LCS Crew Size Increased

Well, it appears that it's official now.  The Navy is adding 20 to the core crew size as predicted in one of our earlier posts.  Of course, finding room to fit the additional berths, galley capacity, showers, heads, laundry, water storage, food storage and all the other things required to support each sailor will be a challenge. 

This is also just about the last nail in the coffin of the original LCS concept.  Let's check the original design scorecard ...

* low cost - failed
* minimal manning - failed
* high speed - passed
* mothership to off-board sensors and weapons - failed
* littoral dominating warship - failed

Hopefully, this program will be terminated after the initial 24 LCS are built, if not before.

Shipbuilding Practices - Commercial vs. Navy

We've discussed the Navy's shipbuilding practices and some of their problems which lead to cost overruns and schedule slips.  A commenter in one of those posts suggested looking at a particular GAO report (1) which compared commercial and Navy shipbuilding practices.  I was unaware of that report and would like to thank and credit the person but the comment was anonymous, unfortunately.  In any event, here is the summary portion from the report.  It quite nicely sums up the various differences.  It also demonstrates that I'm not the only one who sees severe problems with the Navy's practices!

"Delivering ships on time and within budget are imperatives in commercial shipbuilding. To ensure design and construction of a ship can be executed as planned, commercial shipbuilders and buyers do not move forward until critical knowledge is attained. Before a contract is signed, a full understanding of the effort needed to design and construct the ship is reached, enabling the shipbuilder to sign a contract that fixes the price, delivery date, and ship performance parameters. To minimize risk, buyers and shipbuilders reuse previous designs to the extent possible and attain an in-depth understanding of new technologies included in the ship design. Before construction begins, shipbuilders complete key design phases that correspond with the completion of a three-dimensional product model. Final information on the systems that will be installed on the ship is needed to allow design work to proceed. During construction, buyers maintain a presence in the shipyard and at key suppliers to ensure the ship meets quality expectations and is delivered on schedule.

Navy programs often do not employ these best practices. Ambitious requirements are set and substantial investments made in technology development, but often the Navy does not afford sufficient time to fully mature technology. New designs often make little use of prior ship designs. As a result, a full understanding of the effort needed to execute a program is rarely achieved at the time a design and construction contract is negotiated. This in turn leads the Navy and its shipbuilders to rely on cost-reimbursable contracts (rather than fixed-price contracts) that largely leave the Navy responsible for cost growth. Complete information on the systems that will be installed on the ship may not be available, leading to changes that ripple through the design as knowledge grows. Starting construction without a stable design is a common practice and the resulting volatility leads to costly out-of-sequence work and rework. These inefficient practices cause Navy ships to cost more than they otherwise should, reducing the number of ships that can be bought under constrained budgets. The Navy’s in-house capability to oversee design and construction has eroded, and it has been slow to build capacity to support new programs. Congress has recently encouraged greater technology maturity and design stability at key points, but required reporting does not directly address completion of a three-dimensional product model.

Differences in commercial and Navy practices reflect the incentives of their divergent business models. Commercial shipbuilding is structured on shared priorities between buyer and shipbuilder, a healthy industrial base, and maintaining in-house expertise. The need to sustain profitability incentivizes disciplined practices in the commercial model. In Navy shipbuilding, the buyer favors the introduction of new technologies on lead ships—often at the expense of other competing demands—including fleet size. This focus—along with low volume, a relative lack of shipyard competition, and insufficient expertise—contributes to high-risk practices in Navy programs. Further, the consequences of delayed deliveries and cost growth are not as severe in Navy programs because of the use of cost-reimbursable contracts."

I'm reminded of a story from the famous ship modeler, Loren Perry.  He was contracted to build a display model of the USS Arleigh Burke before the ship had been constructed and was given official blueprints to work from.  During the course of building the model he discovered that two parts of the ship (deck levels or somesuch, as I recall) that did not match up.  He notified the Navy who were able to correct the drawings.  He had to do some rework of the model but it saved the Navy from having to rework the actual ship.  This story demonstrates the value of having completed plans and a proven three dimensional model (CAD or real) prior to actual construction. 



A Better Way to Build?



GAO-09-322, “Best Practices: High Levels of Knowledge at Key Points Differentiate Commercial Shipbuilding from Navy Shipbuilding”, May 13, 2009.

 

LCS - ASuW Module

Here’s a statement from the Navy, as reported by Defense Aerospace (1), announcing that the LCS surface warfare (ASuW) module has completed a portion of testing.

“The U.S. Navy completed the first stage of developmental testing for the Littoral Combat Ship surface warfare mission package, June 24.

USS Freedom (LCS 1), the first ship of the class, conducted tests and demonstrations of key mission package components, including the MK 46 gun weapon system, 11-meter rigid hull inflatable boats and an MH-60R helicopter outfitted with a Hellfire missile simulator and .50-caliber and 7.62mm machine guns.

"The capabilities included in the surface warfare mission package will project power and presence in key overseas environments," said Rear Adm. James Murdoch, program executive officer Littoral Combat Ships. "An LCS outfitted with these capabilities, teamed with the ship's inherent speed and maneuverability, will provide a capability in a single platform never before available to the U.S. Navy."

ASuW Module?

There are two interesting points in this note.  The first is the greatly scaled back nature of this version of the ASuW module and what it consists of.  A 30 mm gun, a few machine guns and a helo barely constitutes a self-defense package let alone an offensive swarm-busting mission module.  The helo is the most potent element of the package and we’ve already pointed out the limitations of helos in the littoral combat arena.  Did you note the part about the helo being outfitted with a Hellfire simulator?  It wasn’t even a real armed helo.  Also, a RHIB is part of an ASuW package?  Really?  In case someone attacks in a rowboat?  There’s nothing wrong with a RHIB – it’ll come in handy for boarding and whatnot but to call it an ASuW component is overstating it by a wide margin.  Note that this version doesn’t even include the Griffon missile for the anti-small boat role.  This is a very stripped down module.  Anyone arguing that the LCS is wonderful because magic modules are just around the corner isn’t seeing what’s actually being developed.  And remember, this stripped down module isn’t even ready, yet.  It’s just passed the first stage.  I don’t know how many other stages there are.  And, of course, when the stripped down package is finally approved it will still have to be produced.  The point is that even a stripped down ASuW module is years away, yet.



Let’s be fair, though, other weapons can be added in down the road and that is one of the advantages of the LCS.  This stripped down version can be enhanced over time.  Of course, that doesn’t do anything for the LCSs that are currently in service or will be for the next several years. 

The second interesting point is Adm. Murdoch’s statement that this stripped down package “…will provide a capability in a single platform never before available …”.  Really?  No ship in the Navy has ever had a helo, a RHIB and a few machine guns?  Even the Perry class FFGs had more than this.  There’s nothing wrong with positive spin but there comes a point where you cross the line from spin into outright lies and you lose all credibility. 

 

(1)http://www.defense-aerospace.com/articles-view/release/3/136416/lcs-completes-initial-surface-warfare-tests.html, “LCS Completes First Stage of Surface Warfare Developmental Testing”, Source: US Navy; issued June 28, 2012

Shipbuilding Costs - Impact of Low Volume

The Navy is clearly on a fiscally unsustainable path as regards shipbuilding.  They simply can’t afford to keep building ever more expensive ships on what amounts to a fixed budget, at least for the foreseeable future.  But why do ships cost as much as they do?  Why should a destroyer cost $2B-$4B?  Why does a carrier cost $14B, now?

The easy answer that most people give is bureaucratic inefficiency and waste, both government and industrial.  Other reasons include changing requirements during construction (the concurrency that was discussed in a previous post), overuse of MILSPEC, overly complex win-the-war-singlehanded designs, lack of in-house oversight, and so on.  All these reasons undoubtedly contribute to high costs, however, there's one other contributing factor that I believe is far more significant and that is construction volume.  Ships have gotten so expensive that we only build a few each year.  That's not much volume for the shipyards.  So, instead of spreading their overhead costs and profit over many ships, each shipyard has to roll all their costs as well as profit into the one or two ships they build.

Typical profit margins for "stuff" that you buy commercially in everyday life is 10%-20%.  So, 10-20 cents of each dollar you pay goes to profit for the company that makes the item.  That's fair.  What if the company(s) that make soap knew they were only going to sell two bars for the year?  In order to stay in business, they would have to roll all of their production costs, overhead, and profit into those two bars.  Each bar of soap would cost hundreds of thousands of dollars.

Now, that was a bit of a ridiculous example but it illustrates the point.  Shipyards used to build many ships per year during WWII, several per year during the 600-ship fleet days, and only a couple per year now.  And yet, all the same costs and profits (adjusted for inflation, of course) now get rolled into the couple of ships instead of many.





Ford Class,   Low Volume = High Cost



If the shipyard is only going to build one carrier every five years then it has got to roll five years worth of costs and profits into the price.  And guess what?  We're probably going to a seven year cycle for carriers with the next Fords already looking at intentional two year delays.  Those extra two years worth of costs and profits still have to be included or else the shipyard goes out of business.  Instead of a carrier costing five years of shipyard costs and profits, now they have to cost seven years of shipyard costs and profits.  For the Navy and government, a seven year cycle lowers the yearly costs a bit but drastically raises the total costs.

Here’s some official testimony on the subject.  Ms. Eaglen testifying in front of the House Armed Services Committee said,

“I think another thing we need to do is be honest about what stretching out programs does to the costs.  So, for example, take [the] Joint Strike Fighter program as part of the 2013 budget requests.  The overall buy wasn’t cut but a lot of the planes were shifted into the out years.  The Pentagon said this morning that costs [Ms. Eaglen’s verbal emphasis] $6B.  That’s not a savings, that’s a cost.  But it was done in order to meet a budget target of savings.  … unless we’re honest about what stretching out of these programs, including carriers, is really doing to the cost of them by making them actually rise over time …”

We were going to build 15 carriers and now we're only going to build 10.  We were going to build 32 DDG-1000 and now only 3.  We were going to build 55 LCS and now only (?).  We were going to build (?) CG(X) and now none.  And so on.

In effect, the government is subsidizing the shipyards by paying higher than justified prices in order to keep the shipyards in business.  There is an aspect of national strategic/security concerns at work here and that's understandable.  We don't want to find ourselves with no capable shipyards.  However, the act of subsidizing ensures that shipbuilding costs are higher than they should be.

I'm beating this point to death and I'll stop now.  I think this may be one of the more significant reasons for cost increases over and above inflation but I don't have actual numbers to prove it.  Consider, though, the carriers which have had the largest price increases over inflation.  We're stretching fewer buys over longer periods.  Contrast that with the Burkes which have had the most buys over the shortest periods.  I don't think it's coincidence that the Burkes have had the smallest price increases over inflation (possibly no increase).

For what it's worth, here's my ranking of the sources of cost growth in shipbuilding and the relative impact I think they have (in percent).  Just guesses and opinions on my part!

1.  As just discussed, limited volume - 45%

2.  Changing requirements during construction (concurrency) - 30%

3.  Overuse of MILSPEC - 20%

4.  Simple inefficiency - 5%

What can we do?  Build more ships by building smaller, less capable, and therefore less expensive ships.  Also, upgrade existing ships.  Shipyards don't have to just build new ships, they can rebuild existing ones.  Instead of early retiring good ships, let's drastically upgrade them.  It will still be way cheaper than new construction and will provide more work for the yards and more projects for the yard's costs and profits to be spread over.

JSF Air Wing Cost

I just posted some program costs but it's worth pointing out the JSF costs in a bit more detail.  The Joint Strike Fighter (JSF or F-35) procurement is currently set for 2,457 aircraft.  Using the cost of $161M per aircraft, that's a total program cost of $395 billion !  Yikes!


The new LHA-6 that was discussed in a previous post is designed for an air wing of 20 JSF as one possible configuration.  Let's do the math. 


20 JSF x $161M = $3.22 billion


Breaking the Bank?



That's $3.22B for one air wing on one LHA!

Remember that the JSF was the low cost alternative to the "expensive" F-22.  How'd that work out?  This program needs to be cancelled now, before we go and build two thousand of these and break the bank.

The worst part is that the JSF provides only modest overall improvements over the Super Hornet in terms of range and has a smaller weapons capacity (3000 lb vs 17,750 lb for the Hornet) without resorting to external hardpoints which reduce its range and negate its stealth.

Shipbuilding Costs

I'm always interested in program costs and "true" costs are often hard to find.  The LCS program, for example, has widely varying reported costs.  Anyway, here are a few program costs of interest as reported by the Department of Defense in the Selected Acquisition Report (SAR) to Congress.  These costs should, therefore, be as accurate as possible.  They include R&D costs.

CVN-78 Class, Qty=3, Unit Cost = $14B

Virginia Class, Qty=30, Unit Cost = $3.1B

LCS, Qty=55, Unit Cost = $672M (includes govt supplied equipment but not modules;  add another $100-$200M or whatever you think a module might cost to get the total cost)

DDG-1000, Qty=3, Unit Cost = $7.0B

JSF (all versions), Qty=2457, Unit Cost = $161M


The most interesting program, for me, is the LCS.  You'll note that the true cost of the LCS is not the $450M or so that the Navy claims.  That contracted cost is strictly for the hull and very few people realize that.  All the weapons, sensors, electronics, software, etc. are supplied by the government from another cost accounting source.  The Navy was badly stung by the cost overruns on the LCS program;  so bad, in fact, that Congress imposed a maximum cost cap of around $450M.  To meet the Congressional cap and to avoid more bad publicity, the Navy came up with the creative (fraudulent) accounting method of contracting for just the hull so that they could meet the cap and publicly claim that cost was under control.  We see here that the true cost is exactly what the cost for the original two units was.  There has been no savings from serial production as the Navy has tried to claim.

Remember, though, that the cost reported here is still without a module.  The only actual module cost data point is the single module that was delivered for $200M and then was subsequently rejected.  So, the true cost of an LCS is the hull + govt supplied equipment + module, or $672M + module.  Adding in $100M - $200M for a module gives an LCS cost of around $800M - $900M.  Of course, some of the early, stripped down, limited capability modules may cost less. 

Compare this true cost to the original target of $200M for the entire ship and you realize what a stunning cost escalation has occurred.  It's even more amazing when you consider that the current LCS is the stripped down version that has undergone rigorous cost cutting (like removing the corrosion control measures!).  So much for a small, expendable ship. 

The DDG-1000 is also seen to be hideously expensive but around half of that is R&D.  Still counts, though!

Given that the total Navy annual shipbuilding budget is $15B, you can see why we're building fewer and fewer ships.  The costs are simply out of control.

Peacetime Commanders - Prepared for War?

Once in a while I come across a book that warrants some additional attention.  Such a book is Destroyer Captain, Lessons of a First Command by Adm. James Stavridis.  Stavridis is currently Supreme Allied Commander, Europe and Commander, United States European Command.  The book is a summary of a journal he kept when he commanded the Burke class destroyer USS Barry during 1993-1995 and is intended to convey the author’s thoughts on the human aspects of command and leadership.



Ready for War?



This is not going to be a book review but, rather, an examination of one aspect of the Navy as it is revealed through the book and that aspect is the stark difference between peacetime leaders and wartime leaders.  The author reveals far more than he intended and I strongly suspect he has no idea that he has done so.  What the book reveals is a crystal clear description of the development and selection of a peacetime naval leader. 



A recurring theme is the author's complaints about long periods of time spent awake and on the bridge during what he considers high risk operations.  However, the operations aren't particularly risky (my opinion from a perspective of never having done them!) and consist of things like plane guard, UNREP, escort, formation sailing, etc.  What this is telling me is that he's a Captain who has either not trained his crew sufficiently well, does not trust them, or is overwhelmed by the Navy’s zero-defects mentality.

Repeated mention is made of weapon systems and sensors that fail at the start of exercise periods and how the crew has to scramble to get them working in time to complete the exercise.  Shouldn't a warship be verifying the operability of those things on a daily, if not hourly basis?  Sadly, the peacetime Captain has other, higher priority activities.

The lack of tactical training is also noteworthy.  Basically, the author is exposed to tactics during his pre-command workup and then participates in rare exercises thereafter.  This is confirmation that peacetime Captains just don't have the time to become tactical experts.

He describes some of the weapons training exercises and I'm struck by the extremely simplistic, set-piece nature of them.  For instance, he describes the CIWS training which consists of a Lear Jet with a tow target banner flying in straight lines back and forth alongside the ship while the CIWS shoots at the banner.  How's that for realism?  All that does is verify that the CIWS is mechanically functional.

In short, the book describes a perfect peacetime Captain functioning in a peacetime Navy and demonstrates that the Navy is not serious about being prepared for war.  The author didn't intend to convey this point but he very clearly does.  In fact, he confirms this himself without realizing it, with the following statement,

"To some degree we have become a navy that specializes in safety, communicating, inspecting, engineering, administering, retaining, and counseling.  There is too little emphasis on shiphandling, warfighting, battle repairing, and leading. ... we all need to know that the essence of why navies exist is to fight and win at sea.

As an example of how we are a bit out of whack is that if I charted my personal time, I suspect I spend virtually my entire day working the first list and precious little devoted to the latter."

He recognizes the problem but, firmly committed to the path of advancement, does nothing to change it.  I’m not criticizing this individual.  He’s merely a symptom and an example of the overall problem.

Presumably, all of the Navy’s leadership has followed this same model which suggests that the current crop of leaders are totally unprepared for war.  This is hardly a surprise.  Remember that many Captains and Admirals had to be replaced early in WWII until the peacetime leaders were weeded out and fighting men were found.  The disappointing aspect of this is that, given the graphic lesson of WWII, the Navy has forgotten the lesson already.  Navy leadership should be selected on the basis of combat skills not energy efficiency, diversity, retention goals met, public relations skill, paperwork filed, and boxes checked.  The zero-defect philosophy, both personally and professionally, is neutering the Navy’s fighting spirit.  A better set of promotion criteria would be to have a major ship handling accident on one’s record and at least one altercation with a superior thereby at least demonstrating an aggressive attitude!