Thursday, October 3, 2013

LCS Operating Costs

Before we go any further, let’s acknowledge that you can say anything you want about operating costs by manipulating the list of what’s included or not.  Therefore, citing actual numbers borders on pointless.  With a common set of criteria, you might be able to compare operating costs of various platforms on a relative basis but that’s about it and even then the criteria will determine the outcome.  That said, let’s take a conceptual look at the operating costs of the LCS compared to other ships.

The LCS has an added hurdle in trying to quantify operating costs and that is the fact that the operating and maintenance systems have yet to be worked out, even on paper.  Add to that the fact that the Navy still hasn’t figured out the crew size and the attempt to come up with numbers is nearly pointless.  Nonetheless, we’ll plunge ahead!

The Navy has identified personnel costs as the single biggest factor in operating costs.  With that in mind, the Navy designed the LCS to be minimally manned (some would say that was the main design criteria rather than combat capability!).  Of course, with minimal manning the crew is unable to perform shipboard maintenance or repair.  That function will be handled by permanent shore based support groups.  So, we see that the LCS, by design, has a dedicated “crew” that stays on shore rather than going to sea with the ship.  Thus, the effective crew size is not just the number of sailors on board the ship but is, instead, the total of the shipboard crew plus the maintenance personnel on shore.  A rational discussion of LCS operating costs must include the shore based personnel and recognize that the shore component supports multiple ships so it’s not a simple “add’em up” situation. 

Further, the Navy is using a 3:2 system of crewing.  Three crews rotate among two ships.

Thus, the effective crew size for discussion of operating costs is not the single ship, apparent crew size of around 40 (or 60 or whatever number the Navy eventually settles on) but, rather, three crews plus some portion of shore based personnel all divided by two ships.  See how difficult it is to discuss this?

The Navy is proudly proclaiming that the LCS is minimally manned and will save huge amounts of money in lifetime operating costs (mainly personnel).  While I don’t know the basis for their claims, I’m fairly confident that they aren’t accounting for the factors we just described.  A reasonable estimate of effective per ship crew size is probably on the order of 120 for the ship itself and an additional 40 or so helo crew/support and module specialists.  That would be a total of around 160 per ship.  Hey, wait a minute, isn’t that about what a Perry FFG crew size is?  But I digress …

The other unknown aspect to the LCS operating costs is the shore based maintenance system.  We’ve already seen that the Navy has had to scramble to fly in parts to support the USS Freedom in Singapore.  That kind of dynamic supply system for even simple parts will impose a huge cost burden.  Also, due to US law, the maintenance personnel must be from US companies.  Specialized maintenance personnel will be hopscotching around the world trying to take care of the ships.  When you factor in the personnel costs, the custom travel, the aircraft required for personnel and parts transportation, the maintenance of the transport aircraft, and the many other factors, it’s easy to see that the postulated maintenance system will be very expensive.  To be fair, conventional ships make use of shore based support, also, but not anywhere near the extent to which the LCS will. 

I’m not even going to attempt to guesstimate an actual lifetime operating cost number (and if the Navy does so, they’re making it up).  Suffice it to say that the costs are most likely going to be far higher than what the Navy has suggested and the LCS is probably going to turn out to be more expensive then a conventional ship, not less.

28 comments:

  1. The LCS is fast becoming the 2nd most expensive Pentagon project next to the F-35 Program

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    1. Umm. Not even close. The total estimated cost for all 55 is around $37 billion. That'll buy you maybe 12 Virginia class SSNs or three Ford class CVNs.

      The F-35 program, on the other hand, is at least an order of magnitude more expensive.

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    3. Nicky. No, it is not. LCS isn't even in the top five for shipbuilding programs.

      The information below is taken from table 3 of "An Analysis of the Navy's Fiscal Year 2013 Shipbuilding Plan" It accounts for the total costs per ship class from 2013-42, using CBO estimates:

      DDG(X): $101 Billion
      SSBN(X): $90 Billion
      VA SSN: $89 Billion
      DDG FLT III: $81 Billion
      CVN-78: $78 Billion
      SSN replacement: $38 Billion
      DDG FLT III: $81 Billion
      LHA-6: $27 Billion
      LCS: $22 Billion

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    4. Sorry - DDG FLT III was on my list twice:

      DDG(X): $101 Billion
      SSBN(X): $90 Billion
      VA SSN: $89 Billion
      DDG FLT III: $81 Billion
      CVN-78: $78 Billion
      SSN replacement: $38 Billion
      LHA-6: $27 Billion
      LCS: $22 Billion

      But even with the correction, LCS is #8 on the list. And that is just shipbuilding programs. It doesn't account for other Navy priorities (F-18, Growler, P-8A) or even other DOD programs (F-35).

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    5. Anon, while the LCS is nowhere near the most expensive program in the Navy, do remember that the module costs must be included in construction costs.

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    6. Certainly. But even if the mission packages add 50% to the price of eac vessel (an extremely conservative estimate) its still near the bottom of that list.

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  2. I enjoy your analysis, but the manpower comparison between LCS and FFG isn't really 'apples to apples'.

    The LCS concept is 3:2:1. Three crews for every two ships, with one ship forward-deployed at any time. Best guess is 110 personnel per crew -- so that's 3 x 110 = 330 sailors to maintain one ship forward.

    An FFG is historically manned at 180-200 personnel. Assuming the low end and that you need three FFGs in the rotational base to keep one forward, that's 180 x 3 = 530 sailors.

    Note that I can't speak to the contractor support, nor in any way am a I equivocating the capability of a FFG to an LCS. But the military manpower calculations don't appear to favor the frigate.

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    1. Anon, are you factoring in the shore based component for the LCS? Cause that was kind of the major point of the post. My estimates come a lot closer to the FFG. Regardless, the point of the post wasn't to directly compare the LCS and FFG but to point out that the LCS isn't anywhere near the super-minimal manning the Navy proudly proclaimed at the start of this misadventure.

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    2. I think the issue being pointed out that the 3:2 ends up penalizing the LCS crew size comparison when by doing a somewhat apples to oranges comparison. You are loading up the LCS with 1.5x operational crew but using only 1x for the FFG.

      And your criticism of the shore based maintenance is a bit off as well. While this is a new system for the USN in its infancy, there are many commercial enterprises that have been using similar systems for years. It will probably take the navy a bit to figure out how to do it, but will save money over time. The reality is for the work required the costs once the system is sorted out should be fairly low. The commercial side of the world has long figured out how to transport large bulky items on short notice at reasonable cost. One of the major factors will be for the USN to start using available cargo capacity on commercial passenger and freight flights. For the LCS, pretty much ever replaceable component can be carried as revenue cargo either in the belly of a commercial 747/777/380 or in dedicated commercial freighters. Most large industrial equipment manufacturers already use this capability to provide 24 hour service world wide. Getting to/from any given location can also be done in 24 hours world wide via commercial transport at almost reasonable cost. I've known people involved in this sort of work for Caterpillar. They can basically be anywhere in the world within 24 hours with any part and personel required to fix anything that can be fixed (well short of having to ship in

      Basically, the USN is trying to copy some of the best practices that the commercial world has been doing for the past 30+ years which in the long run, will be a good thing as it will save significant costs. In the short term, it will have higher costs as the USN learns the lessons that many major commercial enterprises have learned over the last 30+ years. The important thing is that the USN needs to learn those lessons and apply them in order to realize the cost savings. If they ignore them and just stick to the plan, then it will cost more in both the short and long term. But it really does need to learn them, as the USN is a peacetime force the majority of the time and needs to be able to function in that mode and save significant money. Things will change in a wartime setting, but that is rather rare, you can almost count the number of days that Navy ships were involved in an actual war setting (aka being fired at!) over the past 40 years with toes and fingers.

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    3. ats: Yes, that was my point.

      ComNavOps: As I said -- I wasn't attempting to speak to contractor (shore side) support.

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    4. ats, you're correct that I'm using a "factored" crew size for the LCS for the reasons I stated in the post. To do otherwise is to ignore the reality of having a portion of the LCS "crew" stationed permanently ashore. The FFG has no such dedicated shore contingent. Yes, there is a general shore support element for all Navy ships but that also applies equally to the LCS and would be a wash in analysis.

      Your assessment of the Navy's LCS support program is based on the most optimistic path possible. IF the Navy adopts every best-in-practice procedure and optimally implements them, the support system MIGHT be cost effective. How many optimal programs has the Navy implemented in the last few decades? How many excellent decisions has the Navy made in the last few decades? I'll stick with my assumption that the Navy will make a hash of the LCS support system just like they've made a hash of the LCS development and acquisition system, optimal manning programs, fleet maintenance, and ... well, you get the idea. The likelihood of your scenario playing out is somewhere around zero. But if it does, then I'm wrong and I'll write a post to that effect.

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    5. Anon: "I wasn't attempting to speak to contractor (shore side) support."

      OK, but if you don't, you can't compare LCS manning with any other ship class since half (no, I don't mean that mathematically) the crew is shore based.

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    6. Nor can you make the same comparison, if you don't factor in the number of FFGs required to sustain one forward at all times.

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    7. CNO, you are making the assumption that if the USN did a modernized frigate instead of the LCSs, that they wouldn't do a 3-2 manning system, which is our point of contention. And the FFG has a dedicated shore contingent, its the two extra FFGs and crews that are typically tied to the docks. Its a whole lot cheaper to pay for 3 crews, 2 ships, and mobile dock side support than it is to pay for 3 crews each with their own support plus 3 ships. The reality is that the USN had/has to figure out ways to trim costs and/or shrink fleet size and esp active (and by active, I mean at sea) fleet size. This was true before the sequester and it is even more true now.

      And we can go back and forth about how well the USN will do with a distributed support infrastructure, but the reality is that they had/have to at least give it a try for the cost-benefit it has demonstrated in the commercial sectors.

      Now we can argue about the value and design of the ships the chose to do it with, we can talk about the cost overruns and design mistakes, etc. But there is a general trend no only in the USN but in the Navies of other countries as well to reduce manning levels of vessels. We aren't the only ones doing it, everyone is. Its a general trend in the commercial side of the world as well. Automation replaces people, reliability of designs in general improves, reducing the need for a 1:1 between on staff maintenance and equipment. Either the USN moves with the trend or the USN shrinks significantly. It doesn't have much choice but to succeed at many of these initiatives cause if it doesn't succeed it don't have a future, and if it doesn't try them, it also doesn't have a future.

      Just look at the manning of modern frigates compared to the OHP. Across the board, the manning is roughly 1/2 of the OHP. Now did the USN try to push too far with the LCS in reduced manning? Maybe, but all of the replacements for current modern frigates are being planned for manning levels fairly close to the LCS. I'm just trying to say that this minimal manning push isn't something unique to the USN.

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    8. ats, you're saying that it's cheaper (on a relative basis) to pay for 1.5 crews per ship than 1.0 crew per ship? You're going to have to explain that to me. You do understand that I'm talking about a relative basis, right? I'm not saying that 1.5 LCS crews is more expensive on an absolute basis than 1 CVN crew. Is that your point? Are you talking about absolute crew size?

      The point of the post wasn't to compare crew sizes across ship classes. It was to conceptually analyze the LCS operating model. Part of that was to point out that the Navy's claims of minimal manning, at least publicly, don't take into account the extra crew in the 3:2 model nor the extra shore based contingent.

      When did I say or imply that future ships would, or would not, have any particular manning scheme and what does that have to do with anything? You're trying to make some point but I'm missing it.

      Of course the Navy has to try to trim costs. Have I ever said they shouldn't? I've said that the way they're going about it is frequently wrong but that's not part of this post.

      As far as minimal manning, I have no problem with reduced manning as long as it doesn't impact combat effectiveness and damage control which it has in the Navy's attempts to implement it.

      The point of the post was summarized in the last paragraph. The LCS operating costs are going to be much greater than the Navy has suggested and may well turn out to be greater than a comparable conventional ship. I stand by that. The only way you can disagree with that is by assuming, as you described, that the Navy implements a bunch of best practices and makes a series of most optimum decisions. We'll have to wait and see on that but history assures us with almost 100% certainty that won't happen. I've spent the last year or so documenting an endless and ongoing series of poor decisions and practices. To expect that trend to suddenly and dramatically reverse itself with the LCS support system is just wishful thinking.

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    9. ComNavOps. The 3:2:1 concept for the LCS is set up that way to support one ship forward-deployed at all times. That is the central premise of the entire LCS CONOPS.

      You seem to focus on the "production" side of that equation (3 LCS crews to man 2 ships), yet you are completely ignoring the "output" (1 ship forward deployed).

      The interesting question is how much would it cost to sustain one FFG forward at all times? I'd hazard that the answer is probably significantly more than what we are paying for LCS.

      We'd either need to maintain three fully manned FFGs (180-200 x 3 = 540-600 sailors) or set up a similar rotational support structure - with contractor support.

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    10. Anon, wow! I'll try one more time to put this as simply as I can and then I'll drop it as a lost cause. We're discussing lifetime operating costs not some kind of efficiency of forward deployment or whatever you're trying to convey.

      If you have a fleet of 50 coventional ships you have 50 crews. If you have a fleet of 50 LCS's you have 75 crews. There, I can't make it any simpler than that.

      Forward deployment has nothing to do with this. The ships are racking up operating costs whether they're forward deployed or not. The crews are being paid whether they're forward deployed or not.

      I have not claimed that LCS has less crew than an FFG although a rigorous analysis of 3:2 crew plus extensive shore support might actually show that. My only off hand comment in the post was that the LCS and FFG crewing was not that far apart when the extra crew and shore support was factored in. Extra crew and more extensive shore support than for conventional ships has to accounted for when looking at lifetime operating costs. That's it. Nothing more.

      I truly am baffled by what point you're trying to make but it seems to have nothing to do with lifetime operating costs.

      I'll repeat the overall conclusion one more time. The lifetime operating costs are well above what the Navy has publicly suggested For example, the Navy has implied that the LCS is minimally manned and, therefore, huge savings are being realized. The point of the post is that, no, the LCS is not minimally manned as the Navy would have us believe. The LCS has an at sea contingent of crew supported by a shore contingent crew. The LCS also an extra complete crew for every two ships. Those have to be factored into any claim of minimal manning and lifetime operating cost savings.

      Will the LCS realize lifetime operating cost savings (on a relative basis compared to a coventional ship the same size)? My post says either no or nowhere near what the Navy would have us believe.

      You seem to think that I've claimed that LCS costs more (in some fashion I don't get) than an FFG. If that's what you're doing, where did you read that I claimed that? Reread the post.

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    11. Oops! Meant to say "I have not claimed that LCS has MORE crew than an FFG ..." in the above comment.

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    12. "The Navy is proudly proclaiming that the LCS is minimally manned and will save huge amounts of money in lifetime operating costs (mainly personnel)."

      **********************

      That's your quote. And with all due respect, you use the term 'savings' quite a lot throughout your blog. I am not sure you fully appreciate what that word means.

      Savings is a relative measure. As in 'A saves $X relative to ‘B'. And in order to discuss manpower saving (or any savings) intelligently, you first need to establish what ‘A’ and ‘B’ are and ensure that the effects you are getting from each are at least comparable. Can we agree on that?

      The Navy doesn't buy ships to have them sit in home-port. We buy them to operate forward to the greatest extent of their service life as possible. Can we also agree on that?

      At the risk of repeating myself, my point is that comparing 50 LCS to 50 FFG completely glosses over that very important issue. The math will get tricky, so I apologize in advance!

      LCS: The ‘3:2:1’ concept would use 75 crews and 50 hulls to sustain 25 forward deployed vessels. Assuming each LCS crew is 100 sailors, and tack on another 20 contractors per seaframe, that’s (100 x 75) + (50 x 20) = 8,500 personnel to maintain 25 LCS forward deployed.

      FFG: A traditional deployment pattern for a frigate is ‘3:1’: one deployed, one just returned, and one working up. Assuming 200 sailors per frigate*, that is (200 x 50) = 10,000 personnel to maintain 50/3 = 17 FFGs forward deployed. About 1,500 additional personnel to maintain 1/3rd less forward presence.

      I hope you now see what I was getting at. The basis of manpower comparison between LCS and a traditional naval combatant is completely wrong. The CONOPS are very different.

      There are of course be ways to get the same forward presence out of an FFG. You could hypothetically adopt a ‘3:2:1’ concept… but that would involve funding 25 more crews. And at twice the manning of LCS, the manpower ratio will never favor the frigate:

      FFG (‘3:2:1’): This hypothetical concept would require 75 crews and 50 FFGs to sustain 25 forward deployed FFGs. That works out to 200 x 75 = 15,000 sailors. Roughly twice the manpower to provide the same amount of presence as LCS. And I am being generous in assuming no contractor support.

      * I assume 200 sailors per frigate because that is what their manning document calls for. I am well aware that the Navy has deployed frigates with less personnel as a cost saving measure.

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    13. CNO, I'm saying that it doesn't matter how many ships or how many crews you have, what matters is how many active ships you have where active means deployed, on patrol, etc. The LCS doesn't use a 3:2 crewing structure because it is an LCS. It uses a 3:2 crew structure because it enables the hardware to active more than if it has a 1:1 crew structure. AKA, the 3:2 and LCS manning are actually separate issues.

      Even if instead of the LCS, the USN went with say a Formidable-class analog or a F125 analog or a mini-FREMM analog, they would be doing a 3:2 crew structure because it enables the hardware to be used more. The 3:2 crew structure enables 1 crew to be in training/R&R/etc while the other two crews are out either on deployment, preparing for deployment, returning from deployment. The USN, rightly or wrongly, views crew fatigue and availability as an issue for deployment availability. Their solution is the 3:2 crew concept. And they were going to deploy the 3:2 concept regardless of the underlying hardware to replace the OHPs. Therefore, it is incorrect to account for the 3:2 concept when making a direct comparison to crew cost vs the OHP. Even a modernized new build OHP would of used the 3:2 crew deployment model, it is independent of the underlying crew size or support model. The onshore support concept for the LCS is however fair game as it is part of the vessel design/manning levels for the ships.

      As far as overall cost, it is cheaper to use 2 ships with 3 crews to support operational requirements of 1 deployed ship than it is to use 3 ships with 3 crews to support operational requirements of 1 deployed ships. AKA LCS plus rotating crew concept is 3:2:1 (crews/ships/deployed) while OHP plus crew concept is 3:3:1.

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    14. ats, this has got to be the most bizzare discussion I've had on any post. You appear to be arguing with me about things I haven't said! For instance, I haven't said,

      - LCS operating costs are more expensive than an FFG
      - 1:1 crewing is a preferred mode for deployment over 3:2

      You picked up on the phrase OPERATING COSTS in the title of the post, right? Operating costs have nothing to do with deployment. A ship racks up the same operating costs whether deployed or sitting back home, pierside (OK, expendables are less). The ship is still racking up crew costs whether it's deployed or not.

      SSBNs have greater relative operating costs than a coventional ship because they have two crews to pay per ship versus one. You get that, right? Similarly, the LCS racks up more operating costs because they pay 1.5 crews per ship versus 1 for a conventional ship.

      How we get the most deployment time out of a hull is a completely different subject that I haven't brought up.

      So, what have I actually stated that you disagree with?

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  3. Correction: 180 x 3 = 540 sailors.

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  4. One added cost with low manning is that each crew member must be fully trained before going on the ship. The present practice of new personnel having weeks or months to get fully qualified on board by being trained by existing crew with up to 5 years on the ship is not possible since there is no personnel to spare. No personnel to spare to be a trainee or a trainer.

    And to get people fully trained before they arrive means that there is added cost of shore based equipment to train on and even the probable need to have a few LCS’s available strictly to train crews before they deploy. And we have two separate types of LCS which will increase the training cost. How successful will turning a ship over to a crew which has not actually been to sea on a LCS? How long will it take to get that ship up to standards Its one thing to operate simulators and do classroom training but the sea is different. True we turn over newly commissioned ships to new crews but they then have at least a year to get worked up on the ship before they are deployed.

    Going to a 3/2 crew also brings up the problem of lack of ownership on the ship which is known to cause maintenance issues. And with 3/2 I am betting some parts of the 3/2 crew get deployed a lot more then others, the best crew members will get stuck with the work and the semi trained, stupid, whiners, lazy, sick etc will manage to stay back in the USA. If you only have space on the ship for the best crew then the best crew members will be the ones put on the ship.

    Right now the LCS’s are using Blue/Gold teams which require 91 per team or 182 for both and that does not count shore based training/maintenance/admin personnel

    “”””The LCS has a core crew of only 53 Sailors on each team, and each LCS has two teams - Gold and Blue. Additional Sailors are brought on to augment the ship during a deployment bringing the total up to 91 per team.””’

    http://www.navy.mil/ah_online/ftrStory.asp?issue=3&id=76207

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    1. DJF, that's a good point about the additional training pipelines. If they're more extensive and more expensive than conventional ones which, by all accounts they are, then that's yet another source of lifetime operating costs that have to factored in.

      In the surface Navy, minimal manning and crew swapping has failed whenever it's been tried and has resulted in ships wearing at a faster rate. Maintaining more ships forward deployed for longer periods provides a short term benefit in number of available ships but results in a long term shortage of ships due to increased wear and lack of maintenance causing early retirement of ships.

      Good comment!

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  5. I have always though that LCSs were to be deployed overseas in groups, not single as Freedom is doing now. As such would it not be better to estimate the costs of ownership on a groups bases, not just one ship at a time.

    I based this on the Transformationalist (AKA the New Light Weight Mafia) being aviation centered, and thinks in terms of squadrons and wings.

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    1. GLof, I suppose that method of deployment could have some small effect on lifetime operating costs but generally the costs will be construction, manning, expendables (fuel, food, and such), maintenance (largely independent of method of deployment), support, etc.

      If the Navy ever comes up with a deployment method, we'll take a closer look!

      If you think I've overlooked a significant factor, let me know.

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    2. I believe that such a method of deployment would not effect the cost of construction and expendables but would reduce the cost of maintenance and support cost by up to twenty five percent.

      Lets suppose the LCS are deployed in groups of four ships with a common support team.

      Frist would be the savings of in support personnel, where they can share by rotating the LCS through port one at a time. This means that the support crew would not have long period where they are waiting to they ship to return to base.

      Second, by combining four ships supplies into one units, a larger, more diverse selection of spares and tools would be available, reducing the need for air freighting these items from the States.

      Third, It will allow more modules to be forward deployed with LCS as we will have enough personnel available to provide local support. For example the four LCS would have six mission modules, two ASuW, two ASW, and two MCM.

      Since they would be a even number of ships the four LCS and their six crews would be base together, not be fought out mid deployment. again saving transportation cost.

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