The mission  packages provide the majority of the ship’s combat capability. In this report,  we asked Congress to consider restricting funding for LCS construction in  2016 and beyond until the Navy submitted an acquisition strategy for the  frigate that was approved by the Secretary of Defense; a plan to upgrade  the existing LCS and an analysis of the cost and engineering feasibility  and risks of doing so; and report on the results of a rough water trial  report for both variants. The task force was directed to consider new and existing ship design  options, to include modified LCS design options. Secretary of Defense Directed Program Truncation

In December 2015, the Secretary of Defense issued a memorandum to  the Secretary of the Navy in which he stated that the Navy would build no  more than 40 LCS and frigates, down from the prior planned 52, and  directed the Navy to buy 8 fewer of these ships over the next 5 years than  planned. Defining Capability Concepts

The task force initially produced 192 “capability concepts” for an SSC. However, certain  cost assumptions made by the task force may have overstated the minor  modified LCS’ relative affordability as compared to other options. Navy Prioritized Speed with Which Minor Modified LCS Could Start Production

In a November 2014 memo in which it recommends selecting a minor  modified LCS, senior Navy leadership also highlighted the speed with  which they believe a minor modified LCS based frigate could be fielded  as a deciding factor in its deliberations, as well as a desire to maintain  stability in the LCS industrial base and vendor supply chain. According to the fiscal year 2017  President’s budget, the frigate program will cost over $8 billion through  fiscal years 2019-2025 for ship construction. The acquisition strategy does not provide details on the nature  of these reviews, including requirements and timing. As the Navy pivots from LCS to the frigate—which is expected to provide  some enhanced capabilities over the current LCS—there are many  unknowns with regards to cost and the design of the frigate, and sufficient  oversight structures are not yet defined. Further, the planned oversight of the frigate program could be enhanced  by requiring the Navy to develop key oversight documents related to cost,  capability, and schedule; at the most basic level, these would include an  independent cost estimate, an acquisition program baseline, and a plan to  incorporate the frigate into SARs. Matters for Congressional Consideration

Congress should consider not funding any requested LCS in fiscal year  2017 because of unresolved concerns with lethality and survivability; the  Navy’s ability to make needed improvements; and the current schedule  performance of the shipyards. DOD  concurred with one of our recommendations and partially concurred with  one. DOD noted that the department already plans to conduct annual OSD- level reviews of the LCS and frigate program, stating that coordinating  future program reviews with key acquisition decisions is standard  practice. To examine how the Navy arrived at its preferred solution of a modified  Littoral Combat Ship (LCS) for its future small surface combatant (SSC)  and the extent to which the Navy’s solution will address survivability and  lethality concerns, we analyzed relevant Navy, DOT&E and CAPE studies  and reports and the Navy’s draft frigate requirements documentation. To address any potential risks associated with the Navy’s approach to  acquiring the frigate, we assessed Navy-provided weight reduction  initiatives and descriptions of frigate upgrades.
Why GAO Did This Study

In February 2014, the Secretary of Defense cited concerns with the combat capabilities of the LCS—a small surface combatant (SSC) consisting of a ship and reconfigurable mission packages built by two shipyards as different variants, with 26 LCS delivered or under contract. The Secretary directed an assessment of alternatives for a SSC. A Navy task force analyzed new and existing designs, including modified LCS concepts.
The House report for the National Defense Authorization Act for Fiscal Year 2015 included a provision for GAO to analyze the Navy's study and the implications for future procurement. This report examines: (1) how the Navy arrived at its preferred solution, and (2) the potential risks associated with the Navy's approach to acquiring the SSC and continued procurement of LCS, among other objectives. To conduct this work, GAO analyzed the task force study and other documentation, and interviewed task force, Navy, and Office of the Secretary of Defense officials.

What GAO Found

The Navy's task force studied a number of options to improve upon known shortfalls in Littoral Combat Ship (LCS) lethality and survivability. It found that neither LCS variant with minor modifications met the Navy's desired capabilities without further tradeoffs. After briefing senior Navy leadership, the task force was directed to further examine the LCS options, which required it to alter or in some cases reduce some capabilities. In late 2014, the Navy recommended (and the Secretary of Defense approved) procuring both variants of a minor modified LCS, designating it a “frigate.” The Navy prioritized this option because of its relatively lower cost and quicker ability to field, as well as the ability to upgrade remaining LCS, over making more significant capability improvements. GAO's analysis found the planned frigate will not provide much greater capability in some areas than LCS and that some cost assumptions may have overstated this option's affordability.
As the Navy pivots from LCS to the frigate program, which is estimated to cost more than $8 billion for ship construction alone, its approach would require Congress to appropriate funding with key unknowns. The table outlines GAO's observations on the Navy's acquisition strategy.
Of note, the industrial base considerations that have factored into prior LCS decisions are less compelling, as both yards will be building LCS currently under contract through fiscal year 2021. Finally, there are no current plans for official DOD milestone reviews of the frigate program, which is a major acquisition program based on its anticipated costs. In addition, the Navy does not plan to develop key frigate program documents or to reflect frigate cost, schedule, and performance information in the annual Selected Acquisition Reports (SAR) submitted to Congress. Without adequate oversight, federal funds may not be effectively spent.

What GAO Recommends

Congress should consider not funding any requested LCS in fiscal year 2017 and should consider requiring the Navy to revise its acquisition strategy for the frigate. GAO also recommends that the Department of Defense (DOD) align reviews to precede key acquisition decisions and enhance oversight by requiring the frigate program to develop key program documents and to report on the frigate separately in the SAR. The department concurred with the first recommendation and partially concurred with the second.