Posted: December 1, 2016 5:21 PM

GAO Analyst: Navy Frigate Procurement Faces LCS Pitfalls

By RICHARD R. BURGESS, Managing Editor

WASHINGTON — An acquisition expert at the Government Accountability Office (GAO) said the Navy will be taking risks if it rushes into its new frigate (FF) program as a modification of the littoral combat ship (LCS) and avoid the institutional oversight gates designed to ensure program performance.

In Dec. 1 testimony before the Senate Armed Services Committee (SASC), Paul L. Francis, managing director of Acquisition and Sourcing Management for the GAO, said that because the FF program is a modification of the LCS it will not face, among several gates, a Milestone B decision gate, a requirements validation by the Joint Requirements Oversight Council (JROC), a body composed by the service military deputy chiefs.

Francis was testifying along with J. Michael Gilmore, director of Operational Test & Evaluation at the Department of Defense; Sean J. Stackley, assistant secretary of the Navy for Research, Development & Acquisition; and Vice Adm. Thomas S. Rowden, commander, Naval Surface Forces and commander, Naval Surface Force, U.S. Pacific Fleet. The witnesses faced a committee whose members expressed dismay over the delays and performance problems of the LCS program, as well as defense acquisition in general.

“The LCS has not yet demonstrated warfighting capability in any of its originally envisioned missions, according to the Navy’s own requirements,” Gilmore said, subsequently detailing the problems he noted with the mission packages. He was especially critical of the deficient mine-clearance rate of the mine-countermeasures mission package.

“Both variants [of the LCS] fall substantially short of the Navy’s reliability requirements and have a near-zero chance of completing a [sustained] 30-day mission without a critical failure of one or more sea-frame subsystems for wartime operations,” he said.

Gilmore also noted that “testing conducted during the past two years on LCS 2, 3 and 4 also revealed significant cyber security deficiencies.”

“The bottom line on the LCS is we’re 26 ships into the contract and we still don’t know if the LCS can do its job,” Francis said. “Over the last 10 years, we’ve made a number of trade-downs. We’ve accepted higher cost, construction delays, mission module delays, testing delays, reliability and quality problems, and lower capability. To accommodate the lesser performance of the ship, we’ve accepted a number of work-arounds: higher crew loads, more shore support, … reduced mission expectations for the ship. It will be 2020 before we know that the ship and all of its mission modules will work.

“On any major weapon system, Milestone B is the most important milestone,” he said. “That’s when the legal oversight framework kicks in. Usually on ships, you have a Milestone B decision when detailed design and construction is approved for the first ship. On LCS, the Milestone B decision was made in 2011, after we had already approved the block buy of 20 ships and had already constructed and delivered most of the first four ships. So the cost growth of the early ships was grandfathered into the baseline of the LCS program.

“The [LCS] mission modules were actually produced before the Milestone B decision to keep pace with the ship,” he said. “What we had was a highly concurrent ‘buy-before-fly’ strategy on an all-new class of ships.

“Once a block buy is approved, your oversight is marginalized,” he told the committee, noting that program advocates will point out “great prices” and “we have to protect the industrial base.” With these two things you cannot change the program from then on, he said.

“The frigate program is concerning,” Francis said. “It’s not going to have milestone decisions, it’s not going to be a separate program, there won’t be a Milestone B … you won’t have a Selective Acquisition Report [SAR] on the frigate itself, and some of the key performance parameters, as they relate to the mission modules, have been downgraded to key system attributes, which means the Navy, and not the JROC, will make decisions on what is acceptable.”

Francis cautioned against rushing into the FF program, noting that in the 2018 budget Congress would be pressured to grant “up-front approval for something where the design isn’t done, with no independent cost estimate, [where] the risks are not well understood, and —  oh, by the way — the mission modules haven’t been demonstrated yet.”

He recommended that the Navy begin a new detailed design competition for the FF between the two LCS ships, down-select to one design and “make it major acquisition program with its one baseline, its own milestones and its own SARs in 2019, then you can consider if you want more ships. You don’t have to do a block buy but can consider other arrangements.”

Francis said the idea of building the first LCSs of each class for experiments and development was a “good idea,” but that about 2005 the Navy decided to move forward with construction for the industrial base.

“As with any construction or production program, once you get into it, once the money wheel starts to turn, the business imperatives of budgets and contracts and ship construction take precedent over acquisition and oversight principles like design and test and cost,” he said.

With the LCS/FF program, Francis told the SASC, “You’ve got one shot left in [fiscal] ‘18 to preserve your oversight power over this program. My advice is, ‘Take that shot.’”

“We have revised the plan going forward for small surface combatants,” Stackley said in his opening statement. “Commencing in 2019, our intention is to transition from LCS to a multimission ship that incorporates the ASW [anti-submarine warfare] plus the surface warfare mission package capabilities of the LCS. We’re working that design today. As we complete this design, before we proceed into production of a future frigate, we will conduct the production readiness reviews, we will ensure that the design is complete and ready to go, we will ensure that the requirements are stable, and we will open the books to invite this committee to participate throughout that review process.”

Stackley took issue with some of Francis’s concerns.

“We haven’t finalized the [FF] acquisition strategy with the ‘18 budget,” Stackley said. “The competitive down-select will be based on best value, associated with the detailed design by the shipbuilders. What we’re telling them is, ‘Somebody is going to win this and they will get 12 ships of this frigate design.’ The [contract] details of whether that’s one [ship] plus options, whether that’s 12 options, or whether we convert that to multiyear in the future, that is not decided today. But we do want to ensure we procure those ships as affordably as possible when we go through that competitive down-select.

“When we talk about LCS transitioning to a frigate, we are leveraging mature designs [and] mature systems,” he said. “That gives us the ability to compete this future ship under a fixed-price contract.”

Asked about Francis’ recommendations, Stackley said, “I don’t propose to halt production of the LCS in 2017. As it relates to the frigate … we will take recommendations to improve upon [the plan], but in terms of the fundamentals of locking down the requirements, stable design, ensuring that we have a competitive, fixed-price approach to the frigate, I think all those fundamentals we’ve got in place.”

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