Navy cancels combat ship as costs escalate

Faced with escalating program costs, the Navy is canceling construction on its fourth Littoral Combat Ship, built by General Dynamics.

The Navy has already canceled construction on the third Littoral Combat Ship (LCS), which was being built by Lockheed Martin, after the company turned down a Navy offer to go to a fixed-price contract.

Lockheed Martin and General Dynamics both have contracts to build the LCS, with Lockheed building the first and third ships and General Dynamics building the second and fourth.

The Littoral Combat Ship is a relatively small warship designed to operate near shorelines.

The LCS program has been plagued by cost overruns. The Navy learned the first Lockheed LCS would cost more than $400 million, far above initial estimates of $220 million. The Navy has acknowledged that LCS costs have ballooned up to 75 percent.

Given the cost growth, the Navy decided not to authorize construction of the fourth ship and sought to restructure its contract agreement with General Dynamics.

But the service and General Dynamics could not reach an agreement, according to an announcement made by Navy Secretary Donald Winter and Chief of Naval Operations Adm. Gary Roughead.

“We are disappointed that the Navy has decided to reject the proposal,” a General Dynamics spokesman said.

“Despite this outcome, we remain focused on completing LCS 2 and delivering the most capable, most affordable ship we can to the U.S. Navy.”

Both service leaders said the Navy is still committed to the LCS.

“LCS continues to be a critical warfighting requirement for our Navy to maintain dominance in the littorals and strategic choke points around the world,” said Winter.

“While this is a difficult decision, we recognize that active oversight and strict cost controls in the early years are necessary to ensuring we can deliver these ships to the fleet over the long term.”