Friday, June 10, 2016

Need to Address Fundamental Weaknesses in LCS and Frigate Acquisition Strategies

GAO-16-356: Published: Jun 9, 2016. Publicly Released: Jun 9, 2016.

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.
Key Upcoming Actions for Littoral Combat Ship (LCS) and Frigate
Fiscal year
Navy planned actions
GAO observations
Request proposals from both shipyards for two LCS with a block buy option for 12 additional LCS.
Including 12 LCS with the current capabilities as a block buy option does not form a sound basis for a future frigate procurement; a robust frigate competition once designs are firm would be a more informed approach.
Procure two LCS, with one ship awarded to each shipyard.
Congress would fund more LCS even though these ships have not demonstrated lethality and survivability capabilities.
Obtain contract change proposals for frigate capabilities for the 12 LCS under the block buy option. Exercise option on one of the shipyard's contracts for detail design and construction.
Navy would exercise the contract option frigate procurement before the start of detail design or completion of weight reduction initiatives needed to determine whether seaframes can accommodate frigate upgrades.
LCS lethality and survivability testing is completed.
Testing will show how LCS can function as basis for frigate.
Both shipyards complete construction of LCS already under contract.
Both shipyards have experienced schedule delays of up to a year or more.
Source: GAO analysis of Navy LCS and frigate information. │GAO-16-356
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.

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 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.

Matters for Congressional Consideration

Matter: 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. 
Status: Open 
Comments: When we determine what steps the Congress has taken, we will provide updated information. 
Matter: Congress should also consider directing the Navy to submit a revised, OSD-approved acquisition strategy under which it completes a significant portion of detail design for the frigates prior to soliciting proposals for the frigate upgrade package. 
Status: Open 
Comments: When we determine what steps the Congress has taken, we will provide updated information. Recommendations for Executive Action 
Recommendation: The Secretary of Defense should ensure that there are Office of the Secretary of Defense (OSD)-level reviews scheduled to assess the Navy's level of knowledge prior to key events, such as the Navy releasing the request for modification proposals for the frigate upgrade and committing to a frigate downselect decision. 
Agency Affected: Department of Defense Status: Open 

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information. 
Recommendation: The Secretary of Defense should, before the downselect decision for the frigates, require the program to submit appropriate milestone documentation as identified by OSD, which could include an Independent Cost Estimate, an Acquisition Program Baseline, and a plan to incorporate the frigate into SAR updates. 
Agency Affected: Department of Defense Status: Open Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information. 

Read the full report here

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