Friday, February 26, 2016

Post-Delivery Construction Costs for LCS

Here’s another interesting budget item.  Read it and then we’ll discuss it.

“BAE Systems San Diego Ship Repair, San Diego, California, is being awarded a $15,589,527 cost-plus-award-fee contract for the accomplishment of post shakedown availabilities (PSA) for USS Detroit (LCS-7) and USS Montgomery (LCS-8).  The PSA encompasses all of the manpower, support services, material, non-standard equipment and associated technical data and documentation required to prepare for and accomplish the PSA.  The work to be performed will include correction of government responsible trial card deficiencies; new work identified between custody transfer and the time of PSA; and incorporation of approved engineering changes that were not incorporated during the construction period which are not otherwise the building yard's responsibility under the ship construction contract.  This contract includes options which, if exercised, would bring the cumulative value of this contract to $103,999,092. 

This is showing the hidden costs of ship construction that the Navy is engaging in more and more frequently.  The Navy is deferring portions of construction to the PSA and other post-delivery periods as a means to fraudulently artificially contain and obscure legitimate construction costs.  This contract is somewhere between $15M - $104M for two ships that were supposed to have been delivered complete.

Note the type of work.

“The work to be performed will include correction of government responsible trial card deficiencies; new work identified between custody transfer and the time of PSA; and incorporation of approved engineering changes that were not incorporated during the construction period which are not otherwise the building yard's responsibility under the ship construction contract. “

PSA's are supposed to be for the purpose of correcting deficiencies revealed in trials.  They are not supposed to be used for deferred construction.  You can bet the LCS supporters (both of them) will not include this cost in their construction cost claims.

This is relatively small money for these ships.  The major one is the Ford which is having significant construction deferred until post-delivery because they’ve bumped up against the Congressionally mandated cost cap and this is how they’re getting around it.


This practice is disgusting and is, unfortunately, becoming more and more common.

29 comments:

  1. Did they do any crap like this in the past? Or is the Navy just more and more into the shell game?

    Is this money, further, coming out of the money given to them by Congress, or is this additional money on top of their nominal budget?

    Money is the sinews of war. If we aren't careful with it, then we have no hope; and acts like this suggest they aren't being careful with it.

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    1. This is a relatively recent development, "invented" for the purpose of evading Congressional cost caps. It's only relatively recently that Congress has begun imposing cost caps as a means of controlling costs and exercising their constitutional oversight responsibilities. Unfortunately, rather than bow to the will of Congress, the Navy has spent a great deal of effort coming up with ways to bypass Congress. If the Navy would put the same effort into cost containment that they put into evading Congressional oversight, there wouldn't have to be cost caps.

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    2. Short answer, Too much corruption in the service.

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  2. To say this is a unique problem to the Navy ignore reality. Even the marines are not immune from this misplacement on safety. Pretty soon even the aircraft they have are going to fail.

    The whole situation is further exacerbated by the Marine Corps’ own lack of prioritization: dumping billions into new ultra high-end airframes (MV-22 Osprey, F-35B) while not sustaining the ones they already own and depend on for critical mission sets.

    I believe the military mindset is now one of corruption and deliberate misleading of the civilian leaders. How long before some buffoon decides to label himself emperor and the generals and admirals fall into line to keep the gravy train rolling on.

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    1. Please do not misunderstand. This is a Navy blog so I focus on Navy matters (hence the title!). I do not suggest that the various problems documented herein are unique to the Navy. All the services suffer from the same problems though, perhaps, manifested in slightly different ways.

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    2. Last I checked the marines were part of the department of the navy. As such they suffer from the same issues and waste of funds since for the most part because they have the same leadership

      Not taking anything away but procurement is a corrupt game in the navy at this point

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    3. I don't know if you have come across Conquest's Law, propounded by the Anglo-American poet and historian Robert Conquest:

      "In any large organisation, there are people in senior positions who behave as if they were in the pay of that organisation's worst enemies, without necessarily being so."

      That of course applies well outside the USN, but it does seem particularly applicable there.

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  3. "The whole situation is further exacerbated by the Marine Corps’ own lack of prioritization: dumping billions into new ultra high-end airframes (MV-22 Osprey, F-35B) while not sustaining the ones they already own and depend on for critical mission sets.

    http://foxtrotalpha.jalopnik.com/the-marines-corps-ch-53e-sea-stallion-fleet-is-in-inexc-1761340070

    (Slipping this in as the Corps is a department of the Navy.)

    Didn't we already have a couple of aviators die in MH-53's due to the poor condition of the Helicopter?

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    1. Yes people have died in navy 53's which is the mine sweeping version the navy runs because both have maintenance issues

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  4. If I remember correctly another example of the shell game used by the USN to hide spend on the LCS were the new waterjets (lighter/efficiency claimed to be +10% /reduced cavitation etc) fitted to the Freedom class from LCS-5 onwards.

    None of the RDT&E costs were attributed to the LCS as USN stated they could be used in other ships, though as yet no knowledge of any current or future USN ship will use these units.

    The waterjets were developed by Rolls-Royce Kamewa Sweden in collaboration with the Office of Naval Research (ONR) and the Naval Surface Warfare Center, Carderock Division.

    http://www.defensetech.org/2014/05/15/lcs5-gets-new-waterjets/


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  5. I am reminded of a saying and panel builder told me.

    Engineering Change Orders Happen

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    1. I am reminded of a saying a panel designer told me.

      Engineering Change Orders Happen If You Don't Know What You Want

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    2. Well this Old panel designer ( and software writer) will tell you

      If there are NO Engineering Change Orders, then the mistakes you made are Still there.

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    3. I, too, have designed and built panels (built small ones myself and contracted out the construction of larger ones). I never issued a change order. Instead, I made sure to understand the purpose and requirements and, with that complete understanding, I was professional and competent enough to design the right panel, from the start.

      When I encountered customers who weren't completely sure about what they wanted (an all too often occurrence), I made it my responsibility to understand their process/needs and guide them to an understanding of what they really wanted. After all, that's what being a professional panel builder is all about.

      I didn't make mistakes. I was professional and thoroughly understood my work and my customer's needs.

      The same applies (or should) to the Navy. If you thoroughly understand the requirements for a ship (via a complete and detailed CONOPS) and you thoroughly understand ship construction, there will be no need for change orders. You'll get it right from the start. Sadly, the Navy no longer does CONOPS so they don't know their requirements and they no longer have in house expertise (BuShips) that understands ship construction. Making all that worse, they've even turned to companies that don't, themselves, build warships for a living.

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  6. Hey NavOps. You seem this?

    http://www.scout.com/military/warrior/story/1643791-navy-rail-gun-round-may-fire-from-5-inch-gun

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    1. I hadn't seen it. Perhaps you'd care to offer an opinion on it?

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    2. This comment has been removed by the author.

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    3. HowdypartnerFebruary 28, 2016 at 4:11 PM
      I find it contradictory for one reason. The third Zumwalt is was going to have the rail gun installed. Now they are forgoing testing?

      This seems like dueling idea with no clear answer. Rail gun not rail gun guided shells not guided shells. What is really happening

      I had heard they were having wear issues with the barrels not lasting on the rail guns. Major wear issues

      Also the 5 inch gun opinions doesn't make sense. I can't form an opinion with out more info

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    4. It is far more likely that the experimental rail gun would use 155mm size round as it would allow the use of the existing AGS ammo handling system, and simplify the rail gun replacement after the test.

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  7. One wonders what the actual final costs will be.

    Anyone want to bet that it could actually be over a billion USD a ship?

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    1. My personal belief is that the ship construction, including GFE which is not part of the budget line items but must be significant, is around $750M - $800M. The original modules would have been $100M - $200M but the stripped down modules they're now going for are probably around $50M - $100M. So, a final, total cost of a functional LCS is probably around $800M - $900M which is in line with your billion per ship suggestion.

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    2. The really scary question becomes, what does the US get for its money?

      I mean, when you think about it, this is people's tax money going for this mess - the concept of opportunity cost comes to mind here.

      Perhaps they ought to just build a modernized Fletcher.

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    3. I happen to agree completely with the concept of a modern Fletcher.

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  8. This is what comes of buying ships from Lock-Mart.
    You'd think the Navy would've learnt from watching AF get royally shafted on the F-35. Nope. Wouldn't even be hindsight... just, look at your neighbours very public issues....

    Now its too late. Bad as the results turning out to be, theres no way lock-mart would allow some brave soul to pull the plug on this debacle.
    Short of Sanders becoming president, USN will end up with 50 of these dry dock hogs,
    And lets face it, none of you are brave enough to vote for Sanders (something totally different) so, welcome to the LCS ownership dream.

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  9. What do you expect? The DoD can't even get their accounting systems to meet audit standards. They haven't been able to do this despite Congressional mandates for over 10 years. So why would you expect PMs and PEOs to follow rules to properly account for money?

    Like most topics here, the cause starts with the people managing the Navy.

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    1. "Like most topics here, the cause starts with the people managing the Navy."

      A recurring theme!

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  10. http://www.defensenews.com/story/defense-news/2016/03/02/destroyer-zumwalt-bath-iron-works-repairs-sea-trials-construction/81193318/

    Propulsion woes, sketchy and vague replies from naval personal when asked for details, missed second round of sea trials. Cutting holes in brand new ships to affect repairs.
    If nothing else, you've got to admire the USN's consistency...

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  11. And....

    http://www.defensenews.com/story/defense-news/2016/03/03/gao-navy-shipbuilding-contracts/81279532/

    The stupidest ####ing thing i've read all day. My god, US arms procurement, in its own unique way, is as bad as Indian arms purchases.

    This is mental.

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