Cost Isn't Everything

By Zachary M. Peterson / December 3, 2009 at 5:00 AM

Alabama's two senators and Rep. Jo Bonner (R ) sent a letter today to Navy Secretary Ray Mabus urging the service to consider more than cost as the determining factor in its decision to select between the two competing Littoral Combat Ship designs this fiscal year.

“The draft request for proposals emphasizes cost as the decisive factor in the design decision, placing technological advancements as secondary criteria,” Sens. Jeff Sessions (R) and Richard Shelby (R) and Bonner write in the Dec. 3 letter. “This means that price is more important than quality and that performance is not a critical factor.”

The design competition pits Lockheed Martin, which is building its monohull LCS in Wisconsin, against General Dynamics, which builds its trimaran LCS in Alabama. The sea service plans to chose one of the two designs before the end of fiscal year 2010. The Navy ultimately desires a 55-ship LCS fleet.

In the letter, the Alabama lawmakers argue Lockheed had a head start on the first LCS, the Freedom (LCS-1), which gives the company “significantly more information about the performance of its ship and recurring costs of correcting its deficiencies.” The Navy has hence created “an uneven playing field,” the lawmakers write.

Earlier today, the Navy revealed cost data for the third and fourth LCS vessels. The Lockheed-built LCS-3 is priced at $470.9 million, while LCS-4, under construction by GD, is valued at $433.7 million. The costs include “ship construction, non-recurring construction and additional engineering effort, configuration management services, additional crew and shore support, special studies and post-delivery support,” according to the Naval Sea Systems Command statement.

See our story on it here.

The costs do not include 2007 termination of the original contracts, government-furnished equipment or contract support expenses, the statement notes.

“The contract values do not include the cost of continuation work and material used from the terminated original contract options for LCS-3 and -4,” the statement explains. “The value of the continuation work and material from the terminated LCS-3 was $78 million for Lockheed Martin and $114 million from the terminated LCS-4 for General Dynamics.”