The LCS Decision: Lockheed Spins DOD Buzz (UPDATED)

by Craig Hooper on August 30, 2010

If you want to see the latest odd twist on the Littoral Combat Ship contest, go read this piece over at DOD Buzz. It is a beautiful example of Lockheed-generated spin–spin so desperate and contrived I wonder if something happened recently to make the wheels come off the LCS-1 bid.

DOD Buzz reports, all in heavy breathy tones, that:

Lockheed Martin, with just a five-week head start, has completed 60 percent of LCS 3, compared to Austal, whose LCS 4 is only 26 percent complete.

We hear Lockheed recently attached the bow to the rest of the ship. Given how close the competition is between Lockheed and the Amero-Australian shipbuilder, the bigger company’s ability to produce ships with greater speed and fewer delays might raises questions in the minds of U.S. Navy officials about Austal’s ability to regularly deliver ships.

Ok. Sounds dire, right? Not really. DOD Buzz is going off of the contract award date (March 23, 2009 for LCS 3 vs. May 1, 2009 for LCS 4)–which, among other things, stipulates that the ships be fabricated some 40-some odd months after the contract award. That’s cool. But it pays to recall a few things.

First, let’s remember that the Pentagon, waaaaay back in the heady days of 2007, issued a stop-work order on the construction of LCS-3. Remember that 22 long-lead items were, shall we say, stuck someplace in a warehouse, making it easier for Lockheed to pick back up again once the order was renewed.

[UPDATE: NOT SO FAST, says an observant Lockheed hand–Austal ordered and kept long-lead items after their first LCS-4 contract expired. Not only that–Austal had even ordered more for LCS-4 than Lockheed had for LCS-3. Argh! I guess I’d better write ten posts in favor of the F-35 in penance, then..]

Second, let’s recall that LCS-1 was commissioned in November 2008. So by March 23 2009–when the LCS-3 contract was awarded–the prototype had gotten enough time at sea to know how the LCS-3 design was going to be “tweaked” before assembly–you know, accounting for those fun little “Water Wings“, that pesky reserve buoyancy problem, and, oh, the deletion of rails to allow for the quick replacement of the turbine, etc….In contrast, the Austal/General Dynamics LCS-4 was contracted and the under construction BEFORE their prototype LCS-2 was commissioned in January 2010. Austal/General Dynamics had to start building LCS-4 pretty much blind.

Third, let’s look at the dates the keels were laid down. LCS 3 “started” (or, well, restarted) fabrication on July 11, 2009. LCS 4 “started” on December 17, 2009. On the basis of percent completion from keel-laying date, Austal ain’t doing half bad.

Fourth, Austal is a new shipyard. It only opened it’s modular fabrication building in November 2009, and then went right to work on LCS-2 in December–and then JHSV-1 six months later. That’s a pretty good pace, frankly.

So, if anything, Lockheed is reaping the advantage in 1) having some long-lead parts already in stock due to earlier TERMINATED construction of LCS-3, and 2) having the benefit of months of real-life operational feedback to inform LCS-3 design. They should be ahead of schedule. Austal, on the other hand, has had to race through the hoops–getting a modular shipyard on-line and the prototype LCS-2 delivered and commissioned, while, at the same time, getting the negotiations done for their follow-on contract.

So, frankly, given the timeline, Austal/General Dynamics is doing pretty well with the deck stacked against it. Lockheed, by the sound of the spin, seems a little desperate they’ve not managed to push those scrappy Aussies back into the Pacific.

And finally, shame on DOD Buzz for not doing more “due diligence” on their reporting. At this stage of the game, it’s OK to trust your source, but…make damned sure you verify it. Or at least provide some context–because spin is going to be flying all over the place. Do more than just regurgitate what you get served.

I mean, how are we, as well-meaning defense observers, going to “raise the game” in defense contracting if we simply traffic in the “latest and greatest” press release? Ain’t we supposed to do some value-added analysis for our readers? And kind of force the contractors do a better job of serving the nation?

That’s why I do this. Shesh, it’s not like I get a paycheck from blogging, either. If anything, making a good effort–on occasion–to distinguish spin from truth only makes me less employable.

Sigh. At least the weather is fine in San Francisco!

{ 2 trackbacks }

War Is Boring » Kyle’s Links 8/30/10
August 30, 2010 at 12:46 pm
Military And Intelligence News Briefs — August 31, 2010 « Read NEWS
August 31, 2010 at 10:26 am

{ 12 comments… read them below or add one }

Craig Hooper September 1, 2010 at 12:55 pm

Hey, you earned it. If you know anybody who can give me a tutorial on why lcs-1 kicks the stuffing out of lcs-2. (not that anybody out there is cheering either program today), I would be glad to hear the sales pitch.

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Ken Adams September 1, 2010 at 11:50 am

Thanks for adding the info on the GD/Austal carryover to the article — better/faster service than would be seen from a “professional” news organization.

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Ken Adams September 1, 2010 at 8:42 am

Craig, I’ve been blogging and commenting about this kind of stuff for years, and I don’t get paid for it either. Yeah, I work for Lockheed, but I don’t speak for the company. I am not employed by the LCS program, although I have been in the past, and I take pains to make sure that what I post about LCS is sourced from the public domain.
I was not angling for a “gotcha,” by the way. You omitted a fact that was germane to the issue, and when I posted my question I did not know the answer. Your “Ready, fire, aim” response prompted me to go do the research and find Phil Ewing’s article with that fact.
To your question of substantive advantage, I’d say probably not. The LCS 3 construction contract was awarded in March 2009, and the keel laying was on July 11th. During that time (timeline published by LM here), LCS 1 was undergoing a second set of acceptance trials (for those items not testable in the Great Lakes), structural test firing, and getting ready for flight deck certification. The actual certification, initial flight operations, an industrial post-delivery availability, and training to get ready for the 4th Fleet deployment all happened after the keel laying for LCS 3. Those underway events are all significant, but how would the LM team have been able to work lessons learned from those into the design of a ship already under construction, under a fixed price contract?
I believe the situation is similar for the GD/Austal team, although their timeline is admittedly compressed relative to Lockheed. They laid the keel for LCS 4 in the same week that they delivered LCS 2. Both teams had time to implement lessons learned from construction in their designs, but I can’t see how the operational lessons being acquired at sea today by USS FREEDOM could have had the opportunity to impact ship design.

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Craig Hooper August 31, 2010 at 8:27 pm

Ken–Nice note. I’m going to restate that I don’t get paid to do this and I’m not tied to any defense contractor. As an interested taxpayer, I’m trying to grapple with this stuff and find the best value.

I would think that a guy like you, writing as you are from a Lockheed-owned IP address, would have the courtesy to state your affiliation and forthrightly provide relevant information–information that I strongly suspect you had in hand–to supplement the debate on this issue.

Frankly, it would be great to see a defense contractor like Lockheed Martin engage in these debates in a forthright, upstanding fashion–rather than angling for a “gotcha” moment. It makes Lockheed Martin look bad, OK? (That goes for all the Lockheed Martin folks who dropped by and commented today.)

Now…OK, assuming Austal/General Dynamics did buy long lead items (And, yes, though it pains me to type this, Austal/General Dynamics did start procurement–according to Janes LCS-4 procured turbines, mountings, raw metal and a BAE Gun.), doesn’t LCS-3 still have a substantive advantage because it is able to modify the design to account for data/info/experiences coming from LCS-1’s period at sea? Yes or no? If the answer is yes, my thesis still stands.

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Ken Adams August 31, 2010 at 5:40 pm

Craig, why would you take my questions as a “shot” requiring that I first aim? Neither you nor the DoD Buzz article answered the question of what long lead materials from the first LCS-4 were available to the second LCS-4 contract. I want to know, so that I can make a fair comparison between the two. There must have been some, because Jane’s reported on 01 November 2007 that “[T]he USN added that it still had to negotiate terms to retain some of the long lead items already purchased for LCS 4.”
When the Navy released the contract values for LCS 3 and LCS 4 in December 2009, they noted that the LCS 3 contract was valued at $470.8 million, while the LCS 4 contract was $433.7 million. Phil Ewing reported at that time that LCS 3 would reuse $78 million in materials from the previously terminated contract, while LCS 4 would reuse $114 million from the prior contract.
Sorry, my friend, for your thesis to be correct, you’ll have to explain away Austal’s $36 million advantage in materials held over from the canceled LCS 4.

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Bobby Ferguson August 31, 2010 at 10:54 am

Don’t look now, but your blogging and commenting sound like spin! We just need to fill in the time between the expected announcement and the rescheduled announcement. My own opinion: Austal came in with a lower price and LM is being given a chance to underbid (as was originally expected).

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Craig Hooper August 31, 2010 at 10:16 am

Hey Bond–Look, I’m not tied to any shipbuilding company. And I hate spin.

So, in the interest of fairness, if you can explain to me–offline, my email is right up top–what GD/Austal has done to spin stuff, l’ll be glad to post–and mock–GD/Austal spin.

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Bond August 31, 2010 at 9:20 am

Craig:

Isn’t Austal/GD guilty of doing the same thing at some point in time during this contest? I find it hard to believe that this is one sided issue and I haven’t seen you post anything regarding any Austal/GD spins that have taken place.

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CBD August 30, 2010 at 7:00 pm

Chris,
Great, great stuff! Excellent, clear and incisive. Especially important when one considers the relative technical burdens and products of the first LCS examples.

It would be nice if the navy slowed the program enough to actually see both LCS-1 and -2 put through the paces (given the LCS-1 6 month lead for keel laying), perhaps even seeing how the 2nd series (LCS-3, 4) come out before they make their final decision.

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G Lof August 30, 2010 at 4:25 pm

The real question should be is LM trying to get the LCS-3 completed early? If so. are they trying to show they have fixes for they long bunch list. As suggested, the wheels for LM program may have fallen off and they are hoping for a last minute rescue.

Another qiuestion, how does this relate to the USN delaying the selection of the production LCS?

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Craig Hooper August 30, 2010 at 4:12 pm

Ken, my friend, aim before you fire! First, the DOD never authorized construction to begin on LCS-4. And second, long-lead items are not tied to a shipyard. In fact, the Navy called LCS-3 contract termination a “partial termination” because Lockheed was allowed to continue procurement of certain long-lead items so they would be on hand for the next Lockheed variant.

Here’s a few links for your edification–this from DOD:
http://www.defense.gov/releases/release.aspx?releaseid=11449

And read this report from Ron O’Rourke.

Enjoy!

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Ken Adams August 30, 2010 at 3:15 pm

So in the due diligence department, what can you report about the existence of long-lead items to the Austal team from the similarly-canceled LCS-4 contract?
I also wonder how much advantage the Marinette yard gained from the previous contract, given that the original LCS-3 was to be built at Bollinger.

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