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Thursday, August 8, 2024

LCS Program Cost and Opportunity Cost

Austal (USA) just launched the final LCS, the USS Pierre (LCS 38).  Now would seem an especially appropriate time to assess the financial and opportunity cost of the program.  Did we get value for our taxpayer money (the program cost)?  Was there something else we could have better spent our taxpayer funds on (the opportunity cost)?  Let’s see.
 
A cursory review reveals that we acquired
 
16x Freedom class ships (5 retired)
 
19x Independence class ships (2 retired)
 
Total LCS Ships  = 35 (7 retired)
Total Active LCS Ships = 28
 
Note:  Depending on which plan you look at, the Navy intends to retire several more Freedom class vessels over the next few years.  Essentially, the entire Freedom class is being terminated as quickly as the Navy can.
 
What did this acquisition program cost? 
 
Ship
GAO reports R&D and acquisition costs = $20.5B [2]
Unit cost = $650M [2]
 
Module
GAO reports module R&D and acquisition costs = $7B[1]
Total modules = 40 [1]
Unit cost = $175M per module.[1]
 
Total Program Cost
Total cost module and ship = $27.5B
 
 
Discussion
 
Value – The LCS has almost no combat capability.  Hence, the value for the money is near zero.
 
Opportunity Cost – The opportunity cost = $27.5B.  What could we have done with $27.5B if we had not spent it on the LCS program?  Well, the alternative opportunities are nearly endless:  munitions, mines, a dedicated minesweeper, ASW destroyer/corvette, air wings, dry docks, etc.  At this point, it’s not even debatable that almost any alternative choice would have been a better use of the funds.  In other words, the opportunity cost-value far exceeded the actual cost-value.
 
Bear in mind that this is not a case of hindsight.  Almost everyone except the Navy pointed out massive problems with the program from day one:  concurrency, lack of CONOPS, a multitude of design issues, insufficient weight and stability margins, a badly flawed manning model, a badly flawed maintenance model, lack of armament, complete absence of modules, etc.  There was no hindsight involved or required.  The problems were painfully obvious and predictable.  In fact, the term ‘predictable’ implies a small degree of uncertainty.  Regarding the LCS problems, there was no uncertainty.  The problems were 100% certain to occur, as was pointed out by … well … everyone.
 
The LCS is the poster child for a program that should never have left the back-of-the-napkin stage.  It produced no value and a staggering $27.5B wasted opportunity cost.
 
  
 
_______________________________ 
[1]Government Accountability Office, “Weapon Systems Annual Assessment”, Jun 2023, GAO-23-106059, p.149
 
[2]Government Accountability Office, “Weapon Systems Annual Assessment”, Apr 2018, GAO-18-360SP, p.92

49 comments:

  1. Let us hope the next Sec Nav uses this post as a launching pad to reform our ship building plans and procedures.

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  2. I would vote for dry docks. Bonus is that they have a similar war-fighting capacity as the LCS ships.

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  3. Perhaps the US should broaden its definition of treason so that it would cover the decision-makers involved in such great acts of waste and corruption.

    Or if you think 'treason' a bit heavy-handed, perhaps you could define a crime by analogy with the old classic Setting fire in His Majesty's dockyards.

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  4. The LCS program came from a strategic blunder assuming US' major threats were regional powers. LCS were designed to combat them. Even most advocated China threat 20-30 years ago believed LCS, DDG, etc. were answers (more in number). Very few thought that the nation would face another superpower.

    The opportunity cost goes far beyond the author gave (27.5 billion). The nation has wasted a generation of talents. A major weapon programs need far more supports from civilian industries on parts and technologies than defence contractors which mainly do system integrations. Tyco's successor - next generation cruiser program was cancelled.

    Time is a far more important commodity as the nation is losing manufacturing and technology base.

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    1. There's a whole generation of admirals that came of age believing they would never be challenged at sea again, and that they should focus on supporting anti-terror operations in the desert. They never learned how to fight a peer-level adversary. What does that do to a culture? It makes you want to un-retire a couple Cold War officers to clean house.

      Delete
    2. "STEM"

      Comment deleted. I've demonstrated before that the STEM assertion is false so stop repeating it.

      Delete
  5. My question is, when will Congress stop trusting the Navy, and start insisting on realistic programs, with realistic pricing, that have acceptable combat value?? When the GAO, and other entities evaluate programs, and are usually pretty prophetic, when is Congress going to stop allowing the Navy to either BS them, or ignore their will?? When will they stop raising the cost caps? When will they evaluate a program and just say "nope, too expensive for a lackluster capability, program cancelled"??
    The LCS is now another "historical" example- so are we going to allow the Constellations to be the next one...??

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    1. Congress is much if not more of the overall problem. Systemic change is needed with some bipartisan amendments on how we can Congress functioning better along with the other 2 branches.

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  6. Allow me to posit the most extreme, viscous, and yet perfectly legal way to prevent this from happening again.
    Pull every naval officer 0-6 and above who continued to push and support this and charge them all formally with dereliction of duty and conduct unbecoming an officer. If they comfortably retired before their courts martial--most have--they can still be recalled to duty and charged. Once convicted the retirees will either be stripped of all their retirement benefits, or better yet they all get to share in paying off a fine of 30 billion dollars--not 27.5B as one must adjust for inflation, the cost of 50 or more courts martial, etc.

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    1. If they did that, can you imagine how the entire Constellation program team would suddenly sit up, find fiscal religion, and start demanding performance from themselves and the manufacturer?

      Of course, the Zumwalt team would have a lot of angst, too, with all their skeletons in the closet.

      The Ford program management team would be on the next plane to a non-extradition treaty country!

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    2. @AdmiralObvious- I honestly don't have any issue with this. There's not much, short of this, that would cause true change. It'd certainly send the message that the days of idiocy were over. Of course, future programs should have much more intrusive oversight, backed with the track record of purging failures with prejudice. UT

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  7. The real heartbreak to all this is the 28 "active/worthless" LCS fleet is 10% of our current battle force. Billions wasted, manpower, talent and resources thrown away and the fighting fleet continues to be over-worked and shrinking. Criminal, if not treasonous.

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    1. Well ... it's going to get a lot worse. The Navy is committed to making a significant portion of the future fleet unmanned ... and nearly unarmed.

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  8. A result of this disaster, there is no replacement for the retiring Avenger mine hunting ships. They built 14 and 8 are still in service with plans to decomm them by 2027. But there is no replacement since the LCS mine hunting version was never developed and now the LCS are being retired early. I would think a high priority in our Navy would be to SLEP the 8 remaining Avengers to give them another 20 years of service or until another ship class arrives.

    And don't listen to those who say USVs can do the job, because the USVs need to be operated from a ship. Should we use a $3 billion destroyer that may hit a mine, or a smaller, old ship designed for that role that our Navy considers expendable.

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    1. In anticipation of the LCS-MCM, the Navy abandoned maintenance of the Avengers and allowed them to, literally, rot. The remaining operational vessels are barely seaworthy (some would suggest they aren't!). A SLEP would have to be more of a tear-down and complete rebuild. Still, that might produce a MCM vessel quicker than whatever the Navy's next option might be.

      Note, though, that the Avengers probably do not have the space for the MCM gear that the Navy now envisions using (CUSV, UUVs, sweeps, etc.) and, of course, they cannot operate helos for aerial sweeps. A SLEP might not gain much, operationally, even if physically possible.

      I'd like to see the Navy do a new-design Avenger with an emphasis on fast combat sweeping and abandon this idiotic one-at-a-time hunting with snail's pace UUVs.

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    2. Maybe SLEP and refit the retiring LSDs as mine hunters? They already have a well deck for small boats and a big helo pad. I worry our Navy would take a decade to produce a new ship class that costs $2 billion each and break down often.

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    3. Fast combat sweeping is sadly impractical against modern mines. Traditional quick methods were based on fooling very dumb mines that they had a target and should explode. Small, limited microprocessors are very cheap these days, and allow mines to be far more selective about detonating. You need to invent a new method of fast sweeping before you can build ships to do it.

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    4. "sweeping is sadly impractical against modern mines."

      No, it just requires a degree of technology. Read this post:
      "Minesweeping"

      The sweep can modulate the output signal to mimic any type/form of acoustic or magnetic signature. However, to the best of my knowledge, this has never been exercised in a real world setting so the actual performance - as opposed to the manufacturer's claim - is unknown. Still, this is one of those rare technologies that seems to me to be perfectly doable with existing technology. I wish the Navy would acquire a few of these and put them through rigorous, real world (meaning, real mines with inert warheads, laid in a large field) testing.

      "Small, limited microprocessors are very cheap these days, and allow mines to be far more selective about detonating."

      Consider the reciprocal statement: Small, limited microprocessors are very cheap these days, and allow sweeps to be far more selective about signal mimicking.

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    5. "Maybe SLEP and refit the retiring LSDs as mine hunters?"

      I like it! They're oversized for the job but since they already exist that's not much of an issue. As you note, well deck and flight deck are the start of a good mine hunter. This would give the Navy the time to design a purpose built, new Avenger.

      Another option would be the Belgian-Netherlands City class mine countermeasures ship which is currently in production. It's not what I would design since it's too focused on one-at-a-time mine hunting as opposed to sweeping but it exists and meets the minimal requirements.

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    6. So at what level do we place the capabilities of the CH-53 MCM Squadrons?? They're big choppers, so they hafta operate off of LH or bigger platforms, when not shore based. It's really hard to discern how capable or effective they are, because there's little info out there. What there is makes the towed sleds sound impressive, but we know how that hoes. It seems that often the CH-53s are moving Marines about, so even though they are an MCM Squadron, they might not always be doing it. Curious, not only for purposes of the post, but personal as well, since it appears one of the kids might be attached to one next year.

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    7. "CH-53 MCM"

      Just so there's no confusion, the MH-53E is the Navy's dedicated MCM helo. The CH-53, depending on version is a heavy lift helo for various other tasks.

      The MH-53E is long overdue for retirement and I understand that many (most?) of the two dozen helos are no longer flightworthy.

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    8. I thought they were retired and the MH-60s were to do their job, but it seems they don't have the power and endurance. The Marines need to become a closer part of the naval team and base a CH-53K squadron at Norfolk to support mine warfare, something the Marines need for their role.

      The Marines don't need as many new $100 million CH-53Ks since Ukraine has proven helos are too vulnerable to drones so they must stay far from the battlefield and focus on logistics in safe areas.

      The great part of this idea is that Marine 53 pilots would do a Norfolk tour and learn about mine warfare, so in a crisis Navy mine warfare teams can fly out to amphibs to find Marine 53s with some aircrew who once served with them and know what to do!

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    9. "CH-53K squadron at Norfolk to support mine warfare"

      It's not quite that simple. The MH-53E was specially built for the MCM mission with specialized equipment such as precision navigation, enhanced comms, tow gear, etc. That's not to say that standard CH-53's couldn't be converted but they can't be made MCM-capable just by tying a sled to the tail.

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    10. My Oops about the MH/CH thing...
      "The MH-53E is long overdue for retirement..." I did read somewhere that the -53s have some kind of refurb/SLEP program going to keep them flying deep into the 2030s. I'm just curious how effective the towed sled systems are, and if they're viable/useful. Seeing that HM-15 has a Det in S Korea, and one in Bahrain, and social media shows them just moving Marines around, how much MCM are they doing/training for??

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    11. "CH-53K squadron at Norfolk to support mine warfare"

      From Wiki,

      "[The MH-53E] has enlarged sponsons to provide substantially greater fuel storage and endurance. It also retained the in-flight refueling probe and could be fitted with up to seven 300-US-gallon (1136-liter) ferry tanks internally. The MH-53E digital flight-control system includes features specifically designed to help tow minesweeping gear."

      So, no, the CH-53 is not a drop-in replacement for the MH-53E in the MCM role.

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  9. The Constellation program says, "Hold my beer."

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  10. "No, it just requires a degree of technology."

    OK. I'd missed that. As you say, it requires testing. It may also need lots of passes to thoroughly sweep a field of mines set for different types of ship.

    Navies didn't switch to minehunting because they're crazy. They did it because they didn't see another way of doing the job, at the time. The USN's neglect of mine warfare is specific to them, not something that all navies do.

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    1. "It may also need lots of passes to thoroughly sweep a field of mines set for different types of ship."

      Absolutely! There's no 'may' about it. Combat effective sweeping requires LOTS of passes in a very short time frame. Realistic testing would establish the required numbers of sweeps and passes to clear a given area.

      You've hit on a key (THE key?) element of mine countermeasures and that is numbers. As I recall, the Normandy invasion used around 300 minesweepers, as a point of reference. The Navy is going down the idiot path of one-at-a-time mine hunting knowing full well that our enemies have hundreds of thousands of mines. Clearing two mines per hour is worse than futile. You've recognized, and stated, an elemental truth about minesweeping that the Navy has forgotten.

      "Navies didn't switch to minehunting because they're crazy. They did it because they didn't see another way of doing the job, at the time. "

      No, they switched for two reasons:

      1. They foolishly believed that the days of large scale, peer war were over and that they only had to deal with a handful of mines at a time that some small, rogue nation dropped as a political message.

      2. They bought into the technology for the sake of technology and tried to apply automation and technology in exquisite fashion to MCM. This is closely related to the abandonment of area weapons in favor of precision weapons.

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    2. "OK. I'd missed that."

      Missed??? I read the words but I don't understand. How could you miss a post??! You brush your teeth in the morning and you check for posts. It's automatic. Pure habit. And when there's a new post, it's like the joy of a Christmas present! It's fun, it's educational, it's entertaining, it's enlightening ... all wrapped up in one wondrous post!

      Just having some fun with you!

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    3. "No, they switched for two reasons:
      1. They foolishly believed that the days of large scale, peer war were over and that they only had to deal with a handful of mines at a time that some small, rogue nation dropped as a political message."

      Actually, this should have caused them to put MORE emphasis on mine warfare, because mines are the kind of low-tech weapons that rogue states and terror groups can obtain. But it didn't.

      "2. They bought into the technology for the sake of technology and tried to apply automation and technology in exquisite fashion to MCM. This is closely related to the abandonment of area weapons in favor of precision weapons."

      Most senior naval officers do not understand mine warfare. Any job in mine warfare is regarded as not good for career-building, although the opportunity to command a sweep as a Lieutenant should be an opportunity to learn to be a CO early and as ComNavOps has noted, early command should be useful for that purpose,

      But mines don't salute and they don't march in formation, and admirals don't like that. The old saw, "The worse they look, the better they fight," clearly fits mines.

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    4. What annoys me is that conceptually, the idea of having a minesweeper that has enough teeth and reach that it can be detached for 2ndline tasks isn't a bad idea. Most other regional navies are consolidating their patrol vessel and minesweeper fleets into a larger class of vessel that can do both (c.f. Japan, China, Italy, as examples). You don't need to use a billion dollar AAW CG on pirate hunting.

      We really should have taken a leaf out of the Italian book with the PPA program. It's a common hull shared between their OPV minesweepers and frigates, with the hulls configured at the shipyard for OPV/minesweeping and ASW/ASuW FFG as per the order for the specific ship.

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    5. "common hull shared between their OPV minesweepers and frigates, with the hulls configured at the shipyard for OPV/minesweeping and ASW/ASuW FFG as per the order"

      I find it very difficult to believe that a single common hull can meet that range of requirements/roles in the most optimum manner possible and, at least for the ASW, ASuW, and frigate roles, anything less than exquisitely optimized is another way of saying 'dead'.

      As one specific example, a modern frigate should have top of the line (Visby-like) stealth. An OPV or ASW variant would not need that and having it would be a complete waste of money.

      Similarly, a modern MCM vessel should have extensive UAV, USV, and UUV handling capability whereas a frigate would have no such need.

      And so on.

      The approach sounds like a budget-driven means to fill several roles affordably but none of them well.

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    6. The difference with LCS and other american programs is that we start from a degraded platform and then try to upgrade up; with the PPA program, the base is that of the ASW/ASuW frigate that is then simplified to get to the OPV/minesweeper.

      In the full spec ship, you've got 3D AESA radar, a towed array sonar, Aster 30 SAMs, ASCMs, a full battle management suite. In the OPV minesweeper config, the SAMs and ASCMs are deleted, a simpler radar is used, a simplified combat software is installed, torpedoes are carried , and there's ample room in the mission bay for USVs and UUVs.

      Kinda the opposite of the attempts to turn LCS into a frigate, or Constellation into a Tico sucessor. They simplified a frigate into a large long-endurance OPV.


      "As one specific example, a modern frigate should have top of the line (Visby-like) stealth. An OPV or ASW variant would not need that and having it would be a complete waste of money."

      The Italian perspective to stealthing for the PPA program is a little different. Given the geographic confines of the Medditeranian Sea, where ships operating within it are in attack range of land-based aviation and shore-based antiship missiles, the Italians decided that the PPA ships would need some stealth reduction features on the superstructure as a survivability measure. Land attack and ASuW were key roles of the Full frigate-configured ships.

      As for ship classes, the Italian Navy's perspective is this: they will never have the full complement of specialised warships that they want in a wartime, and they're going to throw every ship they can into the fight. In that regard, their rationale is that by using frigate hulls for their patrol vessels, these ships have the room to be upgraded with additional weapons to support their full frigates and destroyers in a wartime ASuW role.

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    7. "It may also need lots of passes to thoroughly sweep a field of mines set for different types of ship."

      Not only would it require many passes but it also points out the need to accept a degree of risk since you can never achieve 100% clearance using sweeps. Acceptance of risk, in turn, points directly at the cost of ships. It is easier to accept a given degree of risk the cheaper the at-risk ships are. No one in their right mind is going to risk a $20B Ford passing through a minefield no matter how many times it's been swept. However, we can accept the risk of a $200M ship. This strongly suggests we need to abandon our current path of ever larger and more expensive, do-everything ships and return to smaller, much cheaper, single function ships.

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  11. Giving LCS program is ending, question is whether Navy should retire them ALL and sell to foreign nations. Each one costs a lot of money to maintain, close to a Burke.

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    1. Would anyone want to buy them? They have almost no combat capability, expensive maintenance with no locally sourced parts, and have been abandoned by the country that designed and built them?

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    2. "sell to foreign nations."

      No foreign country is going to want one for the very same reasons we don't want them.

      Delete
  12. Further on the subject of opportunity costs, how about four Ford class carriers at $15B each, or $60B total, that everything works fine, except for the catapults, arresting gear, weapons lifts--and toilets? Or 11 America class large deck amphibs (LHA/LHD) at $3.5B each or $38B total, from which it is not possible to launch a proper amphibious landing?

    In a time when funding is tight, the USN has blown away $120B on ships that are basically useless for the purpose intended. And nobody has gone to jail over it. We should take the people responsible for those decisions, line them up in front of the Pentagon, and give them the old British tradition of cutting their buttons off.

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    1. "give them the old British tradition of cutting their buttons off."
      I'd cut something off but it wouldn't be their buttons.

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    2. There is zero news about the USS Ford since she returned on Jan 17th, just after the SecDef said she would need to remain deployed a few more weeks. Will she remain in the "maintenance phase" for years in hopes everyone forgets about her?

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    3. The July 18 report to congress suggests that not much has improved, and that dual-band radar reliability has actually degraded. I also find is fascinating that Navy build a ship with 159 beds less than needed to allow the full crew to have a berth, instead of the +10% margin they are supposed to have.

      Report is here. Good stuff is around document page 19 in the pdf.
      https://news.usni.org/2024/07/18/report-to-congress-on-gerald-r-ford-aircraft-carrier-program-3

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    4. "I also find is fascinating that Navy build a ship with 159 beds less than needed"

      Yes and no. This was addressed in a 2020 post. See,
      Ford Minimal Manning

      The berthing was based on the Navy's initial, ridiculous manning estimate which they have since significantly increased. The initial crew size estimate was a fantasy number picked out of their ass and no outside observer believed for a moment that it would stand ... and it didn't.

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    5. "The July 18 report to congress suggests that not much has improved"

      These are old issues that we've previously addressed. Please make use of the archives.

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    6. "These are old issues that we've previously addressed."

      Yes, that's nice, but I was addressing the comment that said there were no recent new updates. I realize the report to congress is not great, but its something. And the substance is that nothing is much improved.

      I hadn't seen the Ford berthing issue from your archive post, but it still staggers me that we can't build enough places to sleep on something the size of a carrier. It was supposed to have been built with a 10% overcapacity. Turns out they can't even give all the regular crew a decent bunk. Ridiculous and disgusting.

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    7. "Ford berthing issue"

      You may not be grasping the berthing issue. The original projected manning level that the ship was built for was a crew of 2391 plus an air wing of 1550 for a total of 3941. Various staffs would potentially add another hundred or so.

      The berthing capacity is 4660. Thus, had the Ford held to the original manning projection, the berthing capacity would have been sufficient with a healthy excess. As it turned out, the actual manning is around 4700 although that number has been reduced by around 500 due to unfilled billets.

      To sum up, the Ford was built with adequate berthing IF THE ORIGINAL MANNING ESTIMATE HAD HELD UP. However, as with the LCS, the original manning estimate was fantasy-level delusional and, hence, problems arose.

      " said there were no recent new updates. I realize the report to congress is not great, but its something."

      You may not realize that while the CRS report to Congress that you cited is recent, the DOT&E and GAO reports that the CRS quotes, came from the 2023 DOT&E (published in Jan 2024) and 2023 GAO report (published in Jun 2023). Thus, the information presented is over a year old, having been generated in 2022-2023 and largely covered in this blog in old posts.

      You should note that CRS does not report new, original technical information but, instead, simply gathers and cites old information sources as background for Congress.

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  13. US Navy shipbuilding in worst shape in 25 years. Good article in Newsmax today on US shipbuilding and who is responsible for it. (could be the Navy).

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    1. "The Maritime Industry and a Nation’s Maritime Character

      The Office of Naval Intelligence (ONI) recently assessed that the China’s shipbuilding industry fields 232 times the shipbuilding capacity of the United States, representing almost 50% of total global shipbuilding capacity. To stark quantitative differences like these, the U.S. Navy responds, “in many ways our shipbuilders are better shipbuilders, that’s why we have a more modern, more capable, more lethal Navy.”The Maritime Industry and a Nation’s Maritime Character

      The Office of Naval Intelligence (ONI) recently assessed that the China’s shipbuilding industry fields 232 times the shipbuilding capacity of the United States, representing almost 50% of total global shipbuilding capacity. To stark quantitative differences like these, the U.S. Navy responds, “in many ways our shipbuilders are better shipbuilders, that’s why we have a more modern, more capable, more lethal Navy.”

      Not bad if you want a macabre giggle. I find this astonishing. If it comes down to a war with China, we are dead meat. The ability to ramp industrial production is long gone. The arsenal of the world is China. If we want to be top dog, this needs to be fixed. In reality, the political system in the US means it will never be fixed. And like all empires, we will fade into the sunset.

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  14. Another opportunity cost. Dozens of Navy engineers and analysts spent a decade trying to figure out how to make the LCS into a useful combatant. Rather than thinking about FFG, DDG(X), etc

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    Replies
    1. If they couldn't figure out the LCS would we really have wanted them working on other ships?

      Delete

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