for acquiring LCS provides for multiple flights. Under this strategy, DOD would have more opportunities beyond the fiscal year 2008 Flight 1 decision to upgrade mission packages and seaframes as the 50 or so remaining ships are bought. We have made changes in the report to reflect this strategy. However, we do not believe it lessens the value of incorporating experience from Flight 0 operations into the design for Flight 1.

DOD’s written comments are included in their entirety in appendix II.

We are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, and the Secretary of the Navy. We will also make copies available to others upon request. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions concerning this report, please contact Paul Francis at (202) 512-2811; or Karen Zuckerstein, Assistant Director, at (202) 512-6785. Key staff members that contributed to this report are listed in appendix III.

Appendix I: Scope and Methodology

To assess the basis of the LCS requirements and the concept of operations, we obtained and analyzed Navy wargames and operational plans, requirements documents, and other sources used by the Navy to identify capability gaps in the littoral waters. We conducted our own analysis of all critical concept, requirements, and acquisition documents required as part of the Joint Capabilities Integration and Development system to determine the extent to which the Navy (1) developed specific requirements to address capability gaps and examined materiel and nonmateriel solutions to meet those requirements; and (2) developed a concept of operations that addressed each of the identified requirements as well as critical doctrinal, logistical, and operational considerations. We compared the sources of the requirements for the LCS, such as analyses of military operations based on specific scenarios and threat assessments to the final validated requirements document (Capabilities Development Document), and highlighted each capability gap. We identified the capability gaps in the Navy’s functional analysis for each of the warfare missions—mine warfare, antisubmarine warfare, and surface warfare. This included looking at the Navy’s standards that were used to measure how well the current and programmed joint forces could mitigate the warfare threats in the littorals during a major combat operation. We then reviewed the materiel and nonmateriel solutions identified by the Navy that could be used as alternative solutions for mitigating the gaps. We also conducted a comparative analysis of the Initial Capabilities Document with the validated requirements in the Capabilities Development Document to highlight additional gaps. We also compared the requirements, as developed in the CDD and the Preliminary Design Interim Requirements Document to the LCS operating concepts and capabilities, as developed in the Navy’s two versions of the concept of operations.

To assess the Navy’s progress in defining the concept of operations we used a gap analysis, similar to the one used for the requirements, to trace the extent to which the concept of operations were developed. GAO compared the LCS concept of operations to the ship’s requirements (specifically the Capabilities Development Document) and the identified capability gaps to determine if the LCS concept of operations fulfilled the requirements. We also discussed with Navy officials the extent to which they included doctrinal and operational challenges and the Navy’s assessment of where the risks are stemming from these challenges and their mitigation efforts.

To assess the progress of technology development in LCS mission packages, we reviewed the basis of the Navy’s estimation of technology readiness and plans to bring these technologies to full maturity. As a part of this assessment we analyzed the Technology Readiness Assessment performed by the Navy and reviewed development and testing plans developed by the program offices. As a measure of technology maturity we utilized Technology Readiness Levels, the same metric used by the Navy in the Technology Readiness Assessment. The standard we used for assessing technology maturity is the demonstration of form, fit, and function in an operational environment. This standard is based on defined technology readiness levels developed by the National Aeronautic and Space Administration and adopted by DOD.

Our analysis was supplemented by interviews with officials from the LCS program offices and other Navy programs supporting the mission packages. Our audit focused on technologies for Flight 0, as technologies for Flight 1 have not been selected.

To assess the basis of LCS costs we reviewed the cost analyses prepared by the contractors and the LCS program office. We analyzed the basis of costs for design and construction of the seaframe as well as the development and procurement costs of mission packages for Flight 0. Our analysis was supplemented by interviews with the program offices and contractors involved in LCS. Costs for operation of Flight 0 and procurement of Flight 1 have not been estimated. Details of the costs and technologies for the seaframe are sensitive, due to the ongoing competition. We therefore do not discuss these at length.

To address our objectives, we visited and interviewed officials from Navy headquarters’ surface warfare requirements office; LCS program offices; mine warfare program office; the MH-60 program office; the Unmanned Aerial Vehicles program office; the Naval Surface Warfare Center, Dahlgren Division; the Naval Undersea Warfare Center; the Naval War College; and the Navy Warfare Development Command. We also interviewed officials from the Office of the Secretary of Defense’s Program Analysis and Evaluation division, General Dynamics, and Lockheed Martin.

We conducted our review from July 2004 through December 2004 in accordance with generally accepted government auditing standards.

Appendix II: Comments from the Department of Defense

Appendix III: GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

In addition to those named above, Richard G. Payne, Jerome A. Brown, J. Kristopher Keener, Joseph W. Kirschbaum, James C. Lawson, Jodie M. Sandel, Angela D. Thomas, Roderick W. Rodgers, and Bethann E. Ritter made key contributions to this report.