Seapower chairman to revise cost cap for littoral ships

A key House lawmaker who has railed against the escalating price tag for the Navy's Littoral Combat Ship now wants to change the $460 million cap on the cost of each vessel to give service and industry officials significant breathing room as they struggle to bring the ships under that congressionally mandated limit.

House Armed Services Seapower and Expeditionary Forces Subcommittee Chairman Gene Taylor, D-Miss., intends to make the change when his panel marks up its portion of the fiscal 2010 defense authorization bill Friday.

Taylor wants to take government costs out of the $460 million ceiling, which he argues will put it in line with other shipbuilding programs, which do not typically include oversight and other government expenses.

Those costs come to about 14 percent of the price per LCS, or about $62 million, an analysis of the Navy's fiscal 2010 budget documents shows.

"That's not the case for any other program that I know of," Taylor said Wednesday of the existing method of counting costs.

Taylor, who said earlier that he wanted to give the two contractors on the Littoral Combat Ship a "take it or leave it offer" by enforcing the cap, expressed confidence that his change to the cap will help the Navy reach the target of $460 million per ship.

The subcommittee chairman's mark will include a provision that would require the Navy to open up the program to competition if officials are unable to get each ship's cost down to $460 million.

"I think it's a very fair approach," Taylor said.

Congress originally capped each LCS at $220 million, but the program's costs ballooned and lawmakers agreed to increase it to $460 million in the fiscal 2008 defense authorization bill. But Congress also took the unusual step of mandating that the higher cap include the entire price of the program -- including the government cost.

The ships are produced by Lockheed Martin Corp. and General Dynamics at company shipyards in Wisconsin and Alabama, respectively.

Navy officials plan to buy 55 Littoral Combat Ships, but the program has languished amid severe production problems and cost overruns that sent the price for the first ships soaring above $500 million and led to the cancellation in 2007 of both companies' second ships.

Those ships are under contract again and the fiscal 2010 request includes nearly $1.4 billion for three LCSs.

But Navy Secretary Raymond Mabus said this month he will not know until this fall if they can meet the cap.

"Whether or not we will be able to meet that goal, I cannot tell you today," Mabus told the Senate Armed Services Committee. "But it is a focus of ours, and we are doing everything that we can in terms of freezing commitments, in terms of competition, in terms of contracting practices to make sure that we do."

On Thursday, the Armed Services Strategic Forces Subcommittee wrapped up work on its portion of the authorization bill, agreeing to authorize the Obama administration's request for $9.3 billion for missile defense programs.

The subcommittee made few changes to the administration's request, supporting the $900 million increase over fiscal 2009 levels for the Aegis Ballistic Missile Defense and the Theater High Altitude Area Defense programs.

But the panel added $20.5 million to the administration's request for David's Sling, a U.S.-Israeli cooperative short-range missile defense program. To offset that increase, the subcommittee made a reduction in Ballistic Missile Defense headquarters programs.

During the markup, Republicans raised concerns about missile defense funding, arguing that a growing threat of ballistic missiles from Iran and North Korea demanded heavier investment in anti-missile programs than sought by the administration.

They criticized the termination of futuristic programs like the Kinetic Energy Interceptor and the Multiple Kill Vehicle, as well as the administration's decision to cancel the second Airborne Laser.

Republicans refrained from offering amendments, saying they preferred to wait until the full committee marks up the defense bill Tuesday.