<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By James Gibney</p> <p>If Iran actually tried to <a href="http://www.businessweek.com/news/2011-12-29/u-s-navy-says-won-t-tolerate-disruption-in-strait-of-hormuz.html">shut down the Strait of Hormuz</a>, a U.S. squadron of small, speedy and versatile ships that could operate close to shore might come in handy. Too bad the U.S. Navy doesn't have any.</p> <p>Actually, that's not exactly right. More than a decade after the Navy announced that it would build the so-called Littoral Combat Ship -- intended to hunt submarines, clear mines, thwart speedboat attacks and insert special forces close to shore -- we have two of them. The first developed a <a href="http://www.bloomberg.com/news/2011-03-18/lockheed-martin-s-first-littoral-combat-ship-develops-cracks-navy-says.html">crack in its hull</a>; the other, <a href="http://www.bloomberg.com/news/2011-06-17/navy-finds-aggressive-corrosion-on-austal-s-combat-ship-1-.html">severe corrosion</a> near its propulsion system. At well over $500 million apiece, they cost more than twice their original estimate of $215 million. Various weapons systems seem unlikely to work as advertised. And as a Pentagon report delicately put it last December, they are “not expected to be survivable in terms of maintaining a mission capability in a hostile combat environment.”</p> <p>How did a good idea turn into another poster child for dysfunctional military procurement? Start with the Navy’s rush to build the ship. It wanted to put what was a relatively new concept into operation in about half the time that a new ship design normally makes its way from the drawing board to the fleet. That would be commendable, except a 2004 <a href="http://www.policyarchive.org/handle/10207/bitstreams/2062.pdf">Congressional Research Service</a> report speculated that this “rapid acquisition schedule” was being driven “less by operational urgency than by other considerations,” like getting the program going before a potential change in administration, the arrival of a new Chief of Naval Operations and a thorough vetting by Congress.</p> <p>Construction went ahead even before all the basic design drawings were completed. Now, to build the full complement of 55 ships for an estimated $37.4 billion, the Navy has decided to go with two separate designs and two contractors, <a href="http://www.bloomberg.com/apps/quote?ticker=LMT:US">Lockheed Martin Corp.</a> and <a href="http://www.bloomberg.com/apps/quote?ticker=GD:US">General Dynamics Corp</a>. More competition equals lower prices, right? Not necessarily, according to the Congressional Budget Office -- but the dual contracts will make more congressional delegations happy and avert a bruising protest by a losing bidder.</p> <p>Two weeks ago, <a href="http://mccain.senate.gov/public/index.cfm?FuseAction=PressOffice.FloorStatements&amp;ContentRecord_id=42987243-f045-7da7-6952-e32c98949a64">Senator John McCain took to the Senate floor</a> to decry what he called the "Military-Industrial-Congressional" complex, citing the littoral ship program as "another example of a fundamentally flawed acquisition process." Since 1997, according to the Government Accountability Office, about one-third of all major weapons programs have had cost overruns of as much as 50 percent. In an age when cheap, off-the-shelf technologies are used to produce everything from roadside bombs to homemade drones, that's an inefficiency the U.S. can no longer afford. Remarkably, the Pentagon hasn't even come up with a formal estimate for the total cost of the program for building what was supposed to be a relatively inexpensive, commercially derived vessel. Maybe the Iranians will let us borrow some of their speedboats.</p> <p>(James Gibney is a member of the Bloomberg View editorial board.)</p> </body> </html>