	The LCS Program Has Changed Significantly over Time

When the Navy first conceived the LCS in the early 2000s, the concept  was that two shipbuilders would build prototypes based on commercial  designs—Lockheed Martin’s Freedom variant and Austal USA’s  Independence variant. The Navy planned to experiment with these ships  to determine its preferred design variant. Thus, the program has evolved  from concept experimentation, to LCS, and more recently, to an LCS that  will be upgraded to a frigate. This evolution is captured in  figure 1. Whereas acquisition best practices embrace a  “fly before you buy” approach, the Navy has subscribed to a buy before  you fly approach for LCS. LCS Cost, Schedule, and Performance Expectations Have Eroded

In addition to significant changes to the acquisition strategy for LCS, the  program has also deviated substantially from expectations about its cost,  schedule, and the capabilities the ship would provide with the seaframes  as well as with the modular mission packages. The Navy has attributed a series of recent engineering casualties on  delivered LCS to shortfalls in crew training, seaframe design, and  construction quality. 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. Frigate Acquisition Strategy Rushes Procurement in Light of Continued Unknowns

The Navy has elected to pursue an acquisition strategy that starts with  getting what it calls block buy pricing from both shipyards for 12 LCS. Still, many questions remain to  be settled about the frigate’s design, cost, schedule, and capabilities. 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 4. Frigate Does Not Address All Navy Priorities and Will Likely Carry Forward Some LCS Design Limitations

As LCS costs grew and capabilities diluted, the Secretary of Defense  directed the Navy in February 2014 to explore alternatives to the LCS to  address key deficiencies. We found  that the proposed frigate does not add any new offensive anti-submarine  or surface warfare capabilities that are not already part of one of the LCS  mission packages, so while the frigate will be able to carry what equates  to two mission packages at once, the capabilities in each mission area  will be the same as LCS. Limited Opportunities Remain to Shape LCS and Frigate Programs

Over the past 10 years, we have made recommendations to DOD on a  number of issues with the LCS program. Our recommendations to DOD since 2005 have largely focused on LCS  combat capability shortfalls and the Navy’s acquisition strategy. In addition to these recommendations to DOD, our past reports have  made suggestions to Congress on actions to support better LCS program  outcomes. The Navy’s plans for fiscal year 2018 involve significant decisions for  Congress in terms of the way forward in the immediate future the frigate  program, including potential future commitments of about $9 billion based  on early budget estimates. If these plans hold, the Navy will ask  Congress in a few months to consider authorizing a block buy of 12  frigates and funding the lead frigate when the fiscal year 2018 budget is  proposed. This request appears premature, as it requires Congress to  make a decision on the frigate before detail design has begun and before  the scope and cost of the design changes needed to turn an LCS into a  frigate are well understood. This prolonged workload, when combined  with the two LCS awarded earlier in 2016 and the two LCS planned to be  awarded in fiscal year 2017, takes construction at both shipyards into  2021. Related GAO Products

Littoral Combat Ship and Frigate: Congress Faced with Critical  Acquisition Decisions. National Defense: Navy’s Proposed Dual Award Acquisition Strategy for  the Littoral Combat Ship Program.
Why GAO Did This Study

The Navy envisioned a revolutionary approach for the LCS program: dual ship designs with interchangeable mission packages intended to provide mission flexibility at a lower cost. This approach has fallen short, with significant cost increases and reduced expectations about mission flexibility and performance. The Navy has changed acquisition approaches several times. The latest change involves minor upgrades to an LCS design—referred to now as a frigate. Yet, questions persist about both the LCS and the frigate.
GAO has reported on the acquisition struggles facing LCS and now the frigate. This statement discusses: (1) the evolution of the LCS acquisition strategy and where it stands today; (2) key risks in the Navy's plans for the frigate based on the LCS program; and (3) remaining oversight opportunities for the LCS and frigate programs. This statement is largely based on GAO's prior reports and larger work on shipbuilding and acquisition best practices. It incorporates limited updated audit work where appropriate.

What GAO Found

The Navy's vision for the Littoral Combat Ship (LCS) program has evolved significantly over the last 15 years, reflecting degradations of the underlying business case. Initial plans to experiment with two different prototype ships adapted from commercial designs were abandoned early in favor of an acquisition approach that committed to numerous ships before proving their capabilities. Cost, schedule, and capability expectations have eroded over time, as shown in the table below. More recently, the Navy attributed a series of engineering casualties on delivered LCS to shortfalls in crew training, seaframe design, and construction quality.
Concerned about the LCS's survivability and lethality, in 2014 the Secretary of Defense directed the Navy to evaluate alternatives. After rejecting more capable ships based partly on cost, schedule, and industrial base considerations, the Navy chose the existing LCS designs with minor modifications and re-designated the ship as a frigate. Many of the LCS's capabilities are yet to be demonstrated and the frigate's design, cost, and capabilities are not well-defined. The Navy proposes to commit quickly to the frigate in what it calls a block buy of 12 ships.
Soon, Congress will be asked to make key decisions that have significant funding and oversight implications, but without having important information. The Navy plans to request fiscal year 2018 authorization for its frigate block buy approach. Of note, the pricing the Navy intends to seek from the shipyards will be for 12 basic LCS. Only later will the shipyards submit their proposals for adding frigate capabilities to the LCS hulls. Congress will be asked to authorize this approach many months before the Department of Defense (DOD) prepares an independent cost estimate. Further, there is no industrial base imperative to continue with the Navy's planned pace for the frigate acquisition. LCS workload backlogs, when combined with 2 LCS awarded earlier in 2016 and 2 more planned for award in fiscal year 2017, will take construction at both shipyards into 2021.

What GAO Recommends

GAO is not making any new recommendations in this statement but has made numerous recommendations to DOD in the past on LCS and frigate acquisition, including strengthening the program's business case before proceeding with acquisition decisions. While DOD has, at times, agreed with GAO's recommendations, it has taken limited action to implement them. GAO has also suggested that Congress take certain actions to support better LCS and frigate outcomes.