The LCS is a relatively inexpensive Navy surface combatant equipped with modular ¿plug-and-fight¿ mission packages. The basic version of the LCS, without any mission packages, is referred to as the LCS sea frame. The Navy wants to field a force of 55 LCSs. Contents of this report: (1) Intro.; (2) Background: The LCS in General; Two Industry Teams, Each with Its Own Design; Planned Procurement Quantities; (3) Issues for Congress: New Acquisition Strategy Announced in 9/09; Unit Procurement Cost Cap; Total Program Acquisition Cost; (4) Legislative Activity for FY 2011. Appendices: Cost Growth on LCS Sea Frames; LCS Acquisition Strategy Announced in 9/09. Charts and tables. This is a print on demand publication.

A total of 20 Littoral Combat Ships (LCSs) have been funded through FY2014. The Navy had been planning to procure an eventual total of 52 LCSs, but on February 24, 2014, Secretary of Defense Chuck Hagel announced that "no new contract negotiations beyond 32 ships will go forward" and that the Navy is to submit "alternative proposals to procure a capable and lethal small surface combatant, generally consistent with the capabilities of a frigate. I've directed the Navy to consider a completely new design, existing ship designs, and a modified LCS."

The Littoral Combat Ship (LCS) is a small, fast ship that uses modular plug-and-fight mission packages, including unmanned vehicles (UVs). The basic version of the LCS, without any mission packages, is referred to as the LCS sea frame. The first LCS was procured in FY2005, another three were procured in FY2006, and two more were procured in FY2007. The Navy's proposed FY2008 budget, submitted to Congress in February 2007, requested $910.5 million in procurement funding for three more LCSs. Navy plans call for procuring a total of 55 LCSs. In response to significant cost growth in the building of the first LCSs, the Navy in March 2007 announced a proposed plan for restructuring the LCS program. On April 12, 2007, the Navy announced that the Navy and Lockheed could not reach an agreement on a restructured contract for LCS-1 and LCS-3 and that the Navy consequently was terminating construction of LCS-3. On May 10, 2007, it was reported that the Navy would ask Congress to increase the procurement cost cap for the fifth and sixth LCSs to $460 million each in FY2008 dollars. A primary issue for Congress at this point is whether to approve, reject, or modify the Navy's proposed restructuring plan, and what additional actions, if any, should be taken in response to the Navy's decision to terminate construction of LCS-3. Congress has several potential options regarding the LCS program. This report will be updated as events warrant.

The Navy is procuring a new type of surface combatant called the Littoral Combat Ship (LCS). The LCS is a small, fast, relatively inexpensive combat ship that is to be equipped with modular "plug-and-fight" mission packages. The basic version of the LCS, without any mission packages, is referred to the LCS sea frame. The Navy wants to procure a total of 55 LCSs.

The Navy had been planning to procure an eventual total of 52 LCSs, but on February 24, 2014, Secretary of Defense Chuck Hagel announced that "no new contract negotiations beyond 32 ships will go forward" and that the Navy is to submit "alternative proposals to procure a capable and lethal small surface combatant, generally consistent with the capabilities of a frigate. I've directed the Navy to consider a completely new design, existing ship designs, and a modified LCS." Following Hagel's February 24, 2014, announcement, the Navy began an internal study of options for small surface combatants (SSCs) to be procured following the 32 LCSs. The Navy states that study was completed on July 31, 2014, as required. On December 10, 2014, Secretary of Defense Chuck Hagel, after reviewing the Navy's work, approved a Navy plan to procure an SSC based on an upgraded version of the two LCS designs. The upgrade includes additional equipment for air defense, surface warfare, and antisubmarine warfare, plus some other changes. The Navy estimates that the changes will increase the cost of each LCS by $60 million to $75 million. The Navy states that it is now starting to develop an acquisition strategy for procuring the 20 modified LCSs. LCSs have been procured since FY2010 under a pair of 10-ship, fixed-price incentive (FPI) block buy contracts that the Navy awarded to the two LCS builders-Lockheed and Austal USA-on December 29, 2010. Under these contracts, which cover the years FY2010-FY2015, four LCSs (numbers 21 through 24) were to be requested for procurement in FY2015. The Navy's proposed FY2015 budget, however, requests funding for the procurement of three rather than four LCSs. Hagel's February 24 announcement and the Navy's request for three rather than four LCSs in FY2015 raise several potential oversight issues for Congress, including the Navy's plan for determining which of the two LCS builders would receive one LCS in FY2015 rather than two, and the analytical basis for the actions affecting the LCS program announced by Hagel on February 24. The LCS program has been controversial due to past cost growth, design and construction issues with the lead ships built to each design, concerns over the ships' survivability (i.e., ability to withstand battle damage), and concerns over whether the ships are sufficiently armed and would be able to perform their stated missions effectively. Prior to Secretary Hagel's February 24, 2014, announcement, some observers, citing one or more of these issues, had proposed truncating the LCS program. In response to criticisms of the LCS program, the Navy has acknowledged certain problems and stated that it was taking action to correct them, and disputed other arguments made against the program.

The Navy is procuring a new type of surface combatant called the Littoral Combat Ship (LCS). The Navy substantially restructured the LCS program in 2007 in response to significant cost growth and schedule delays in the program. The Navy's proposed FY2009 budget requests $920 million in procurement funding for the procurement of two LCSs, which would be the fourth and fifth ships in the restructured LCS program. The LCS is a small, fast, relatively inexpensive combat ship that is to be equipped with modular "plug-and-fight" mission packages, including unmanned vehicles (UVs). The basic version of the LCS, without any mission packages, is referred to as the LCS sea frame. The Navy wants to procure a total of 55 LCSs. Congress originally funded a total of six LCS sea frames (LCSs 1 through 6) in the FY2005, FY2006, and FY2007 defense budgets. In 2007, as Congress was considering the proposed FY2008 defense budget, the Navy canceled LCSs 3 though 6 as part of its restructuring of the program, leaving only LCSs 1 and 2 under construction. As part of its final action on the FY2008 defense budget, Congress did the following: accepted the Navy's cancellation of LCSs 3 through 6; funded the procurement one additional LCS in FY2008 (LCS-5); significantly reduced the Navy's FY2008 funding request for the LCS program; amended the LCS sea frame unit procurement cost cap; required the Navy to use fixed-price-type contracts for the construction of LCSs procured in FY2008 and subsequent years; criticized the execution of the LCS program; expressed concerns for the program; and expressed support for continuing with the program in restructured form. The issue for Congress for FY2009 is whether to approve, reject, or modify the Navy's restructured LCS program. The LCS program raises potential oversight issues for Congress relating to cost growth, total program acquisition cost, procurement cost cap, technical risk, and operational evaluation and competition for production.

Alkire et al. provide a clear understanding of the operational, logistics, and cost trade-offs between three interdependent elements of the Navy's Littoral Combat Ship (LCS) program: the number of LCSs in the fleet, the number of mission packages that those LCSs would require in order to perform a range of missions, and the number and locations of LCS homeports and mission package installation sites.