Procurement: Ship Prices Gone Wild


January15, 2007: The U.S. Navy has halted work on the third Littoral Combat Ship (LCS). This is due to sudden increases in costs for the first and third vessels, which are being built by Lockheed Martin. The stop-work order is to last for 90 days, as the Navy tries to find ways to halt the cost increases. LCS-3, which has not been named yet, was ordered on June 26, 2006.

The Littoral Combat Ships are intended to be very versatile, and handle missions ranging from anti-submarine warfare to mine warfare. The Navy is planning to build as many as sixty of these vessels. The third vessel was slated to cost $197.6 million, displace about 3,000 tons, have a top speed of 92 kilometers per hour, and be relatively stealthy. The preceding class of frigate, the Oliver Hazard Perry-class, cost an average of $68 million each (which would be about $100 million today).

This is not the only naval surface ship program to have financial troubles in the form of increasing costs. The Zumwalt-class destroyers have also faced ballooning costs - up to as much as $3 billion per ship, as opposed to planned costs of $800 million. This has led to discussions about ending the Zumwalt-class production at seven ships. Arleigh Burke-class destroyers only cost $1 billion each.

Another program with high costs is the Ford-class aircraft carriers, formerly the CVN-21 program. The first ship is slated to cost $13 billion (counting R&D). The Nimitz-class carriers that form the backbone of the American carrier fleet only cost $4.5 billion. The air wing (48-50 fighters, plus airborne early-warning planes, electronic warfare aircraft, and anti-submarine helicopters) costs another $3.5 billion.

The real issue with these high costs is not the quality of the ships. In many cases, the LCS, the Zumwalt-class destroyers, and the Ford-class carriers will be very good ships. They might even be somewhat cheaper to operate than their predecessors. They also will be harder to detect - due to advances in stealth designs that have occurred since their predecessors (the Perry-class frigates entered service in 1977, the Nimitz entered service in 1975, and the Arleigh Burke entered service in 1991).

That said, these ships cost anywhere from just under twice as much to three times as much as their predecessors, and it is an open question whether the Navy wouldn't be better off with three Nimitz-class carriers instead of a single Ford-class carrier. It is a question that will be hotly debated as these new ships are built. - Harold C. Hutchison ([email protected])




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