When first conceived, the LCS program represented an innovative approach for conducting naval operations, matched with a unique acquisition strategy that included two nontraditional shipbuilders and two different ships based on commercial designs—Lockheed Martin’s Freedom variant and Austal USA’s Independence variant, respectively. The Navy planned to experiment with these ships to determine its preferred design variant. However, in relatively short order, this experimentation strategy was abandoned in favor of a more traditional acquisition of over 50 ships. More recently, the Secretary of Defense has questioned the appropriate capability and quantity of the LCS. The purpose of the program has evolved from concept experimentation, to LCS, and more recently, to an LCS that will be upgraded to a frigate. The strategy for contracting and competing for ship construction has also changed. This evolution is captured in figure 1. While one could argue that a new concept should be expected to evolve over time, the LCS evolution has been complicated by the fact that major commitments have been made to build large numbers of ships before proving their capabilities. Whereas acquisition best practices embrace a “fly before you buy” approach, the Navy has subscribed to a buy before you fly approach for LCS. Consequently, the business imperatives of budgeting, contracting, and ship construction have outweighed the need to demonstrate knowledge, such as technology maturation, design, and testing, resulting in a program that has delivered 8 ships and has 14 more in some stage of the construction process (includes LCS 21, with a planned December 2016 construction start) despite an unclear understanding of the capability the ships will ultimately be able to provide and with notable performance issues discovered among the few ships that have already been delivered. The Navy’s vision for the LCS has evolved significantly over time, with questions remaining today about the program’s underlying business case. In its simplest form, a business case requires a balance between the concept selected to satisfy warfighter needs and the resources— technologies, design knowledge, funding, and time—needed to transform the concept into a product, in this case a ship. In a number of reports and assessments since 2005, we have raised concerns about the Navy’s business case for LCS, noting risks related to cost, schedule, and technical problems, as well as the overall capability of the ships. Business case aside, the LCS program deviated from initial expectations, while continuing to commit to ship and mission package purchases. The LCS acquisition was challenging from the outset. The Navy hoped to deliver large numbers of ships to the fleet quickly at a low cost. In an effort to achieve its goals, the Navy deviated from sound business practices by concurrently designing and constructing the two lead ship variants while still determining the ship’s requirements. The Navy believed it could manage this approach because it considered LCS to be an adaptation of existing commercial ship designs. However, transforming a commercial ship into a capable, survivable warship was an inherently complex undertaking. Elements of the business case further eroded— including initial cost and schedule expectations. Table 1 compares the Navy’s initial expectations of the LCS business case with the present version of the program. Our recent work has shown that the LCS business case continues to weaken. LCS ships under construction have exceeded contract cost targets, with the government responsible for paying for a portion of the cost growth. This growth has prompted the Navy to request $246 million in additional funding for fiscal years 2015-2017 largely to address cost overruns on 12 LCS seaframes. Similarly, deliveries of almost all LCS under contract (LCS 5-26) have been delayed by several months, and, in some cases, closer to a year or longer. Navy officials recently reported that, despite having had 5 years of LCS construction to help stabilize ship delivery expectations, the program would not deliver four LCS in fiscal year 2016 as planned. Whereas the program expected to deliver all 55 ships in the class by fiscal year 2018, today that expectation has been reduced to 17 ships. LCS mission packages, in particular, lag behind expectations. The Navy has fallen short of demonstrating that the LCS with its mission packages can meet the minimum level of capability defined at the beginning of the program. As figure 2 shows, 24 LCS seaframes will be delivered by the time all three mission packages achieve a minimum capability. Since 2007, delivery of the total initial mission package operational capability has been delayed by about 9 years (from 2011 to 2020) and the Navy has lowered the level of performance needed to achieve the initial capability for two packages—surface warfare and mine countermeasures. In addition to mission package failures, the Navy has not met several seaframe objectives, including speed and range. For example, Navy testers estimate that the range of one LCS variant is about half of the minimum level identified at the beginning of the program. As the Navy continues to concurrently deliver seaframes and develop mission packages, it has become clear that the seaframes and mission package technologies were not mature and remain largely unproven. In response, the Navy recently designated the first four LCS as test ships to support an aggressive testing schedule between fiscal years 2017 and 2022. Additional deficiencies discovered during these tests could further delay capability and require expensive changes to the seaframes and mission packages that have already been delivered. As the cost and schedule side of the business case for LCS has grown, performance and capabilities have declined. Changes in the LCS concept of operations are largely the consequence of less than expected lethality and survivability, which remain mostly unproven 7 years after delivery of the lead ships. LCS was designed with reduced requirements as compared to other surface combatants, and over time the Navy has lowered several survivability and lethality requirements further and removed some design features—making the ships less survivable in their expected threat environments and less lethal than initially planned. This has forced the Navy to redefine how it plans to operate the ships. Our previous work highlighted the changes in the LCS’s expected capability, as shown in table 2. Further capability changes may be necessary as the Navy continues to test the seaframes and mission packages, as well as gain greater operational experience. For example, the Navy has not yet demonstrated that LCS will achieve its survivability requirements and does not plan to complete survivability assessments until 2018—after more than 24 ships are either in the fleet or under construction. The Navy has identified unknowns related to the Independence variant’s aluminum hull, and conducted underwater explosion testing in 2016 but the Navy has yet to compile and report the results. Both variants also sustained some damage in trials in rough sea conditions, but the Navy has not completed its analytical report of these events. Results from air defense and cybersecurity testing also indicate capability concerns. The Navy elected to pursue a frigate concept based on a minor modified LCS. The frigate, as planned, will provide multi-mission capability that is an improvement over LCS and offers modest improvements to some other capabilities, such as the air search radar. Still, many questions remain to be settled about the frigate’s design, cost, schedule, and capabilities—all while the Navy continues to purchase additional LCS. Despite the uncertainties, the Navy’s acquisition strategy involves effectively demonstrating a commitment to buy all of the planned frigates—12 in total—before establishing realistic cost, schedule, and technical parameters—because the Navy will ask Congress to authorize the contracting approach for the 12 frigates (what the Navy calls a block buy contract) in 2017. Further, the frigate will inherit many of the shortcomings or uncertainties of the LCS, and does not address all the priorities that the Navy had identified for its future frigate. The costs for the frigate are still uncertain. Navy officials have stated that the frigate is expected to cost no more than 20 percent—approximately $100 million—more per ship than the average LCS seaframes. However, the Navy will not establish its cost estimate until May 2017— presumably after the Navy requests authorization from Congress in its fiscal year 2018 budget request for the block buy contracting approach for 12 frigates—raising the likelihood that the budget request will not reflect the most current costs for the program moving forward. In addition to the continued cost uncertainty, the schedule and approach for the frigate acquisition have undergone substantial changes in the last year, as shown in table 3. According to frigate program officials, under the current acquisition approach the Navy will award contracts in fiscal year 2017 to each of the current LCS contractors to construct one LCS with a block buy option for 12 additional LCS—not frigates. Then, the Navy plans to obtain proposals from both LCS contractors in late 2017 that would upgrade the block buy option of LCS to frigates using frigate-specific design changes and modifications. The Navy will evaluate the frigate upgrade packages and then exercise the option—now for frigates—on the contract that provides the best value based on tradeoffs between price and technical factors. This downselect will occur in summer 2018. Figure 3 illustrates how the Navy plans to modify the fiscal year 2017 LCS contract to convert the ships in the block buy options to frigates. The Navy’s current plan, which moves the frigate award forward from fiscal year 2019 to fiscal year 2018, is an acceleration that continues a pattern of committing to buy ships in advance of adequate knowledge. Specifically, the Navy has planned for its downselect award of the frigate to occur before detail design of the ship begins. As we previously reported, awarding a contract before detail design is completed—though common in Navy ship acquisitions—has resulted in increased ship prices. Further, in the absence of a year of frigate detail design, the Navy plans to rely on a contractor-driven design process that is less prescriptive. This approach is similar to that espoused by the original LCS program, whereby the shipyards were given performance specifications and requirements, selecting the design and systems that they determined were best suited to fit their designs in a producible manner.