[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


                                      
                          [H.A.S.C. No. 114-145]
 
    OVERSIGHT REVIEW OF THE U.S. NAVY'S LITTORAL COMBAT SHIP PROGRAM

                               __________

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                            DECEMBER 8, 2016

                                     
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              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                  VICKY HARTZLER, Missouri, Chairwoman

JEFF MILLER, Florida                 JACKIE SPEIER, California
K. MICHAEL CONAWAY, Texas            JIM COOPER, Tennessee
JOSEPH J. HECK, Nevada               HENRY C. ``HANK'' JOHNSON, Jr., 
AUSTIN SCOTT, Georgia                    Georgia
MARTHA McSALLY, Arizona              GWEN GRAHAM, Florida
                 Heath Bope, Professional Staff Member
                 Katy Quinn, Professional Staff Member
                         Anna Waterfield, Clerk
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Hartzler, Hon. Vicky, a Representative from Missouri, Chairwoman, 
  Subcommittee on Oversight and Investigations...................     1
Speier, Hon. Jackie, a Representative from California, Ranking 
  Member, Subcommittee on Oversight and Investigations...........     3

                               WITNESSES

Gilmore, Dr. J. Michael, Director, Operational Test and 
  Evaluation, Department of Defense..............................    12
Mackin, Michele, Director, Acquisition and Sourcing Management, 
  Government Accountability Office...............................     9
O'Rourke, Ronald, Specialist in Naval Affairs, Congressional 
  Research Service...............................................    14
Rowden, VADM Thomas S., USN, Commander, Naval Surface Forces.....    10
Stackley, Hon. Sean J., Assistant Secretary of the Navy for 
  Research, Development, and Acquisition, Department of the Navy.     5

                                APPENDIX

Prepared Statements:

    Gilmore, Dr. J. Michael......................................   101
    Hartzler, Hon. Vicky.........................................    45
    Mackin, Michele..............................................    74
    O'Rourke, Ronald.............................................   133
    Speier, Hon. Jackie..........................................    47
    Stackley, Hon. Sean J., joint with VADM Thomas S. Rowden.....    50

Documents Submitted for the Record:

    Two charts displayed by Ms. Speier...........................   159

Witness Responses to Questions Asked During the Hearing:

    Mr. Byrne....................................................   163
    Ms. Speier...................................................   163

Questions Submitted by Members Post Hearing:

    Mrs. Hartzler................................................   167
    Ms. Speier...................................................   168
    
    
    
    OVERSIGHT REVIEW OF THE U.S. NAVY'S LITTORAL COMBAT SHIP PROGRAM

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
              Subcommittee on Oversight and Investigations,
                        Washington, DC, Thursday, December 8, 2016.
    The subcommittee met, pursuant to call, at 9:05 a.m., in 
room 2118, Rayburn House Office Building, Hon. Vicky Hartzler 
(chairwoman of the subcommittee) presiding.

OPENING STATEMENT OF HON. VICKY HARTZLER, A REPRESENTATIVE FROM 
      MISSOURI, CHAIRWOMAN, SUBCOMMITTEE ON OVERSIGHT AND 
                         INVESTIGATIONS

    Mrs. Hartzler. Good morning. I would like to extend a warm 
thank you to our witnesses testifying before us today and 
welcome them to our subcommittee's last hearing event for the 
114th Congress.
    I thank the subcommittee members for your contributions and 
dedication during this Congress. I wanted to especially express 
gratitude to those members who are not going to be returning 
next year.
    Certainly, Representative Graham, you have been a wonderful 
member on this committee and on Armed Services and just here in 
Congress as well. I have enjoyed getting to know you and 
appreciate your work, your dedication. Representative Graham 
is--comes to the hearings. I don't think she missed hardly any, 
so responsible and cares so deeply about the military, so we 
are going to miss you, but thank you. Thank you.
    And we also have subcommittee member Representative Heck 
and Representative Miller who may be joining us, but we 
appreciate their service as well.
    So in connection with today's hearing, I welcome the 
members also of the full committee who are not permanent 
members of the subcommittee, who are or who will be attending. 
And I ask unanimous consent that these committee members be 
permitted to participate in this hearing, with the 
understanding that all sitting subcommittee members will be 
recognized for questions prior to those not assigned to the 
subcommittee.
    Without objection, so ordered.
    So today, we take testimony of the littoral combat ship 
[LCS] program. We seek to gain a deeper understanding of the 
challenges that this program has presented us in the past and 
the opportunities that exist as the program moves forward. We 
need to grow the size of this Navy's surface fleet. The LCS 
could have an important role in increasing our capabilities and 
our flexibility. I know that there is a critical need to 
replace our less capable and decommissioned mine countermeasure 
ships, patrol craft, and all of our Hazard Perry-class 
frigates.
    I believe the littoral combat ship and the eventual upgrade 
to the frigate design has great potential to fulfill the roles 
for the platforms it replaces. This is why the LCS has garnered 
bipartisan support in the Seapower Subcommittee. The concept of 
the LCS and the decision to begin the program came at a time in 
the Department of Defense's acquisition history in which senior 
leaders of the Department thought it was necessary and possible 
to disregard the natural evolution of technology by skipping a 
generation of development. It was good theory but proved costly 
and cumbersome to implement.
    We have learned many lessons from this period. For example, 
introducing immature technologies into acquisition programs 
will lead to cost and schedule growth. Awarding contracts 
without a stable design and directing prescriptive government 
specifications also increases cost and schedule. It is only 
with unleashing the power of best buying practices that we can 
realize acquisition efficiencies. These lessons have been hard 
learned in a multitude of acquisition contracts.
    For example, stable government funding is essential to 
providing material ordering and labor efficiencies. 
Additionally, innovative multiyear procurements or block buys 
save money because long-term agreements with subcontractors and 
vendors provides contracting stability. Dangerous reductions 
below minimum order quantities only serve to exacerbate our 
industrial base and increase the cost of the taxpayer. That is 
why the House has advocated adding a third LCS in fiscal year 
2017, and has expressed reservations about the Navy's 
acquisition strategy, which involves procuring one LCS frigate 
every year during fiscal year 2018, 2019, and 2020.
    I also want to discuss the Navy's force structure 
requirements of 52 small surface combatants. The Navy's force 
structure is based on their ability to meet combatant commander 
requirements both in peace and in war. That is why I am 
perplexed with Secretary Carter's determination that we only 
need 40 LCS frigates. I believe the Secretary's decision lacks 
analytical rigor. I am hoping that the next administration will 
review this issue.
    We must absolutely integrate the program's acquisition 
lessons learned as we evaluate, with prudent scrutiny, the 
opportunity to invest an additional $14 billion to complete the 
purchase of LCS and transition its hull form into a frigate 
design. We must also ensure that the mission modules which are 
integral to the first LCS designs are successfully completed, 
tested, and fielded at the lowest possible price.
    So I look forward to discussing this program with our 
distinguished panel of witnesses we have here before us. But 
before I introduce the witnesses, I turn to the Oversight 
Investigation Subcommittee ranking member for any opening 
remarks that she would like to make.
    [The prepared statement of Mrs. Hartzler can be found in 
the Appendix on page 45.]

    STATEMENT OF HON. JACKIE SPEIER, A REPRESENTATIVE FROM 
   CALIFORNIA, RANKING MEMBER, SUBCOMMITTEE ON OVERSIGHT AND 
                         INVESTIGATIONS

    Ms. Speier. Thank you, Madam Chair.
    We are here today to examine a case study in gross 
mismanagement on the part of the Navy. At virtually every 
decision point--from conceiving the initial flawed concept, to 
the concurrent acquisition process, to the huge cost overruns, 
to the huge fundamental flaws in the ships themselves, and to 
the feeble attempts by the Navy and DOD [Department of Defense] 
to correct course--the Navy has wasted billions in taxpayer 
dollars and failed to produce a ship that meets its objectives.
    What we examine today is: Has the Navy learned its lesson, 
have they corrected course, and are they moving forward with a 
stable ship design based on a sound analytical foundation? From 
the testimony of witnesses today, I fear the answer is a 
resounding no.
    I would especially like to know who certified that LCS 
would cost $220 million each. We know it now costs more than 
double per ship, at $478 million. Who briefed this to Congress, 
and who signed off on this gross escalation in cost?
    While cost overruns are by no means acceptable, perhaps 
they can be explained if they resulted in a functional ship. 
But the LCS isn't just outrageously expensive, it is also 
outrageously bad at doing its job. In simple terms, it is a 
dud.
    Just look at how many issues six out of eight ships in 
service have had, and I point to this chart, which you can see. 
Every one of these six ships, and there have only been eight 
that have been in the water, six out of the eight ships have 
had serious problems in which the engines have flooded, the 
couplings cracked, and the ships broke down in transit.
    [The chart displayed can be found in the Appendix on page 
159.]
    Ms. Speier. Now, the USS Montgomery was commissioned in 
September of this year, and it has already had two engine 
failures and two collisions that resulted in major damage. What 
is even worse is that because of the way the Navy structured 
the contracts, taxpayers are still responsible for most of the 
repair costs, even when the shipbuilders are at fault. These 
contracts mean that, in some cases, the shipbuilders aren't 
responsible for even one cent of potential defects.
    In other words, you take delivery of an LCS, it immediately 
breaks down, and there is no warranty, there is no lemon law. 
So there is no compunction on the part of the shipbuilder to 
make sure that this product is indeed worthy to be afloat, 
because if it breaks down, it is the taxpayers that will pick 
up the tab. Why is it that the Coast Guard can hold its 
shipbuilders responsible for defects, but the Navy puts the 
burden on the taxpayers?
    If that is not enough, there is more bad news. The 
Secretary of Defense has admitted that continuing to produce 
two versions of the ship makes no sense, and he has ordered a 
down-select. The Navy has admitted that its transformative 
interchangeable mission module will likely never be 
interchanged as originally envisioned. The Navy has also 
admitted that its transformative crewing concept won't work and 
has essentially scrapped it.
    Look at how much the program has changed from the Navy's 
early pie-in-the-sky promises. Cost overruns, delayed schedule, 
design changes, cannot survive combat. In part, the reason why 
we are changing the name of LCS is because the word ``combat'' 
is in its name and we now know it is not survivable in a combat 
setting. Poor mission capabilities.
    [The chart displayed can be found in the Appendix on page 
160.]
    Ms. Speier. Now, in all of the Navy's wisdom, they have 
decided to change the name of the LCS to a frigate, and plan to 
purchase more of what is essentially still an LCS but whose 
modifications are unproven, lack critical capabilities, and 
can't pass original survivability tests. Why? Because they have 
determined it will meet their multi-mission requirements. Yet 
once again, we don't have a ship design, we don't know what it 
will cost, or whether the ship can survive in combat. Instead, 
as I have joked many times, we have a ship that even the 
Chinese don't want to copy.
    You would think all this uncertainty would prompt calls for 
a pause to get the LCS conceptual house in order before the 
Navy does a binge buy for more. But if you think that, you 
don't know the LCS program. Instead, in an act of astonishing 
arrogance and disregard of taxpayers' money, reports indicate 
that the Department of Navy is gearing up to ask Congress for a 
block buy of 12 of these ships. This would give us all 
leverage--this would give us all our leverage away with a 
contractor to ensure the ships are tested and fixed.
    What are they thinking? Does anyone honestly believe that 
the taxpayers, the Tea Party, or President-elect Donald Trump 
would approve this buy if they were in charge of doing so?
    From the beginning, the Navy has regularly submitted LCS 
budget requests that are not consistent with shipbuilding 
programs, making it nearly impossible for Congress to exercise 
oversight. It did this in 2003 when it funded the first ships 
with research and development funding and in 2010 when it 
wanted to switch to a plan of buying two parallel LCS designs 
inside of a 20-ship block buy.
    When issues continued to occur throughout construction and 
fielding, the block buy was always cited as the reason why 
Congress shouldn't slow the program down. Yet again, as the 
Navy moves towards a different design that they claim will 
address many of the LCS shortcomings, they are looking for a 
block buy authority before the design is even completed. This 
is a strategy that even the shipyards criticized, since it 
doesn't give them time to complete the frigate design before 
beginning construction. The single greatest contributor to cost 
inflation on the LCS was an incomplete design when construction 
began. The Navy still hasn't learned their lesson.
    I am glad that the Navy has acknowledged reality and 
changed some of its operational concepts, but in many respects, 
I am concerned they are still hiding the ball. The next time 
LCS flaws become apparent, it could be in the heat of battle 
and, frankly, get our sailors killed.
    Furthermore, if the Navy's plan for a block buy moves 
forward, Congress and the Navy's hands will be tied. I realize 
what this is really about. We know the LCS is the Ford Edsel of 
the sea, and yet certain of my colleagues say we can't afford 
to pause production and get it right because of, quote, 
``industrial base concerns,'' unquote, even though, and I want 
to emphasize this, even though the shipyards will be building 
the existing buy until 2021 even if we canceled funding for the 
program today.
    Let's be real. This is about getting pork back to their 
districts. The LCS is a $120 billion pork ship, and they are 
putting pork barrel politics above the safety of our service 
members.
    The Navy has shown a callous disregard for the taxpayer, 
and frankly, the Congress has been derelict in doing its job. 
We think no one will notice. We think our obligation is to the 
shipbuilders to keep building a defective ship just because we 
want to retain jobs.
    Today, we need the guts to say that the LCS was a mistake. 
To protect the United States interests and to do what is best 
for our service men and women, we need a ship that is capable 
of fulfilling its intended mission. The taxpayers deserve to 
know if what they are paying for is actually effective. That is 
why Congress needs to find out if the most recent changes will 
really make the LCS better or if we are just trying to make a 
silk purse out of a sow's ear.
    I look forward to your insights and about how we got here 
and how we should go forward and who is to blame.
    And with that, I yield back.
    [The prepared statement of Ms. Speier can be found in the 
Appendix on page 47.]
    Mrs. Hartzler. Thank you.
    I am pleased today to recognize our witnesses. I want to 
thank them for taking the time to be with us. We have the 
Honorable Sean Stackley, Assistant Secretary of the Navy for 
Research, Development, and Acquisition. We have Dr. J. Michael 
Gilmore, director of tests--Operational Test and Evaluation for 
the Department of Defense. We have Vice Admiral Thomas Rowden, 
commander of the Naval Surface Forces for the United States 
Navy. We have Ms. Michele Mackin, director of Acquisition and 
Sourcing Management for the Government Accountability Office; 
and Mr. Ron O'Rourke, specialist in naval affairs at the 
Congressional Research Service.
    So thank you all for being here today. Really, really 
appreciate it, and we look forward to hearing your comments. 
And now we turn to Mr. Stackley.

STATEMENT OF HON. SEAN J. STACKLEY, ASSISTANT SECRETARY OF THE 
NAVY FOR RESEARCH, DEVELOPMENT, AND ACQUISITION, DEPARTMENT OF 
                            THE NAVY

    Secretary Stackley. Chairwoman Hartzler, Ranking Member 
Speier, members of the subcommittee, thank you for the 
opportunity to appear before you today to address the littoral 
combat ship program. With your permission, I would like to make 
a brief opening statement and have my full testimony entered 
into the record.
    Mrs. Hartzler. Without objection.
    Secretary Stackley. The littoral combat ship, or LCS, is 
designed to fill critical warfighting gaps in anti-surface, 
anti-submarine, and mine countermeasures warfare mission areas. 
And as a replacement for three legacy small surface combatant 
ships, she is about one-third the size of a DDG-51-class 
destroyer, is designed to perform missions the DDG [guided-
missile destroyer] is not equipped to do or that could 
otherwise be better performed, at least well performed by a 
small surface combatant, and thus freeing the destroyer for 
missions tailored for its higher end capabilities.
    LCS's reduced size results in greatly reduced procurement 
and operating and support cost. In fact, the procurement unit 
cost for LCS is about one-third of that of a DDG-51, and 
likewise, the manpower requirements for the ship.
    The LCS hull is designed and built to provide the ship with 
its high-speed, mobility, damage control, survivability, 
aviation, and combat systems, including its 57-millimeter gun, 
surface-to-air missiles, and an over-the-horizon missile that 
the Navy is currently adding for offensive firepower against 
long-range threats.
    In addition to this core capability, the ship carries 
modular mission packages tailored for the mission's planned 
deployments. The surface warfare mission package adds 30-
millimeter guns, an armed helicopter, an unmanned aerial 
vehicle for extended surveillance, and surface-to-surface 
missiles. The anti-submarine warfare, ASW, mission package adds 
a variable depth sonar that operates in tandem with a 
multifunction towed array, an ASW helicopter with dipping sonar 
sonobuoys and airdrop torpedoes and a towed decoy.
    The mine countermeasure mission package has air unmanned 
surface and unmanned underwater vehicles with associated 
sensors and systems to detect and neutralize mines.
    And there are four cornerstones of the program I would like 
to briefly summarize. First, the shipbuilding program. As the 
committee is well aware, the LCS program was initiated with 
unrealistic cost and schedule estimates and with highly 
incomplete design, resulting in extraordinary budget overruns 
and schedule growth. The program was subsequently restructured 
in 2009. Production was placed on hold pending the insertion of 
production readiness reviews to verify design quality and 
completeness; authorization to approve design and requirements 
changes was raised to the four-star level, specifically the CNO 
[Chief of Naval Operations] and myself; Navy oversight of the 
shipyards was greatly increased; the acquisition strategy was 
restructured to compete long-term contracts under fixed-price 
terms and conditions. And in response to this strategy, 
industry made significant investments in terms of skilled labor 
and facilities to improve productivity and quality.
    As a result, cost, schedule, and quality have greatly 
improved such that current ships under construction are 
delivering at less than half the constant year dollar cost of 
the lead ships. Performance has stayed reliably within the 
budget throughout this time, and the quality of each ship has 
successively improved, as measured by the Navy's Board of 
Inspection and Survey. Bottom line, the block buy strategy 
approved by Congress in 2010 has delivered on its promise. LCS 
construction is stable, and performance continues to improve on 
a healthy learning curve.
    Second, mission packages. The program's acquisition 
strategy is that we will incrementally introduce weapons 
systems as a part of a mission package when they are mature and 
ready for deployment. The strategy provides tremendous 
flexibility, affordability, and speed for introducing new 
capabilities to the ship when those capabilities are ready to 
deploy.
    Consistent with this approach, the LCS has been highly 
successful integrating mature weapons systems. The MH-60 
helicopter, the Fire Scout unmanned aerial vehicle, the 11-
meter rigid hull inflatable boat, the Mark 50 30-millimeter gun 
system, and most recently, the Harpoon Block II over-the-
horizon missile, the Airborne Laser Mine Detection System, the 
Airborne Mine Neutralization System, and we are currently 
integrating the Hellfire Longbow missile in support of testing 
in 2017.
    As a result, we have successfully fielded the first 
increments of the surface warfare mission package. They are 
deployed today and are on track to complete the next increment 
in 2018.
    The next mission package we will field is the anti-
submarine warfare, or ASW, mission package. The performance of 
this system, as demonstrated by its prototype in 2014, greatly 
exceeds that of any other ASW sensor system afloat. And we are 
currently in the process of awarding the contract to build the 
developmental model, which will be put to sea for shipboard 
testing on LCS in 2018.
    These mission packages are late to their original schedules 
in part due to technical challenges and in part due to budget 
challenges. They do, however, demonstrate the benefit provided 
by the LCS modular design. And as the Navy develops or acquires 
new systems appropriate to the LCS mission, we will leverage 
the ship's design and flow these new weapons to the ship in 
rapid fashion once they are mature.
    We have run headlong, however, into challenges with 
developing those capabilities that are central to filling one 
of the critical shortfalls in terms of warfighting, and that is 
the mine countermeasures, or MCM, mission package.
    The Navy's requirements for the LCS MCM mission package are 
to locate, identify, and clear mines at a rate that 
significantly exceeds our current capability and to do so 
without putting the ship or the crew into the minefield.
    The MCM mission package airborne capability and MH-60 
helicopter carrying the Airborne Laser Mine Detection System 
and the Airborne Mine Neutralization System has completed 
testing and is ready to deploy. Additionally, an unmanned 
aerial vehicle carrying a sensor capable of detecting mines 
close to shore is on track to complete testing in 2017.
    The workhorse of the mission package is the high-endurance 
unmanned vehicle that tows a sonar for mine detection. The Navy 
is satisfied with the performance of the towed sonar system and 
its ability to detect mines, but we are halting development of 
the unmanned vehicle--we refer to it as the Remote Multi-
Mission Vehicle [RMMV]--due to poor reliability. And we are 
revising the MCM mission package to employ an alternative 
unmanned surface vessel, specifically one that is currently 
being built to tow the minesweeping system to likewise tow the 
mine detection system.
    Testing with this vehicle is to commence in 2019. This puts 
the MCM mission package back to 2021 timeframe, a significant 
delay to that capability. The likely long-term solution will be 
to eliminate the tow vehicle altogether and operate with an 
unmanned underwater vehicle with an embedded sonar when 
technology can support it.
    The third cornerstone is performance of in-service ships. 
In total, LCS material readiness, as reflected in operational 
availability and casualty report metrics, is consistent with 
other combatant ship classes and meets the Navy's threshold 
requirements. However, I would like to address five engineering 
casualties of concern that have occurred over the past year. 
The Navy has conducted formal engineering reviews and command 
investigations to assess the root causes, and corrective action 
for each of these casualties are in action.
    One was design related. A deficiency with a new propulsion 
gear on the Freedom variant resulted in the gear's clutch 
failure. The shipbuilder has been responsive with the 
manufacturer to correct the design, and we are currently 
testing this correction. The shipbuilder and manufacturer are 
being held accountable for these corrective actions.
    Two of the five engineering casualties were due to Navy 
crews departing from established operating procedures. The type 
commander, Vice Admiral Rowden, has taken appropriate 
corrective action, including revising the LCS training program 
and conducting an engineering standdown for all LCS class crews 
to review, evaluate, and renew their commitment to safe ship 
operation and good engineering practices.
    The remaining two engineering casualties trace to 
deficiencies in ship construction and repair procedures. One 
involves the waterborne alignment of the propulsion train, 
which is being addressed by the Naval Sea Systems Command with 
industry, equipment manufacturers, shipbuilders, and ship 
repair yards.
    The second involves contamination of a hydraulic system on 
a newly delivered ship, requiring the ship to reflush the 
system and the shipyard to make corrections to its flushing 
procedures. This was corrected under warranty provisions by the 
shipbuilder in accordance with the contract.
    Across the board, we are raising the level of engineering 
and design discipline on this new ship class to that of zero 
tolerance for departure from standards. In this vein, the Naval 
Sea Systems Command has initiated a comprehensive engineering 
review of LCS propulsion systems and will make their findings 
available to the subcommittee upon their completion.
    The fourth cornerstone is transition to the frigate. 
Following an intense period reviewing alternative designs, 
which was ultimately approved by the Secretary of Defense, we 
are proceeding with modifications to the design of the LCS to 
incorporate the combined features of the LCS core capabilities, 
surface warfare mission package, anti-submarine warfare mission 
package, plus enhancements to the ship's combat systems and 
survivability features.
    Industry is currently working on this new design, which 
trades the modularity of the LCS for a highly capable multi-
mission frigate, and is on track to award in late 2018. The 
estimated cost for the 12 frigates outlined in the Navy's 
budget and report to Congress is approximately $8.1 billion.
    I want to make clear to the subcommittee that unlike the 
experience at the outset of the LCS program, we will not 
proceed with frigate construction before design is complete and 
of high quality and that cost estimates are validated. And to 
enable this committee to conduct its new oversight, we will 
provide your staff with full insight to our design review 
process, products, and criteria.
    Madam Chairwoman, thank you for the opportunity to discuss 
this important program, and I look forward to answering your 
questions.
    [The joint prepared statement of Secretary Stackley and 
Admiral Rowden can be found in the Appendix on page 50.]
    Mrs. Hartzler. Thank you.
    Ms. Mackin.

STATEMENT OF MICHELE MACKIN, DIRECTOR, ACQUISITION AND SOURCING 
          MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Mackin. Thank you, Madam Chairwoman.
    Good morning, Ranking Member Speier and members of the 
subcommittee and committee. Thank you for having me here today 
to discuss the littoral combat ship and frigate programs.
    We have been reporting to Congress on LCS for over 10 years 
now. Our concerns have been and continue to be the Navy's 
decisions to prioritize seaframe and mission package 
procurements ahead of needed testing.
    Testing is critical to ensure that expected capabilities 
and operational concepts can be proven out. Over the past few 
years, we have recommended the LCS program be halted or slowed 
down while important knowledge was gained through testing. But 
DOD has generally not taken any actions that would impact the 
production piece of the program, even in light of some serious 
concerns. Instead, it has warned that the prices under the two 
LCS block buy contracts would increase if the program were 
disrupted.
    Almost 3 years ago, the Secretary of Defense directed the 
Navy to assess options for its small surface combatant that 
would be more survivable and have more combat capability than 
the LCS. The resulting study found that a minor modified LCS, 
which is now the frigate program, was the least capable option 
considered. Nevertheless, that option was ultimately chosen. In 
addition to affordability, which was a very important 
consideration, a key factor was the determination not to have a 
gap in production at the two LCS shipyards.
    We all know that the initial promises of LCS have not come 
to fruition in terms of cost, schedule, or capabilities. As the 
Navy pivots now from the LCS to the frigate, there are key 
questions yet to be answered.
    First, what will the frigate cost? This is unknown. A rough 
estimate is about $9 billion for 12 ships, but the Navy won't 
develop a more robust estimate until the middle of next year, 
and not until fiscal year 2018 will DOD prepare an independent 
cost assessment--cost estimate. Independent cost estimates are 
very important because they provide an unbiased assessment as 
to whether the program's cost estimate is reasonable.
    Second, what will the frigate design look like? This is 
also unknown. While the frigate design will be based on the 
same LCS seaframes we have today, those seaframes have 
significant weight issues that will need to be addressed, among 
other considerations.
    The Navy plans to award a frigate contract to one of the 
shipyards in 2018 and start construction as early as 2019, but 
specific contractor design proposals won't be received until a 
year from now. Until the detailed design is understood, exactly 
what the Navy is buying isn't known.
    I want to stop here and address the industrial base issue. 
Our work has shown that both LCS shipyards are running quite a 
bit behind in delivering the ships already under contract. 
Backlogs are many months long and up to a year or more in some 
cases. So the bottom line here is that both shipyards will be 
building LCSes for years to come, at least into 2021 at this 
point. So there is no schedule imperative to add frigates to 
the pipeline right now.
    And finally, what is Congress being asked to do? With its 
fiscal year 2018 budget request, the Navy plans to ask Congress 
to approve a 12-ship frigate block buy strategy and also to 
approve procurement of the lead ship based only on a rough cost 
estimate. From a contracting standpoint, the initial block buy 
prices will be for 12 LCS, that is 12 regular LCS. If past is 
prologue, the Navy might get great pricing for those ships, but 
only later will the price of adding the frigate capabilities be 
known.
    At that point, under a block buy contract, there is a risk 
that the program will be considered locked in, as has been the 
case with LCS, and any inclination to make needed changes may 
be foregone.
    There is an opportunity here to not repeat the mistakes of 
the past. Continued concerns about the capabilities of LCS, 
testing that is years away from being completed, unknowns about 
the frigate, and the production backlog at the shipyards are 
all factors that need to be taken into account. This 
potentially $9 billion investment can wait until more is known 
about what the taxpayers are being asked to fund. Thank you.
    [The prepared statement of Ms. Mackin can be found in the 
Appendix on page 74.]
    Mrs. Hartzler. Thank you.
    Admiral Rowden.

   STATEMENT OF VADM THOMAS S. ROWDEN, USN, COMMANDER, NAVAL 
                         SURFACE FORCES

    Admiral Rowden. Good morning, Chairwoman Hartzler, Ranking 
Member Speier, distinguished members of the subcommittee. I am 
honored for the opportunity to testify about the littoral 
combat ship.
    As the commander of our Naval Surface Forces, I am 
responsible for leading the 58,000 sailors that man and support 
our surface ships, and I am responsible for manning, training, 
and equipping those same ships. To execute these 
responsibilities, I rely on a staff of dedicated officers, 
enlisted, and civilian professionals. I rely on the experience 
I have gained over my 34 years of service to our Nation. I rely 
on almost 14 years to over 40 percent of my professional life 
serving on ships at sea, ships that range from our Coast Guard 
cutters all the way to tours on our aircraft carriers. I rely 
on the experiences I have operating on every ocean and sea from 
the Gulf of Guinea to the Sea of Japan. I rely on experiences I 
have gained through port calls in 52 different cities in 36 
different countries around the world.
    When it comes to driving, fighting, and steaming our ships, 
I have experienced firsthand what our Nation can produce, both 
in terms of sailors with magnificent talent, determination, 
professionalism, and sheer grit, and in terms of the superb 
technical capability our phenomenal military industrial complex 
can produce. Time and again, in real-world situations I have 
seen our talent, training, tools, and tactics come together to 
produce a maritime fighting force that, on the whole, is 
significantly greater than the sum of its parts.
    Time and again, the value of our Navy to our Nation 
manifests itself through engagement and through partnership 
building on a gray ship with a white number and Old Glory 
flying atop the mast, tied to the pier or at anchor in the 
harbor. I have experienced the palpable sense of relief when by 
our very presence the level of angst in a potentially volatile 
situation is erased.
    To execute our missions, we rely on our ships and aircraft 
and the sailors who man them. The ships and aircraft are the 
tools we use. Our sailors round out our fleet's capability by 
providing the talent, the training, and tactics we need to win 
and win decisively.
    One of the tools we have coming online is the littoral 
combat ship. So far, eight of these tools have been delivered. 
Many more are on the way, and to be quite honest, I cannot wait 
to have them in the fleet and cannot get them there fast 
enough. This tool, this ship will be--will soon be deployed in 
numbers to our forward fleet commanders and will provide them 
with a highly valued and absolutely necessary capability. For 
in addition to the anti-mine, anti-submarine, and anti-ship 
capabilities it will carry, it brings the ability to enter 
ports we have rarely or never been able to visit because of 
draft limitations. It brings the ability to build partnerships 
and partnership capacity that we have been able to--that we 
have only been able to execute in very limited ways. In the 
day-to-day shaping and stabilizing operations our Navy executes 
daily, these ships will be invaluable and are needed right now.
    Beyond the shaping and stabilizing operations that dominate 
our operations today, I see a vital role for our littoral 
combat ships should our adversaries take an aggressive stand 
towards our maritime forces. And this is where the talent, 
tactics, and training really come into play.
    We understand well the requirements these ships are built 
to, and we understand the testing and evaluation has proven 
they are built to the approved requirement. In short, we 
understand the tool. We understand the ship. We also understand 
well our talent, tactics, and our training. We can and must 
take all of these into account when planning for combat 
operations. As such, we will employ all of our ships and our 
talent, training, and tactics to maximize their value to the 
combatant commander while continually assessing the risk to the 
force.
    All risk can never be eliminated, not to our littoral 
combat ships or any other ship in the inventory, for that 
matter. However, in planning for any mission, we are constantly 
evaluating our ability to achieve the objective while limiting 
the risk to the fleet. In other words, we will never lean into 
a punch if it can be avoided.
    While all this is well and good, there have been challenges 
in fielding these ships, which is why earlier this year I was 
tasked to lead, along with Vice Admiral Dave Johnson, the 
principal military assistant to Secretary Stackley, and Mr. 
Brian Persons from the CNO staff, a review of the LCS program 
and to come up with recommendations on how to address and 
overcome the challenges to providing robust operational 
capability for our littoral combat ships.
    In truth, I was thrilled with the opportunity. Our team 
looked at the ships and their challenges through three lenses, 
these lenses being simplicity, stability, and ownership. We 
looked at all aspects of LCS through these three lenses and 
came up with what I know to be reasonable, prudent, and 
appropriate recommendations to start to accelerate the value of 
these ships to the forward fleet commanders. We are moving out 
on these recommendations, and I am already seeing the benefits 
of our new approach on the waterfront. And we will continue to 
evaluate, assess, and adjust as we move forward.
    Beyond this, we have already deployed twice and are in the 
leading edge of a third LCS deployment. In addition to learning 
a heck of a lot about how to support these ships forward, I 
believe the facts speak for themselves: Over 500 days at sea; 
helicopter landing qualifications with eight nations; boarding 
operations with seven nations; fleet operations with diverse 
ships ranging from aircraft carriers down to coastal patrol 
ships; special operations force operations with the Republic of 
Korea; humanitarian assistance and disaster response during 
Typhoon Haiyan, relief operations in the Philippines, and the 
search for AirAsia Flight 8501 in the Java Sea; regional 
partners who welcome and want LCS with a high demand signal, 
having visited 15 cities in 8 countries around the Western 
Pacific.
    There is still much work to be done to fully unlock the 
significant potential of these ships. I am 100 percent 
confident that with the talent, training, and tactics our U.S. 
Navy sailors possess, the promise of our littoral combat ships 
will be fully realized, and I look forward to being part of 
this valuable effort.
    Thank you very much, ma'am, and I look forward to your 
questions.
    [The joint prepared statement of Admiral Rowden and 
Secretary Stackley can be found in the Appendix on page 50.]
    Mrs. Hartzler. Thank you.
    Dr. Gilmore.

STATEMENT OF DR. J. MICHAEL GILMORE, DIRECTOR, OPERATIONAL TEST 
             AND EVALUATION, DEPARTMENT OF DEFENSE

    Dr. Gilmore. Chairwoman Hartzler, Ranking Member Speier, 
members of the committee and subcommittee, I will try to 
briefly summarize my written testimony.
    The Increment 2 surface warfare mission package is the only 
fielded system on LCS seaframes, and it has demonstrated a 
modest ability to aid the ship in defending itself against 
small swarms of fast inshore attack craft, though not against 
threat-representative numbers and tactics, and the ability to 
support maritime security operations such as launching and 
recovering boats and conducting pirate interdiction operations. 
When the Hellfire missile is fielded in the next increment, the 
surface warfare package capability has the potential to improve 
significantly, provided targeting and other challenges can be 
surmounted.
    In a June 2016 report, based on this testing conducted 
before 2016, I concluded that an LCS employing the current mine 
countermeasures package would not be operationally effective or 
suitable if called upon to conduct mine countermeasure 
missions. The testing that was done demonstrates the LCS mine 
countermeasure mission package did not achieve the sustained 
area mine clearance rate of the Navy's legacy systems, nor can 
the package be used even under ideal benign conditions to meet 
the Navy's reduced Increment 1 mine countermeasures 
requirements for mine area clearance rate, achieving, at best, 
one-half those requirements, which are a fraction of the Navy's 
full requirements. And by the way, my assessment is the same as 
the Navy's commander of operational test force.
    The ships as well as many of the mine countermeasure 
systems are not reliable, and all the MCM systems, not just the 
Remote Minehunting System and the Remote Multi-Mission Vehicle, 
had significant shortfalls or limitations in performance. For 
example, limitations in the Airborne Mine Neutralization System 
depth for neutralizing mines means that it cannot be used to 
neutralize the majority of the mines in the Navy's own 
scenarios.
    Based on those results, after more than 15 years of 
development, the Navy decided this past year to cancel the 
Remote Minehunting System, which is a hard decision for the 
Navy, halted further procurement of the Remote Multi-Mission 
Vehicle, abandoned plans to conduct operational testing of 
individual MCM mission package increments, and delayed the 
start of full integrated LCS mine countermeasure mission 
package operational testing until at least fiscal year 2020.
    As the Navy attempts to fill capability gaps and correct 
the shortfalls in performance of these canceled and 
restructured elements of the mine countermeasures package, it 
is likely operational testing of either LCS variant equipped 
with the final fully capable mine countermeasures, MCM, package 
will not be completed until at least 2023, more than a decade 
after the schedule set in the Navy's original requirements.
    All of the LCSes have suffered from significant repeated 
reliability problems with both seaframe and mission package 
equipment. No matter what mission equipment is loaded on either 
of the LCS variants, the low reliability and availability of 
seaframe components, coupled with the small crew size, imposed 
significant constraints on mission capability.
    When averaged over time, LCS 4, which was used in the 
testing last year, was fully mission-capable for surface 
warfare missions just 24 percent of the 2015 test period. Both 
variants fall substantially short of the Navy's reliability 
requirements, and have a near-zero chance of completing a 30-
day mission, the Navy's requirement, without a critical failure 
of one or more seaframe subsystems essential for wartime 
operations.
    The Navy's most recent reliability reports show upward 
trends for a few LCS systems, so that is good news, but the 
majority of the ship's systems demonstrate flat or declining 
reliability well below the Navy's objectives, and that is the 
Navy's data.
    It was only through testing of the full mission packages at 
sea and aboard the ship with sailors from the fleet that the 
significant problems and shortfalls I have described, both in 
system performance and sailor training, were clearly revealed. 
In fact, the Navy's independent mine countermeasures review 
team emphasized that a reliance on unrealistic, segmented, 
shore-based testing, quote, ``provided a false sense of 
maturity,'' unquote.
    As in all operational testing, we interacted extensively 
with the ships' sailors and surveyed them to capture their 
views of the ships' capabilities. These sailors are proud of 
their ships and determined to make the best use of them. The 
sailors are also straightforward in identifying the many 
problems they have encountered. We--I have a long list of the 
comments from the surveys that were done during the testing, 
and I am going to read just a couple, but there is a long list 
that are consistent with these, so I am not just cherry-
picking.
    ``Well, 130 duty days to complete technical evaluation, 
which should have only taken 45 days. That should tell you 
something about the reliability of the RMMVs.''
    ``The tasking would be easier to complete if the equipment 
didn't constantly break.''
    ``As equipment breaks, we are required to fix it without 
any training.''
    Those are not my words. Those are the words of the sailors 
who were doing the best they could to try and accomplish the 
missions we gave them in the testing.
    So to provide the sailors with what they need to accomplish 
their missions, it is my hope that the Navy will be provided 
the resources, meaning the time and money it needs to fix these 
problems, which we should acknowledge, because if we don't 
acknowledge them, we can't fix them. And the Congress, 
obviously, has a key role to play in providing those resources. 
Thank you very much.
    [The prepared statement of Dr. Gilmore can be found in the 
Appendix on page 101.]
    Mrs. Hartzler. Thank you, Dr. Gilmore.
    Mr. O'Rourke.

  STATEMENT OF RONALD O'ROURKE, SPECIALIST IN NAVAL AFFAIRS, 
                 CONGRESSIONAL RESEARCH SERVICE

    Mr. O'Rourke. Chairwoman Hartzler, Ranking Member Speier, 
distinguished members of the subcommittee, thank you for the 
opportunity to appear before you today to discuss oversight 
issues relating to the LCS program. With your permission, I 
would like to submit my written statement for the record and 
summarize it here briefly.
    Mrs. Hartzler. Without objection.
    Mr. O'Rourke. I have been tracking the LCS program since 
its inception 15 years ago. In my 32 years as a naval issues 
analyst for CRS, no program has been more complex to track or 
has posed more potential oversight issues for Congress than 
this program. The LCS program is at a crossroads not only 
because of the Navy's proposal to shift to production of the 
frigate variant, but also because of three additional factors. 
These are the rapidly shifting international security 
environment, the possibility that the incoming Trump 
administration might make significant changes in U.S. foreign 
and security policy, and the Trump campaign organization's 
announced objective of building the Navy toward a goal of 350 
ships.
    A key oversight issue for the Navy's proposal for procuring 
the frigate variant concerns its analytical foundation as a 
result of how the program was restructured twice in less than 2 
years at the direction of two Secretaries of Defense. The 
Navy's proposal for procuring the frigate variant of the LCS 
appears to have three potential weaknesses in its analytical 
foundation. These potential weaknesses are now compounded by 
the shifting international security environment and the 
possibility that the incoming Trump administration might make 
significant changes in U.S. foreign and security policy.
    This situation doesn't prove that the Navy's proposal for 
procuring the frigate variant of the LCS isn't the most cost-
effective approach for meeting the Navy's future needs. It 
might very well be the most cost-effective approach. But as a 
result of this situation, the Navy now has less of a basis for 
being certain of that and less ability to demonstrate this 
compellingly to others.
    This situation also, however, creates a fresh opportunity 
for the Navy to create a new analytical foundation for the 
effort that is both rigorous and fully up to date. Doing that 
would take some time, but it wouldn't prevent some variant of 
the LCS from being procured in fiscal year 2017 or 2018.
    Another oversight question concerns the plan to total 
quantity of 40 ships. This is 12 less than the 52 small surface 
combatants called for in the Navy's current 308-ship force 
structure objective, and the 52 number itself could change 
again as a result of a decision to build the Navy toward a 
fleet of about 350 ships.
    Building up to a force of 52 or more small surface 
combatants over the next several years could involve increasing 
the small surface combatant procurement rate to 3 or 4 ships 
per year. In terms of industrial base capacity, it might be 
easier to execute such a procurement rate with two LCS builders 
rather than one. If the ships are acquired with annual 
contracting, then depending on the annual procurement rate, 
maintaining two LCS builders might enhance the Navy's ability 
to use competition effectively in procurement of these ships.
    Another oversight question concerns whether to use annual 
contracting or block buy contracting for procuring the frigate 
variant. Annual contracting preserves flexibility for Congress 
regarding whether and when to procure follow-on units in an 
ongoing procurement program, while multiyear contracting in the 
form of block buy contracting or multiyear procurement reduces 
that flexibility in return for reducing the cost of the units 
being procured.
    My written statement discusses some of the considerations 
that come into play in considering annual versus block buy 
contracting. My statement also discusses two other oversight 
issues, the survivability of the frigate variant and the mine 
countermeasures module. It then presents some potential 
oversight questions for Congress relating to two additional 
oversight matters, the recent propulsion equipment casualties 
and the Navy's new plan for crewing and operating the ships.
    Now that we are 15 years into the program and with the 
Navy's proposal to shift to procurement of the frigate variant 
now being considered, there is a question about the acquisition 
lessons learned from the LCS program. My written statement 
concludes with some comments on that question, particularly in 
terms of the rapid acquisition strategy that the Navy 
originally pursued for the LCS program which aimed at reducing 
acquisition cycle time.
    Chairwoman Hartzler, this concludes my statement. Thank you 
again for the opportunity to testify, and I will be pleased to 
respond to any questions the subcommittee may have.
    [The prepared statement of Mr. O'Rourke can be found in the 
Appendix on page 133.]
    Mrs. Hartzler. Thank you very much. Very good comments. I 
think very clearly laid out some of the challenges and the 
opportunities. I would like to start with Admiral Rowden.
    What specific combatant commanders' requirements have 
changed over the past 10 years that necessitates converting the 
LCS platform into a more capable and survivable frigate?
    Admiral Rowden. The requirement for the littoral combat 
ships and the frigates, the 52 number, is a number that 
provides them with the capability to address not only the day-
to-day operations that we are executing during the shaping and 
stabilizing operations that we are executing now, but also as 
we transition to the high end.
    Clearly, as we look at--reflect on the last 10 years and we 
see a potential adversary's growing numbers of ships and 
aircraft and submarines that are being fielded, in order to be 
able to address those threats, those potential threats, we need 
a Navy that can do that. And they--and the littoral combat 
ships and the frigates with either the ASW package installed or 
the ASUW [anti-surface warfare] package installed, and the 
frigates with both of those capabilities installed will 
certainly give capability to the combatant commanders that they 
need as they look at the ever-changing threat and to be able to 
address that.
    Mrs. Hartzler. So you would say that the need to change to 
the frigate is because of the threats and the increased 
capabilities that the frigate would have over the LCS? Because 
that was what the question was. Why--what are the changes that 
would necessitate moving to a frigate from an LCS?
    Admiral Rowden. Yes, ma'am. Given the wider range of 
operations that the frigate will be able to execute against the 
growing threat, that certainly would drive us towards building 
the frigate over the littoral combat ship.
    Mrs. Hartzler. So bottom line is because they have more 
mission capability.
    Admiral Rowden. Yes, ma'am.
    Mrs. Hartzler. Multiple rather than just singular, correct?
    Admiral Rowden. Yes, ma'am.
    Mrs. Hartzler. Okay. Secretary of Defense's December 2014, 
2015 memorandum that directed the Secretary of Navy to reduce 
the total procurement quantity of littoral combat ships and 
frigates from 52 to 40 states, and I quote, ``40 littoral 
combat ships and frigates, the number that the Navy's own 
warfighting analysis says it is sufficient to need,'' end 
quote.
    So it appears to be the rationale as to why the Secretary 
of Defense reduced the program's quantity. So does the Navy 
have warfighting analysis that demonstrates that 40 littoral 
combat ships and frigates are sufficient to meet warfighting 
requirements? And if so, what is the Navy's number of 52 total 
small surface combatants based on?
    Admiral Rowden. Yes ma'am. I think that is a good question 
to be addressed by Secretary Stackley, but what I can tell you 
about the conversations that I have with our forward deployed 
fleet commanders now, the commander of the 6th Fleet in the 
Mediterranean and the commander of the 7th Fleet in the Western 
Pacific and the commander of the 5th Fleet in the Arabian Gulf 
and even the commander of the 4th Fleet down in Southern 
Command is, in my conversations with them, that one of the 
questions that always comes up is how many LCS can I get and 
how fast can you get them to me. So the demand is there. With 
respect to the--and the requirement remains 50.
    With respect to the reduction from 52 to 40, Secretary 
Stackley.
    Secretary Stackley. Yes, ma'am. Let me start by the 
document of requirement which goes to the Force Structure 
Assessment that the CNO has conducted. 2012 Force Structure 
Assessment updated in 2014 continues to emphasize the need for 
no less than 52 small surface combatants to address the full 
mission requirements across the balanced fleet. And the CNO, 
since then, has been clear about a couple of things.
    One, all pressure on our fleet points towards the need for 
a larger fleet to continue to perform the missions at the level 
that the Nation requires. And so there is not a requirement 
that is going to come through, and this--the 2014 update is 
going to be updated again this year, will be delivered with the 
budget. But I can tell you that that requirement will not go 
down in terms of the number of small surface combatants.
    The decision to go from 52 to 40, that was a decision that 
did not come from the requirements community. It, frankly, 
didn't come from the Navy. This was driven in a budget 
environment where the determination was made that we have to 
take risk somewhere. This is a place where we will take risk in 
terms of the size of our force.
    Mrs. Hartzler. Okay. And I know a lot of our members want 
to ask questions, so I will come back to some others. But I do 
want to ask--something you said, Secretary Stackley, caught my 
attention. Where you said the shipbuilders are being held 
accountable. I know that as contracting goes forward, there is 
a warranty type of a provision added. But is there--how are 
they being held accountable now?
    Secretary Stackley. Yes, ma'am. Let me start by describing 
that I have been doing shipbuilding for over 30 years.
    Mrs. Hartzler. Right.
    Secretary Stackley. In our contracts, we do have explicit 
warranty provisions. When the ship is delivered, we first bring 
the Board of Inspection--well, first, our supervisors of 
shipbuilding are monitoring the construction of the ship as it 
goes to ensure compliance with process and procedures. And in 
terms of the delivered ship, the Board of Inspection and Survey 
comes on board and conducts a pretty extensive full-week 
inspection of the ship, including underway periods. 
Deficiencies are documented.
    When the ship is delivered, it is still within a warranty 
period so that if other deficiencies emerge during the warranty 
period, then we first--we evaluate who is responsible for the 
deficiency. If it is a government responsibility, if it is a 
government system, then we own it. But if it is a contractor 
responsibility, we take it back to the contractor to fulfill 
his requirements under the contract within that warranty 
provision. And then at the end of this period, we have what is 
referred to as a final contract trial to shake out any last 
remnants before we go into a post-shakedown availability, at 
which point in time the government and the contractor are both 
on board the ship correcting our response--our respective 
deficiencies.
    Mrs. Hartzler. Sure. What is the time period for these--has 
been for the warranty period?
    Secretary Stackley. Notionally, it is 12 months.
    Mrs. Hartzler. So of the--you outlined in your testimony 
five engineering--five concerns, and a couple of them dealt 
with crews, dealt with training. That is why you are changing, 
Vice Admiral----
    Secretary Stackley. Yes, ma'am.
    Mrs. Hartzler [continuing]. The training, which makes 
perfect sense. So you are saying that those were--those costs 
were incurred by the Navy because it was basically the crew's 
fault that the structural problem occurred.
    Secretary Stackley. Yes, ma'am.
    Mrs. Hartzler. But with the design, like on the propulsion 
and those others, who ate those costs----
    Secretary Stackley. Let me walk through that.
    Mrs. Hartzler [continuing]. To fix that?
    Secretary Stackley. First the gear. This was a new gear 
manufacturer brought to the ship. The prior gear manufacturer 
ceased its business. And specifications went out to the gear 
manufacturer. When that gear was coupled with the rest of the 
propulsion plant, there was a, I will call it a mistiming in 
terms of software controlling the system. That was not 
discovered until the USS Milwaukee was en route to her home 
port, and we tripped over this failure and the clutch--the 
clutch burnt out.
    That--the shipbuilder in this case and the gear 
manufacturer are paying for the correction of the design, and 
we are withholding payments on subsequent ships until that is 
corrected on the subsequent ships. And then the USS Milwaukee 
itself, that final correction is waiting for the design, 
verification, and validation. And prior ships, the LCS 1 and 
LCS 3, are not affected because they are under a different gear 
design. So that is being covered today with withholdings, with 
fee----
    Mrs. Hartzler. Very good.
    Secretary Stackley [continuing]. And cost under the 
contract.
    Mrs. Hartzler. Good. That makes sense.
    Secretary Stackley. Can I hit the other one, because the 
other one is important?
    Mrs. Hartzler. Well, I think we need to--we are going to 
have votes coming up.
    Secretary Stackley. Yes, ma'am.
    Mrs. Hartzler. And we want to get to some other questions, 
but thank you for that.
    Ranking Member Speier.
    Ms. Speier. Thank you, Madam Chair. Before beginning my 
questioning, I just want to compliment Congresswoman Graham for 
an outstanding service to this committee and to Congress, and I 
am really very disappointed that you are leaving because you 
really are the kind of member we need that is always going to 
be responsive to the needs of their constituents and to their 
responsibilities as members of the committee. So thank you very 
much for your leadership.
    Mr. Stackley, I am so disappointed in your testimony I 
can't begin to tell you. You just answered a question for the 
chair that I thought was very deceptive. Let me just read from 
a GAO [Government Accountability Office] report: ``Our past 
work has found that by virtue of using guaranty provisions as 
opposed to warranties (such as the U.S. Coast Guard generally 
uses), the Navy is responsible for paying the vast majority of 
defects.
    ``Specifically regarding the LCS, we found that for LCS 4, 
the Navy's guaranty provisions were structured such that the 
Navy paid all of the costs to correct the defects. For LCS 3, 
the shipbuilder was responsible for 30 percent of the costs of 
the first $100,000 of defects, a number the Navy surpassed just 
days after delivery. Thus, the Navy was 100 percent responsible 
for the costs of all remaining defects, for LCS 5-8, the 
shipbuilder is responsible for some portion of the first $1 
million in defects for each ship.''
    Now, I don't think you were very responsive. I am not going 
to ask you to respond. I am going to ask Ms. Mackin to clarify 
what the warranty versus guaranty provisions, how the Coast 
Guard is so different, and how for the vast majority of 
defects, it is the taxpayer picking up the tab.
    Ms. Mackin. Yes. We looked into this issue for Coast Guard 
and Navy ships. It was a pretty comprehensive review. Not just 
LCS, but other Navy ships as well, and what we found is the 
Navy does not use warranty provisions as outlined in the 
Federal Acquisition Regulation warranty the way we would think 
of a warranty. They use a guaranty clause in the contract, and 
it is subject to a limitation of liability. Those are the 
numbers you were citing. So it is negotiated in the contract. 
The limitation was zero on LCS 4. The more recent ships it is a 
million dollars. The way these contracts are structured, 
however, the government and shipbuilder, even for shipbuilder-
responsible defects, would split the cost in essence of paying 
for the fixes, up to a million dollars. After a million 
dollars, it is all on the government.
    The Coast Guard, on the other hand, for their more recent 
cutters has a pretty stringent warranty provision, kind of the 
way we would think of it, that they negotiate at the outset and 
hold their shipbuilders more accountable to fix problems.
    Ms. Speier. Thank you. So, Mr. Stackley, why is it the 
Coast Guard can get it right and the Navy can't?
    Secretary Stackley. I will review the Coast Guard warranty 
provisions, but our contract----
    Ms. Speier. You have been doing this for 30 years. Why 
haven't you looked at it before----
    Secretary Stackley. I don't look at the Coast Guard 
contracts unless it comes under my purview. The provisions that 
we have on our contract, they hold the contractor responsible, 
for what he--he is responsible regarding specifications, 
regarding performance of the systems that they deliver. And if, 
in fact, there is a deficiency, the costs go back to that 
contractor during the warranty period.
    Ms. Speier. I think that we are talking around some 
realities. The reality is the Coast Guard has figured out a way 
to do it appropriately. The Navy has basically taken the 
position that we will pay for most of the costs. And that was 
reflected in the GAO report.
    Secretary Stackley, let me ask you a question. Last week a 
similar hearing was held by our colleagues in the Senate. You 
were asked who was responsible for briefing Congress that the 
ship would cost $220 million. As we see from the chart, it is 
now costing $470 million per frame. You said you had to check 
your records. So you have had about a week. Who was responsible 
for that?
    Secretary Stackley. Yes, ma'am. Let me go back to, that was 
the 2003, 2004 timeframe. I have got to be careful about the 
term briefing because that number was briefed by everybody from 
the Chief of Naval Operations to the Assistant Secretary of the 
Navy to the program executive officer to the program manager.
    Ms. Speier. So who is it? Who was it?
    Secretary Stackley. I would start at the top of the chain 
of command.
    Ms. Speier. Well, evidently, I have a tweet from a reporter 
that suggests that it was Vern Clark.
    Secretary Stackley. I said I would start at the top of the 
chain of command, and Vern Clark was the Chief of Naval 
Operations at the time. His counterpart in terms of acquisition 
was Assistant Secretary Young. They carried forward the program 
based on what they had for affordability targets at the time.
    Ms. Speier. Okay. But I guess my point is, in your 
statement you made the case that, you know, we are really 
moving along appropriately. They are costing about the right 
amount. We are saving money. We are not saving money. They are 
costing over twice as much as they were originally intended to 
cost.
    Now, Dr. Gilmore, do you think the LCS is survivable?
    Dr. Gilmore. The admiral noted that the ship meets its 
requirements for survivability, which it does. The testing that 
we have done and that we will continue to do is indicating that 
is true. And here are what its requirements are. Its 
requirements against very modest threats, and the details are 
classified, are to exit the area, not to continue in combat, 
but to exit the area if they are attacked by modest threats. If 
they are attacked by, and hit by, more stressing threats, and 
unfortunately these threats are proliferating throughout the 
world and they are quite stressing--they are stressing for any 
ship to deal with--but if the ships are hit by these more 
stressing threats, the requirement is for an orderly abandon 
ship. And the testing that we have done and will continue to do 
is probably going to indicate that those requirements have been 
met.
    That means that the ship is not going to be able to stay in 
the battle area and conduct operations. Now, it is a challenge 
for any ship to do that, if hit by some of these threats, but 
all the other surface combatants that we have are built with 
compartmentalization, redundancy, and other features that at 
least give them much more of a chance to survive hits by some 
of these stressing threats. So that is the basis of my 
evaluation.
    The requirements were set when the vision for using these 
ships actually as articulated first by Admiral Clark--I have 
looked at his testimony before the Congress in March of 2004--
the requirements were set consistent with the vision that the 
ship would have many off-board systems that could go 
potentially over the horizon, attack targets, which would mean 
the ship could stay out of harm's way, and I am paraphrasing 
what Admiral Clark said. Unfortunately, those capabilities have 
not materialized. They may in the future. The Navy is getting 
ready to deploy with some unmanned aerial vehicles that will 
have reconnaissance capabilities. But in terms of long-range 
attack, those systems are probably a number of years away.
    In fact, many of the upgrades that the Navy has talked 
about in the past as being available either in the last decade 
or this decade are probably slipping into the middle of the 
next decade at best.
    So that is the basis of my assessment. If in the future the 
Navy is able to develop and deploy systems that enable the ship 
to stay out of the range of some of these threats, then the 
survivability assessment would change.
    Ms. Speier. So if an LCS is hit by a torpedo, what is 
survivability, that the sailors can get overboard or that they 
can exit the area?
    Dr. Gilmore. Actually I am going to have to not answer that 
directly because the details are classified. Talking about 
specific threats makes the discussion classified, so I would be 
happy to discuss that with you in the----
    Secretary Stackley. I would like to answer that. I would 
like to answer that, ma'am.
    Ms. Speier. Well, if it is classified, why should you be 
discussing it?
    Secretary Stackley. I can get into some generic discussion 
regarding survivability that might be helpful.
    Ms. Speier. All right.
    Secretary Stackley. Okay. First, Dr. Gilmore's assessment 
regarding the ship's meeting its survivability requirements is 
correct. The ship was not designed for what you call fight-
through survivability. If it takes a devastating blow, the key 
is to exit the area and ensure the crew survives. But since the 
mission is built around these mission packages that work off-
board, then it is not envisioned that the ship's ability to 
continue to operate the off-board mission packages is critical 
at that point.
    In the case of a torpedo striking the ship, the comment 
regarding compartmentalization of the ship, this ship is 
designed to the same compartmentalization standards as the rest 
of the United States Navy, and that is to be able to survive a 
blow that covers 15 percent of what is referred to as floodable 
length of the ship to provide three-compartment flooding. So 
whether it is an LCS, or whether it is a DDG-51, or whether it 
is a carrier, that compartmentalization standard is the same. 
The fact that it is smaller, it has a bigger impact on a 
smaller ship. But a compartmentation requirement in the event 
that a torpedo, if it breaches more than three compartments, 
then that crew is going to have to abandon that ship.
    Ms. Speier. When I was on the----
    Dr. Gilmore. Could I say something----
    Ms. Speier. Yes, Dr. Gilmore.
    Dr. Gilmore. The ship still doesn't have all of the 
redundancy----
    Mrs. Hartzler. Excuse me, Dr. Gilmore. I just want to let 
everyone know we are voting. There is 9 minutes to go. So if we 
could wrap up this question, then what I would like to do is 
just to pause our hearing, let us go vote. It should be about a 
half hour in voting, and then reconvene, because we have a 
second vote series later on. So if that would be good. So if 
you would finish the question.
    Dr. Gilmore. I will just very briefly say----
    Mrs. Hartzler. Sure.
    Dr. Gilmore. The ship doesn't have the redundancy of the 
other combatants. That is because it is a small ship. It also 
has a very small crew, which is very important to 
recoverability. So the other ships have a larger crew and more 
redundancy, and if they are hit, that means they have a better 
opportunity to survive. There is no guarantee of survival when 
hit by any of these threats. So there is in my view, as I have 
explained in multiple reports in detail, a significant 
difference in survivability between these ships and all the 
other surface combatants.
    Mrs. Hartzler. Great. Thank you very much. So, we will 
stand in recess and reconvene as soon as possible.
    [Recess.]
    Mrs. Hartzler. This hearing will now reconvene. Thank you 
for your patience while we voted. I appreciate that very much. 
I would like to go to Mr. Scott.
    Mr. Scott. Thank you, Madam Chair. One of the questions I 
had has already been answered, and that was for Mr. Stackley, 
and that is if the Coast Guard is doing a better job or has 
better provisions in their contracts, we should at least look 
at that and see if that is something that we can incorporate. I 
know you have said that you all would do that, and I appreciate 
that.
    I guess as I listen to this, I think back to the quote that 
nothing will ever be attempted if all possible objections must 
first be overcome. And regardless of the weapons system or the 
branch, if we are talking about the Army, there is a reason we 
have Strykers, and there is a reason we have M1 Abrams, and the 
Stryker cannot handle the same type of strike from another 
weapons system that the Abrams can. But the Abrams can't do all 
of the things that the Stryker can. And if we are looking for a 
light, nimble craft, then we have just got to accept the fact 
that you can't build it as thick as you are going to build some 
of our other weapons systems. It is just part of the tradeoff. 
We have this tradeoff with every weapons system that we have. 
And so I just, nimble and fast, in and of itself, and quantity 
in and of itself, I believe are important in winning the 
battle.
    I do have a question, Ms. Mackin. As you talk about the 
cost per ship, do you consider the development cost a variable 
cost or a fixed cost?
    Ms. Mackin. When we look at the cost per ship, there is 
several different ways to look at it. So there is a cost cap 
for this program, which is somewhat generous. We usually look 
at the selected acquisition report, the unit cost as reported 
by DOD----
    Mr. Scott. But do you consider the research and development 
[R&D] of the system a fixed cost or a variable cost?
    Ms. Mackin. I think that would depend on the system. Maybe 
somebody else can weigh in with more detail on that.
    Mr. Scott. Well, research and development is a fixed cost. 
It doesn't matter if you build 1 or 50----
    Ms. Mackin. I think one issue for this program and other 
programs is that some of the systems on this ship may be R&D 
funded but not by the Navy. Maybe another part of the Navy that 
is funding the system that will eventually go on the ship. So 
it is hard sometimes to totally capture the entire cost of the 
ship. But, again, we go with what is reported to Congress.
    Mr. Scott. But the same type of analysis is what led to the 
cancellation of the F-22, when the per unit cost of the F-22, 
when the project was cancelled, was significantly lower than 
the cost per unit that was being reported in reports like this. 
Because the research and development costs are already sunk. It 
doesn't matter if you build 1 or if you build 1,001.
    Ms. Mackin. Quite frankly, cost is not our main concern 
with this program right now. After the rebaseline, I do think 
they have gotten costs more or less under control. The key 
concern we have is the testing, the lack of completed testing, 
while they have continued to buy the seaframes and the mission 
packages. There are still significant concerns. And, again, the 
frigate is going to be based on these same seaframes that have 
reliability issues. So I would characterize that as our main 
concern at this point.
    Mr. Scott. Well, a lot is said about cost from the people 
who want to cancel the program. So you are telling me the cost 
is not the primary concern----
    Ms. Mackin. The cost has doubled since the initial 
estimate, as was discussed earlier. But let's look at what is 
happening right now. After the restructuring, I think they have 
gotten costs more or less under control. That is not our main 
concern. Schedules are late, and the capabilities aren't there, 
and the testing hasn't been completed, would be how I would 
characterize our main concerns at this point.
    Mr. Scott. Admiral, what are we giving up? What are we 
accepting in additional risk, as a nation, when we move from 52 
ships to 40 ships? And what is your understanding of any 
studies that were done with OSD [Office of the Secretary of 
Defense] to form any type of analysis foundation for the 
quantity reduction to the LCS program?
    Admiral Rowden. Thank you, sir. I will let Secretary 
Stackley discuss the analysis. But, I mean, clearly when we 
reduce the number of ships from 52 to 40, we are taking risk in 
the capacity that we want to have forward. And so that will 
result in more water under the keels of the ships that we have. 
It will result in more wear and tear on those ships. It will 
result in more wear and tear on the crew and a greater time 
deployed for the same amount of availability forward. And so 
that is risk that has to be weighed and has to be accepted as 
we attempt to fulfill the requirements of the combatant 
commanders.
    Mr. Scott. My time is expired, but as I understand it there 
was no analytical foundation for the reduction. That this was 
simply a budget-driven decision. Is that correct?
    Admiral Rowden. That is my understanding.
    Mr. Scott. Thank you.
    Mrs. Hartzler. Thank you. Ms. Graham.
    Ms. Graham. Thank you, Madam Chairwoman, and I really 
appreciate your kind remarks earlier, thank you so much, and 
Jackie, thank you as well.
    As a representative of a State with nearly 100 vendors that 
undergird the LCS program, I am very grateful to have an 
opportunity to talk with you all today. This is my actual last 
day here on the Hill, so it is very special to be able to be 
with you all. I would first like to thank the House Armed 
Services Committee for fighting for the Graham amendment in 
this year's NDAA [National Defense Authorization Act], which 
would express the sense of Congress on the role of Panama City, 
Florida, to the Armed Forces of the United States.
    I would also like to thank the conferees who noted that 
Panama City has played a long role and an important role in the 
development and support of the United States Armed Forces. 
This, I hope, is just the first step in recognizing Panama City 
with the ultimate hope, and I have talked to the Secretary of 
the Navy about this--that the Navy will name a future LCS after 
Panama City, a much deserving community.
    So now I would like to direct a question to Secretary 
Stackley. As you know, the United States shipbuilding capacity 
had been in steady decline for years. As many have noted, 
shipbuilding is not a faucet that can be turned on and off. 
Indeed, once lost, it can take years to recapitalize a vendor 
base and labor force necessary to build our Navy's warships. 
So, Secretary Stackley, you have suggested that a block buy 
strategy enables a shipbuilder to go out to its vendor base and 
secure long-term agreements to achieve the best pricing. Can 
you please expand on this and comment on how such a strategy 
may contribute to maximum efficiency and capacity in our 
industrial base as well as best price for the taxpayers?
    Secretary Stackley. Yes, ma'am. Thanks for the question. 
First, you described the level of ship production that we have 
going on in the country, and it is below capacity, and it is, 
frankly, below where we need it to be in the long-term in terms 
of being able to sustain the force structure that the Navy 
needs. And there are three critical elements to that. First is 
the shipbuilders themselves, and shipyards are capital-
intensive and require significant investment in order to be 
able to produce these extraordinarily complex, large warships. 
And so in order to support the investment that is required, you 
have to have throughput in terms of ships. I mean, it is just 
fundamental.
    And so if production drops to an unsustainable level--
unsustainable meaning they can't invest in those facilities--
then those facilities are going to ultimately shutter. That is 
one part.
    The second part is skilled labor. Shipbuilding requires 
unique skills in terms of shipfitters, pipefitters. We have 
nuclear-trained mechanics, production control in the shipyard, 
very skilled set of labor. And what we can't afford to have 
happen is a sawtooth effect in terms of hiring and firing at 
our shipyards.
    One, we will be continually dealing with learning in terms 
of the labor themselves. And, two, we will lose the skilled 
labor. They will go to other areas where there is more stable 
employment, and that will come back to us in terms of cost and 
quality. So we have to maintain those two key elements in our 
industrial base, and it is particularly fragile at a time when 
your shipbuilding rates are below where you believe they need 
to be.
    And then the third is the vendor base itself. We can't lose 
sight of the vendors that support our shipyards because at low 
rates, quite often those vendors are uniquely supporting our 
shipbuilding, and at lower rates, they are fragile. So we have 
to be careful that we don't break the vendor base and have that 
come back to us again in terms of cost and quality. That is all 
on the industrial base side.
    On the requirement side, we have to make sure that we are 
building our ships at a rate to support the force structure 
that we have laid out in terms of our 30-year plan which is 
backed up by the maritime strategy in support of the national 
military strategy. And so if you look at our long-term plan, we 
are below where we need to be. If you look at what we have done 
over the last 8 years, it has been to try to increase our 
shipbuilding rates to support that long-term plan. And if you 
are going to do that when you are starting at a fragile base, 
those long-term agreements with the shipbuilders to incentivize 
them to invest and with the vendor base to incentivize them to 
basically support the shipbuilders through the material flow 
are absolutely critical.
    So in the Department of the Navy--I will stand by the 
record over the last 8 years--whether it is the LCS program 
across two shipbuilders, the Virginia program across two 
shipbuilders, the DDG-51 program across two shipbuilders, the 
T-AO(X) program that we just awarded, with one shipbuilder--
program by program we have done our best to be able to line up, 
whether it is a multiyear or a block buy, a long-term run of 
production to stabilize performance, to attract, retain the 
skilled workforce that we need, and to reduce cost from the 
vendor base right to the shipbuilder because that comes back to 
us in terms of the government and the taxpayer. And that allows 
us to, in fact, plow those funds back into whether it is 
shipbuilding or aviation or whatever it is that is the priority 
at the time to support our national security strategy.
    Ms. Graham. Thank you for that very thorough answer. I 
really appreciate it, and I am out of time. I want to end with 
this. Please continue to feel my spirit and my commitment and 
my thanks for all that you all do. And I hope that spirit will 
one day result in an LCS being named after Panama City.
    And I will let that be my final comment, and I yield back 
to the chairwoman. Thank you.
    Mrs. Hartzler. Thank you, Representative Graham. 
Representative Byrne.
    Mr. Byrne. Thank you. As a member of the Seapower 
Subcommittee, I am particularly glad to be here today.
    Admiral, Mr. Stackley, thank you for your years of 
experience, for the expertise and professionalism you bring to 
your jobs. It helps us do our jobs to have you do what you do 
and give us such great information. Admiral, you stated your 
years of experience. You can never replace that. We can sit 
here and read pieces of paper and listen to you, but your 
experience really speaks volumes to us, so thank you for that.
    Admiral, you said that there is a significant need in the 
Western Pacific and the Mediterranean for the LCS. You said 
that the fleet commanders are asking for more LCSes and to get 
them there more quickly, which I heard from Admiral Harris when 
I was out in Hawaii at the RIMPAC [Rim of the Pacific] 
exercise. I asked him, what is the message, Admiral? He said 
get more of them to me. Get them to me as quickly as you 
possibly can. You also stated that you are 100 percent 
confident in the LCS and that you have seen the need for the 
capability it currently has and that you are optimistic of the 
added capabilities as the program continues to mature. And you 
stated that there is growing threats in the world and a 
demonstrated need for both the LCS and its transition to the 
frigate.
    I want to make sure I have summarized what you have told us 
today. Did I get that right?
    Admiral Rowden. Yes, sir, I think you nailed it.
    Mr. Byrne. Good. Mr. Stackley, you said that the LCS 
acquisition program has been steady since 2008, and since then 
has been under the cost cap. You also explained that the 
casualties of the LCS have been addressed and that there are no 
systemic or recurring issues with these casualties. You also 
said the Navy continues to have a need for 52 small surface 
combatants, and, in fact, that number may increase. And the 
reason to go down to 40 LCSes was driven by the budget and not 
by any sort of operational study.
    So I want to make sure that you continue to believe, and 
the Navy continues to believe, you need 52 of these small 
surface combatants, these LCSes to frigates?
    Have I summarized your statements correctly?
    Secretary Stackley. Yes, sir. As I described earlier, the 
52 number, I don't anticipate any downward change to that 
number when the updated Force Structure Assessment comes back 
from the CNO with the next budget.
    I want to make a minor correction, but an important 
correction. In terms of stabilizing the program, I would tag 
that to the 2010 timeframe, and that is when we basically came 
over to Congress with the block buy approach, and that is the 
environment that we are executing in today.
    The other comment regarding the casualties, those specific 
casualties that were identified that we are tackling, those by 
themselves, not systemic, we are correcting those and we are 
going beyond that though. Naval Sea Systems Command is doing a 
comprehensive review of propulsion systems for both ship types 
to ensure that we don't run into further unanticipated 
casualties that could have been corrected ahead of time.
    Mr. Byrne. Thank you. I have been on, I think, three of 
these ships at dock and one at sea. And when I go on them, 
Admiral, I talk to not just to the officers on the ships, I 
talk to the sailors, because if you want to know what is really 
happening, you talk to the sailors. You know that better than I 
do. And what I have heard uniformly from the officers and 
sailors on these LCSes, is that they love them. They are proud 
to be serving on them, and they are having fun operating the 
ships. I know you have been on them. I know you have talked to 
a lot of these officers and sailors. What are you hearing from 
the officers and sailors that are actually serving on the 
LCSes?
    Admiral Rowden. Sir, I hear a lot of things, clearly, and I 
think that there are some things that we need to work on, but 
those comments--and we take those onboard, and we go and we 
attack them. From my experiences, not only on the LCSes both on 
the East and West Coast, whether it is the Freedom variant or 
the Independence variant, the young men and women that are 
serving on these ships, they are excited for the mission. They 
are excited for the mission. They are excited for the 
opportunities that these ships present.
    When I talk to the young men and women that have come back 
from deployment, the varied missions that they are able to 
accomplish, the engagement that they are allowed to execute, it 
gives them a tremendous sense of pride. They also are 
monumentally innovative, and so they are constantly coming up 
with new ideas and new ways as we think about the future of 
these ships in order to be able to fully utilize and fully get 
the value out of these ships.
    They talk about the modularity. You know, one of the things 
that I think is important is that when we go to modernize a 
guided-missile destroyer, we have to take that ship offline for 
a significant period of time; but they understand that we can 
modernize the module ashore and in a very short period of time 
have a fully modernized combat system in order to be able to go 
put it back out to sea, get the crew trained up, and away we 
go.
    And so the capacity and the capability that these ships 
bring, the opportunities that they bring to contribute to three 
very important missions, and the opportunities to provide the 
presence that sometimes we just can't get because the guided-
missile destroyers, the cruisers, the submarines, and carriers, 
are off doing other things. That is what really gets them fired 
up.
    Mr. Byrne. Well, thank you for that, and thank you for your 
service, sir. And I yield back.
    Mrs. Hartzler. Thank you. A few more questions here. Dr. 
Gilmore, what specific LCS platform characteristics and design 
do you believe that the Navy will need to address in its design 
for the frigate in order for your office to deem the frigate 
operationally suitable and effective?
    Dr. Gilmore. Well, the most important problem, set of 
problems, that will have to be addressed, are associated with 
the continuing reliability problems of many of the ships' 
systems, and many of those may end up being the same on the 
frigate, although Mr. Stackley will know more about that than I 
do because he is the one who is involved in developing the 
detailed design, but the initial assumption was that many of 
those would be the same. And there are continuing reliability 
problems with those systems. And if those problems are not 
fixed and addressed, it will be hard to, in fact, probably 
impossible to say that the frigate would be suitable, but I 
assume the Navy is looking at that.
    And then, of course, in the testing that we have done so 
far, there are problems with the guns, and some of the guns may 
end up being the same in terms of the ability of the crews to 
use them consistently to accomplish the missions that they are 
supposed to accomplish. They can in some instances accomplish 
those missions, but it turns out to be very difficult.
    But the other thing I have to say about combat missions is 
that we have only done a very limited amount of testing so far 
in that regard, very limited testing of the surface warfare 
package, and then truncated testing of the mine countermeasures 
package. Of course, the mine countermeasures package isn't at 
issue for the frigate.
    So at this point what I would say is with regard to the 
problems that might be encountered with the combat systems, the 
anti-submarine warfare systems, and the augmented surface 
warfare package on the frigate, we will have to see how that 
goes. The Navy is in development of those systems, but the Navy 
should devote a lot of attention, and I think Mr. Stackley has 
indicated they are devoting a lot of attention to the 
continuing reliability problems with the systems on the ships.
    Mrs. Hartzler. Thank you. Mr. Stackley, I wanted to ask you 
about that because in your testimony you talked about the 
packages that they include, and you said they will deliver when 
available, and they are ready to deploy. They have successfully 
fielded the surface warfare. They were late due to budget and 
technological challenges. I know you went in depth and 
explained about the mine countermeasures challenges and what 
you are doing with that regard. But I was a little surprised to 
hear you talk about how these other packages are ready.
    Can you give a little further assessment on that? Are they 
ready? And it sounds like you are putting old systems on them 
and bringing on new ones as they come about, or what is the 
status of the packages?
    Secretary Stackley. Yes, ma'am. Thanks for the question. I 
will try to be real clear here. We launched the program with 
three mission packages as the targeted initial round of 
capabilities as we delivered the ship. Across those mission 
packages, certain subsystems were mature and certain subsystems 
were going through development. And as I indicated in my 
opening statement, we are delivering mission package capability 
late. And the lateness ties to the extended development of 
certain of those subsystems. However, when one is ready, when 
it is mature, we are bringing it to the ship, so that as those 
capabilities mature and as these ships deploy, you are seeing 
increasing capability on board.
    And, in fact, I would argue that the approach that we are 
taking with the LCS regarding bringing mature capability to the 
ship in an incremental fashion is exactly what you all have 
outlined for the Department of Defense to do in the 2017 NDAA. 
I think if you take that, what you have outlined in terms of 
practice for the Department, and you line that up with the LCS 
program, that is the approach that we are taking here. The 
reason that we are having this hearing frankly is, one of the 
reasons, is the time that it has taken to complete the 
development and testing for some of these subsystems. We spend 
a lot of time talking about the RMMV, for example, but there 
are other examples where we have had to actually cancel parts 
of the mission packages because the development was not getting 
there and then find an alternative.
    The beauty is that when that decision is made, we don't 
have to go in and do a significant redesign to the ship because 
the ship was designed in a modular fashion, and we can bring 
these alternatives to the ship with a far less intrusive 
integration onboard. And I can walk through some of those 
examples, but I think it is instructive in terms of the benefit 
of the modular approach.
    Mrs. Hartzler. I think that is a good point because we have 
talked about open architecture and some of those things in 
acquisition reform.
    Just a question. Curious about the contracting, the 
subcontractors, so I got a list of them and looked at them 
because this has been problematic as far as the delay. Are they 
penalized for not delivering on time, or how is a contract set 
up initially in that regard?
    Secretary Stackley. Yes, ma'am. Bottom line, most of these 
developmental systems are under a cost-plus R&D contract where 
the terms and conditions of the contract are we take on 
responsibility for cost in a cost-plus environment, recognizing 
that in many cases we are looking for new invention and 
discovery. And so we assume the responsibility in a cost-plus 
environment for the cost, but the contractor loses if it is a 
cost overrun or delays, they are going to lose the fee that 
goes with the work. And ultimately they will lose the contract.
    I mean, RMMV was under development with Lockheed Martin. 
They had their eyes on the production contract and when we 
cancelled, they didn't just lose the fee on the RMMV 
development, but they lost the production that was going to 
come with it.
    Mrs. Hartzler. Very good. And I want to go to other members 
too, but I do want to ask Mr. O'Rourke a question. You have 
waited patiently, and you are a known expert on these issues on 
the Hill.
    So GAO has previously indicated that Congress limits their 
oversight by authorizing a block buy. A few questions. How has 
the previous block buy been used to manage cost growth, and is 
Congress able to perform oversight during the block buy? And, 
third, what are the implications of Congress not approving the 
next block buy for LCS?
    Mr. O'Rourke. In terms of conducting oversight during the 
period of a block buy, we have actually been through a test of 
that over the last several years as we have executed the 
current block buy contracts. There are many aspects to 
congressional oversight. One is what we are doing right now, 
which is asking questions during hearings. And there has been 
quite a lot of that over the past several years. The LCS has 
been a recurrent topic of questioning, sometimes quite 
intensive or extensive, at the annual Navy budget review 
hearings.
    I would venture that most of the annual Navy posture and 
budget review hearings have at one point or another discussed 
the LCS, so there has been a lot of Q&A at the hearings. 
Another aspect of oversight are legislative provisions and 
there have been a lot of----
    Mrs. Hartzler. If I could ask you, I think maybe you didn't 
hear the question. What I am looking for, how has a block buy 
been used to manage cost growth not oversight? So how has a 
block buy managed cost growth, and what are the implications 
for us as Congress if we don't approve a block buy?
    Mr. O'Rourke. Right I was going to the----
    Mrs. Hartzler. That is what we are looking at so----
    Mr. O'Rourke. Right. I had picked out the middle part of 
your question first.
    Mrs. Hartzler. Yeah there was a question----
    Mr. O'Rourke. But let me return to the first part, which 
is, if you would say that again, I want to make sure?
    Mrs. Hartzler. Sure. How has a previous block buy been used 
to manage cost growth?
    Mr. O'Rourke. Okay. I think it is important to get into the 
record that most of the cost growth on the procurement cost of 
the seaframes occurred prior to the block buys. Once the 
program was put under the block buy contracts, there has been 
only minor growth within that contract, some of which has been 
paid by the Navy. But the majority of the increase in the cost 
of the ships occurred during the period of annual contracting 
on the first four ships.
    Mrs. Hartzler. So you would say block buy locks in the 
price and helps save money?
    Mr. O'Rourke. It stabilized the costs and put the program 
into an environment where the costs have been not one that 
assembled a record of cost growth of anything like what we saw 
on the first four ships. Furthermore, by doing a block buy 
contract, you are getting the kinds of savings that are 
possible under a block buy contract compared to annual 
contracting. And those savings for the kind of block buy 
contract we are looking at here, which did not include upfront 
batch orders of components, could be upwards of 5 percent, so 
if we had been in an annual contracting environment, the ships 
might have been that much more expensive as well. A third point 
on this is that----
    Mrs. Hartzler. Very quickly.
    Mr. O'Rourke. These block buy contracts are fixed price 
incentive contracts, and so that tends to limit the 
government's exposure to the amount of cost growth that does 
occur during the contract. That was the first part of your 
question.
    Mrs. Hartzler. Makes sense. Thank you very much. 
Representative Speier.
    Ms. Speier. Thank you. Let's talk more about block buys, 
because my understanding is that, Secretary Stackley, you have 
already put out an RFP [request for proposal] that presupposes 
a block buy, even though you don't have authorization yet from 
Congress. Is that correct?
    Secretary Stackley. What we have put out an RFP for is the 
2017 ships with an option for a block buy where we will be 
coming back to the Congress with the 2018 budget for 
authorization for the block buy.
    Ms. Speier. But the shipbuilders are even saying that a 
block buy at this time won't afford them the necessary time for 
the completion of design.
    Secretary Stackley. We are doing the design today with the 
shipbuilder. We won't award the contract until we have 
completed a design review so that we, the government, are 
satisfied based on their presentation of the design information 
that will inform their proposal for the frigate.
    Ms. Speier. Ms. Mackin, what are the downsides of a block 
buy?
    Ms. Mackin. You know, it could have advantages for cost 
control, number one.
    Ms. Speier. Which Mr. O'Rourke has talked about.
    Ms. Mackin. Right. The disadvantages in our view, is that, 
as I mentioned in my opening remarks, the program can be 
considered, quote-unquote, ``locked in,'' so that any attempt 
to adjust the procurement pace, if Congress has concerns about 
the program, they want to make some changes, DOD has 
consistently come back and said, well, the pricing will 
increase then.
    So you are not locked in. I mean, you can make changes, but 
there is that risk that, oh, well, the contractors, we had this 
deal, and now they are going to raise their prices. So, I think 
it needs to be carefully considered if the block buy proposal 
for the frigate right now, which will be based initially on LCS 
prices, is the best strategy.
    Ms. Speier. Secretary Stackley, and you can provide this 
for the record if you don't have it off the top of your head, I 
want to know--and I would like for you to send it to the 
committee and also to my personal office--how much money we 
have spent on repairs to the LCS fleet to date, how much has 
the government spent, and how much has the shipbuilder spent.
    Secretary Stackley. Yes, ma'am. I will submit that for the 
record.
    [The information referred to was not available at the time 
of printing.]
    Secretary Stackley. Now, I am going to ask for 
clarification because, for example, the LCS 1 has been in the 
fleet for about 8 years, the LCS 2 for about 7 years; and so 
when you say how much money for repairs, we will come back with 
a--it will probably be a large dollar amount for repairs, but 
you understand that most repair, the predominance of the repair 
that we do in operations is because of the wear and tear that 
we put on the ships by operating them. For clarification, are 
you looking for contractor-responsible deficiencies?
    Ms. Speier. I want all repairs, and you can give it to us 
by date so we can look at the date the ship was commissioned 
and the date of the repairs so we can make that kind of 
assessment as to whether it is just wear and tear on the ship 
or whether it is something relative to a newly commissioned 
ship that has a series of problems, as many of these have 
already had.
    We will make that determination. If you just provide to us 
the dates of the repairs and how much they cost and who paid 
for them, that would be sufficient.
    Secretary Stackley. Yes, ma'am.
    Ms. Speier. And then I was on the LCS 4 on its very first 
trip, and I talked to the commander at the time who said they 
were having trouble with the design of the ship because they 
couldn't see over the hull. Now they left Cartagena and came 
back to Coronado to be christened. And as they went through the 
Panama Canal, the hull got damaged when pieces of the lock 
penetrated the hull. I would like again, if you don't have that 
figure off the top of your head, to provide it to me and the 
committee how much that cost to repair.
    Because in my conversations with the commander, I said this 
seems like a serious problem, and it seems like you need 
cameras or mirrors or something to be able to see over the 
hull. And he said, well, we won't be able to get that until it 
goes back into dry dock in 2 years. And literally within weeks, 
they had damaged the hull. So if you would provide that to me, 
I would appreciate it.
    Secretary Stackley. Yes, ma'am.
    [The information referred can be found in the Appendix on 
page 163.]
    Ms. Speier. Back to you, Dr. Gilmore, the testing of the 
modules for the LCS, can you go over that? How many of them--
according to the Secretary there is three now. How many of them 
have been fully tested?
    Dr. Gilmore. The only mission module that has been 
partially tested consistent with the--you know, there is a 
series of incremental requirements associated with the 
increments of each package, so we have tested the Increment 2 
surface warfare package against its requirements, which are 
reduced relative to the requirements for surface warfare that 
the Navy ultimately hopes to meet with the fully capable 
surface warfare package which will come in the next several 
years, probably middle of the next decade, perhaps a little 
sooner.
    So what we have done so far in terms of operational testing 
is to test both LCS variants equipped with the Increment 2 
surface warfare package against the Navy's requirements for 
surface warfare for the Increment 2 package. We had initiated 
what is called the technical evaluation last year, which was of 
the mine countermeasures package, which was the lead-up to what 
was supposed to have happened in operational testing. But given 
what happened in the technical evaluation testing, the Navy 
made the decision not to go to operational testing, 
commissioned an independent review team, and ultimately decided 
to cancel the RMS [Remote Minehunting System] program and make 
other changes to the mine countermeasures program. And we now 
have in place a plan for testing that future mine 
countermeasures package, which will be different from what the 
Navy had been thinking, at least in some respects, but that 
won't take place for several years.
    So just to sum up, what we have done so far in terms of 
operational testing is operational testing of the Increment 2 
surface warfare package. There has been a lot of developmental 
testing done on elements of the other packages. For example, 
there has been developmental testing done of a variable depth 
sonar, not the one that the Navy has recently contracted for, 
but it was a foreign source variable depth sonar. There was 
developmental testing done of that. I forget exactly when that 
was, a year or two ago, and that was very promising. But it was 
done under conditions that weren't operationally realistic 
because, you know, the crews doing the testing actually were 
engineers, and the submarine that they were using the sonar to 
look for, the operators knew where it was, and the submarine 
wasn't evading.
    Now having said all of that, the test results were 
nevertheless very promising, and there have been lots of other 
developmental testing that has been done and that the Navy 
continues to do. But I am the operational test guy, and what we 
have done is what I said.
    Ms. Speier. So if I understand you correctly, this whole 
concept of having modules that you could interchange on the 
ship, making it more flexible, has been tabled, and we are now 
doing single modules for the ships, and only one has been 
operationally tested?
    Dr. Gilmore. Well, the original concept was that different 
modules could be interchanged among different ships, and that 
the ship crews and the module crews could be separate and 
interchangeable.
    My understanding is that the Navy as a result of another 
review in which Admiral Rowden was involved, has decided that 
they are going to merge the ship crews and the module crews on 
LCS and pretty much dedicate given modules to given ships and 
crews. And based on what we have seen, we think that is a good 
decision, so the Navy is giving up on some of the original 
vision based on what it has learned as we have done operational 
and developmental testing.
    Now, you still will be able to pull a module off a ship. 
The points have been made about, well, you can modernize the 
module and not take the entire ship down. So suppose you want 
to implement Increment 4 of the surface warfare package, you 
can take those modules off the ships. You can take the existing 
surface warfare modules off the ships and replace them with 
another module for another warfare area, and the ships aren't 
completely down and going through a lot of construction and 
changes in a dry dock.
    So that part of the concept is still alive, but the Navy 
has modified its thinking about how it is going to implement 
modularity on these ships going forward.
    Admiral Rowden. Ma'am, if I may provide some clarification.
    Ms. Speier. Sure.
    Admiral Rowden. Yes ma'am. So, I led the review team that 
came up with the recommendation to think differently about the 
modularity of these ships, and in the execution of the review, 
we were concentrating on three things really: simplification, 
stabilization, and ownership. My experience in going to sea is 
that the crew has to own the mission, and my concern was as we 
were looking at the modularity and shifting the mission over 
perhaps the course of a weekend, you are taking the vast 
majority of the crew and you are trying to shift them from 
hunting submarines on Thursday to hunting mines on Tuesday, and 
that just didn't make sense to me from the operational 
perspective. I still value and wanted to fully utilize the 
modularity of the ships for the reasons that Dr. Gilmore points 
out. We can modernize it much more effectively and much more 
rapidly.
    But I think it is important to understand that while we 
will single up crews and we will single up ships dedicated to a 
specific mission, if the need arises, we also have those crews 
given the similarity between the ships, or the identical 
between the ships, if we need to shift ships from hunting mines 
to hunting submarines, we have crews available, and we have 
modules available to do that if we have to expand that 
capacity.
    So we will have divisions dedicated to specific missions, 
and we will have crews dedicated to specific missions, but we 
can still utilize the modularity to expand our capacity should 
we have to do that in a time of crisis.
    Ms. Speier. Okay. But we started off with a concept. We 
built eight ships under that concept. We have got another 12 
ships in development, and we keep changing our design 
expectations or assessments. And it just seems to me that we 
should design and then build because then we built things that 
aren't adequate to do what we want them to do.
    Let me ask you this, Secretary Stackley, and just one more 
question after that, Madam Chair. It is my understanding that 
because we didn't have a U.S.-based or U.S. Navy capability, a 
repair technician was flown to Florida from Australia in 2015 
to make a 90-minute repair but essentially delaying operations 
by 4 days. How many other pieces of equipment could require 
similar repairs and/or delays, and has this happened more than 
once?
    Secretary Stackley. I will have to get back to you on the 
record in that specific instance and see if there are other 
instances. But I will describe that for every ship in our Navy, 
if we have to, and we do, we reach around the world to get the 
right tech rep there to the ship to provide the technical 
support that it will need in timely manner. And when we have 
original equipment manufacturers that are located overseas, 
then in fact we do on occasion have to go overseas to get that 
repair assist.
    Ms. Speier. All right. So if you would just provide to us 
how many times have we had to utilize resources that were not 
available within the Navy on these specific ships?
    Secretary Stackley. Yes, ma'am.
    [The information referred to was not available at the time 
of printing.]
    Ms. Speier. Okay. And then finally one last question. If we 
are now taking the LCS and turning it into a frigate, wouldn't 
we be better served to design a frigate that meets what our 
needs are? We have always had problems with the LCS because we 
were bumping up against the weight restriction. We have always 
had problems with the fact that there is not adequate number of 
crew on the ship, and we have a hull that is made out of 
aluminum that gets pierced easily and has been damaged in a 
number of settings. It seems to me that maybe we should go back 
to the drawing board and build a frigate that we want as 
opposed to just superimposing it on an LCS frame that appears 
to have many problems.
    Secretary Stackley. Yes, ma'am. Thanks for the question. 
Back in the 2014 timeframe, we spent a year reviewing design 
alternatives for this frigate, and we worked with the fleet. We 
worked across the design community. We worked with the Joint 
Staff. We worked with the CNO staff. And we reviewed existing 
designs, U.S. and foreign frigate designs, as well as 
considered a clean sheet. So, in fact, we did consider a clean 
sheet.
    We considered other existing designs, other existing 
designs as parent designs that could be modified, and included 
in that was the LCS itself. Reviewed all those alternatives, 
looked at the range of capabilities. The fleet weighed in in 
terms of their priorities in terms of the capabilities. Had to 
consider the missions that the ship would perform in, and had 
to consider things like cost and maturity and risk.
    And out of all that and that review that was conducted with 
OSD, with the Joint Staff, and we invited review by committee 
staffs as well, out of all of that, we landed on the proposal 
that came across to Congress last year and which we are 
continuing to discuss, which is the modified LCS, using the 
existing ASW and surface warfare capabilities that we either 
have or are developing to reduce the risk to first and foremost 
provide the capability that the fleet has prioritized, reduce 
the risk in terms of technical time and cost, and ensure that 
when we make a commitment to the Congress in terms of this 
frigate, this capability, this cost, that we are not bringing a 
lot of risk to the table and have a repeat of what we just 
experienced on the LCS at the beginning of this program. We are 
trying to leverage. It goes back to my comment regarding the 
2017 NDAA----
    Ms. Speier. All right. Ms. Mackin, could you just respond 
to that as well?
    Ms. Mackin. We also looked at the study. We looked at how 
the study was done. The study team did a pretty good job given 
a very limited time that they had. They did consider existing 
design, modification of existing new designs, and a major and 
minor modified LCS. As I mentioned earlier, the minor modified 
LCS, which is now the frigate, was the least capable option 
that the study team assessed. It did not meet all the fleet's 
needs, everything that they wanted.
    Cost was a big driver in deciding to go with the minor 
modified LCS, but another big driver was that they didn't want 
to disrupt the workload at the two existing LCS shipyards, so 
that was also a factor in addition to cost, and what we have 
now is the frigate.
    Ms. Speier. But the actual production is not jeopardized 
until 2021?
    Ms. Mackin. That is right. And even the study team noted 
that the current workload, even at that time they were doing 
their work, was taking both yards into 2021. So as I mentioned, 
there is no schedule imperative right now to get the frigate 
into the pipeline for industrial base concerns.
    Ms. Speier. So for the record, of everything that was 
studied, this was the least attractive alternative that was, 
indeed, selected? Is that what you just said?
    Ms. Mackin. It was the least capable option.
    Secretary Stackley. I would not agree with that, for the 
record, ma'am.
    Ms. Speier. All right. Now----
    Secretary Stackley. For the record, and I would, rather 
than have this be a debate at this hearing, that you invite 
your staff or the members to review, we will brief, we will go 
through the extensive review that was done of the alternatives.
    And for the record, the disruption to the shipbuilders, 
that is important, but the decisionmakers, and that included 
the CNO first and foremost, and the CNO first and foremost is 
less concerned about disruption to the shipbuilders and more 
concerned about delivering capabilities to the fleet. And that 
was the priority that he placed in terms of the ultimate 
recommendation that went forth to the Secretary.
    Ms. Speier. Well Mr. Stackley, I do not want to engage in a 
discussion on this right now, but I think in the end, for all 
of us, what is most important is, one, that our seamen are safe 
and secure at sea and that they can survive and that the ship 
can survive.
    And, two, that we build competent, capable ships, and, 
three, that the costs be known and that we are prudent in 
making sure that we are not paying for pigs in the poke. And 
that we are not providing sweetheart deals to the shipbuilders 
for not providing us ships at the outset that are capable of 
doing the job that we contracted for, and that is why that 
warranty/guaranty issue must be addressed.
    With that, I yield back.
    Secretary Stackley. I 100 percent concur, ma'am.
    Mrs. Hartzler. Very good. Mr. Byrne.
    Mr. Byrne. A couple of follow-up questions. Have we had 
other classes of ships that have moved through the Panama Canal 
that have had some sort of damage as they have gone through?
    Admiral Rowden. Sir, I can't think of any specific 
instances at this time. However, I will take that for the 
record; and if that, in fact, has occurred, I will get that 
back to you, sir.
    [The information referred can be found in the Appendix on 
page 163.]
    Mr. Byrne. When the ship is going through the Panama 
Canal--I have watched commercial ships go through the canal, 
and the crew is still on board the ship, but the Panama Canal 
personnel are actually operating the transit through the locks. 
Is that true with U.S. Navy ships?
    Admiral Rowden. Yes, sir, that is.
    Mr. Byrne. So if there has been damage as it is going 
through the locks, it is really not our personnel that has 
caused it. It has been caused by the people that work for the 
Panama Canal?
    Admiral Rowden. That is correct, sir. And specifically with 
the latest damage that occurred on the ship, when we took the 
first ship through and there was some damage associated with 
it, we sent a team down to the Panama Canal to talk to them 
about how we needed to take these ships through the canal, the 
modifications that needed to be made to the way they hook the 
lines up and pull the ship through the canal.
    Unfortunately, and we discussed this at length with how 
they were going to do it, unfortunately in the most recent 
transit, that was not executed. We have gone back to them, and 
we are going to get it squared away in the future, but we know 
how to get the ships through the canal safely, and if we 
execute the procedures as we have outlined them, I don't think 
we will have any problems with that in the future.
    Secretary Stackley. If I can add to that?
    Mr. Byrne. Sure.
    Secretary Stackley. The LCS 2 variant is what we would 
refer to as Panamax. In other words, the ship design maximizes 
the beam width of the ship up to the limits of the Panama 
Canal, so it is going to be tight. And it is also a very unique 
design in terms of the sides of the ship, and you are well 
familiar with this.
    So the first couple of instances of transiting the canal, 
the damage has occurred because we are pressing up against the 
full width of the canal with this unique design, and the system 
that is used, what's referred to as a fendering system, for all 
ships--all ships have a fendering system to minimize the 
damage--just was not prepared for that situation.
    So as Admiral Rowden indicated, it is both handling, but it 
is also the fendering system that we are putting in place to 
deal with those type constraints.
    Mr. Byrne. And with the casualties that we have experienced 
with this class of ships, the LCS class, are they on par with 
other classes of ships when they are new? Is this what you get 
when you get a new class of ship, that you have a certain level 
of casualties, any worse or any better?
    Secretary Stackley. The answer is absolutely yes, but we 
are not satisfied. And so I reviewed what we refer to as 
casualty----
    Mr. Byrne. Absolutely yes, that it is on par?
    Secretary Stackley. Absolutely yes, that it is on par, but 
we are not satisfied. I reviewed the history of the last 4 
years' worth of casualty reports, and LCS is in the mix for 
combatants in terms of casualty reports status 2, 3 and 4, 
which are different degrees of severity. So that is in the mix.
    However, Dr. Gilmore's comments regarding reliability are 
absolutely on. This is a relatively new ship class. We do have 
new ship systems. We are going through what is referred to as 
reliability growth. And what we have got to do is get there 
faster on a system-by-system basis so that the concerns that he 
raises and that we share with regards to reliability, we can 
retire more quickly, and we will just as we have with every 
prior ship class that we have introduced to the Navy.
    Mr. Byrne. And, Admiral, one final question for you. We 
have heard a lot about distributed lethality. I hope I said 
that right. It is a lot of syllables in a couple words for 
somebody from Alabama to say. When we added the missile 
capability to these ships, what did it do to these ships' 
distributed lethality?
    Admiral Rowden. Sir, thank you for the question. It is 
interesting because our first thoughts of how to distribute the 
lethality of the fleet, distribute the lethality of the force, 
came when we were up at the Naval War College actually 
conducting a war game utilizing the littoral combat ship. And 
in this specific war game, we were playing in the mid 2020s 
timeframe, and one of the capabilities that we indicated would 
be available and on the ship at that time was an extended-range 
over-the-horizon missile.
    And this was a war game in that we set up live players, 
playing live players as we executed the moves. And I was just, 
I was quite pleased with the effectiveness that we had out of 
the littoral combat ships that had been discounted by the 
adversary given the capability that we had built on to the 
ship, and they had full understanding of what was happening 
there.
    And so as we have looked back and as we conducted the 
after-action reports, one of the things that I realized as we 
were looking at the requirements that we built into our ships 
is this migration towards pretty defensive ships. Defend the 
aircraft carrier. Defend the logistics train. Defend the 
amphibious readiness groups. And what we have found in 
subsequent war games is that if we increased the offensive 
capability of the ship, if we increased the range at which we 
could go out and attack our adversary, it caused a couple 
problems.
    One, they had to think very differently about all of the 
different aspects of the fight. They had to pay less attention 
to the undersea domain. They had to pay less attention to the 
space of the domain because they had to pay much more attention 
to the surface ships and the lethality of those surface ships.
    Mr. Byrne. Well, I noted when I was at the RIMPAC exercise, 
that the Chinese ships that were participating were all closest 
to the Coronado, the littoral combat ship, and watching it very 
carefully. And so I think the Chinese are very interested in 
what this new capability has been added to that ship and what 
it would do in that theater.
    Thank you, Madam Chairman. I yield back.
    Mrs. Hartzler. Thank you. We have had a very thorough and, 
I think, helpful hearing today discussing this very important 
platform for our sailors and for our Nation.
    Before we conclude the hearing, I was wondering if any of 
the witnesses have any closing remarks that they want to make 
or anything they want to say to put on the record that they 
haven't gotten to say yet.
    So I will just go through Mr. Stackley, if there is 
anything you want to add.
    Secretary Stackley. Ma'am, I would be at risk of repeating 
my opening statement. But just to synopsize, the ship works. We 
have reliability issues. We will get through those. But the 
ship works. Concerns with things like redundancy, I agree with 
Dr. Gilmore's assessment that we need to increase redundancy, 
particularly for critical systems, and we are going about that, 
first with the frigate design and then looking at backfitting 
that to the earlier hulls. The ship works.
    The mission packages are correctly selected in terms of 
warfighting gaps. We have got to deliver that capability 
regardless of what the platform is, and we have selected the 
LCS platform to deliver those capabilities. We are late. We 
understand that, but we are bringing that capability forward in 
an incremental fashion when it is ready so every deployment, 
every deployment, littoral combat ships are deploying with 
increased capability. And yes, we have changed the program as 
we go. That is because we are learning.
    This is a new concept. And concepts that were struck back 
in the 2001, 2002 timeframe, now that we are out there 
operating and deploying, we are learning and we are improving.
    So I thank you for the hearing, and we will follow up on 
all the requested actions.
    Mrs. Hartzler. Very good. And you are--each of you can 
submit comments for the record in addition.
    Vice Admiral Rowden, any closing comments?
    Admiral Rowden. Yes, ma'am. I too sincerely appreciate the 
opportunity to be here on behalf of the littoral combat ship.
    It is an exciting time in our Navy, and it is an exciting 
time bringing this capability into the fleet. The capabilities 
that it is going to deliver and understanding that we have a 
team focused on the issues, we are learning about the issues, 
we are learning about how to maintain it, and going forward, I 
am 100 percent confident that we will tackle those issues and 
we will defeat them.
    And as we deliver that capability forward, as we--and in my 
mind, it is all about the center of the universe, and I think 
the center of the universe, at least from the professional 
perspective, are the ships and the men and women that serve on 
those ships. They are excited about the capability that these 
ships bring, and I know that they will deliver to the forward 
forces. And we are going to continue to work hard and make sure 
that we maximize the value of these ships to our fleet 
commanders.
    Mrs. Hartzler. Very good.
    Ms. Mackin.
    Ms. Mackin. I just would reiterate the need for prudence in 
pursuing a block buy strategy at this point in time, which will 
be initially 12 LCS prices, with the frigate upgrades to be 
added in later. There are a lot of unknowns about the basic 
ship right now that is going to be modified, what will the 
design look like, what will the cost be. So I will just 
reiterate that caution.
    And then just for the record, I did want to mention on the 
warranty issue, we recommended that the Navy take a look and 
see if it would be possible to move more toward a warranty 
approach, as the Coast Guard does, and they agreed to do so. 
That study is supposed to be provided to us this month. So we 
haven't seen it yet, but we will look forward to taking a look 
at the results.
    Mrs. Hartzler. Very good.
    Dr. Gilmore.
    Dr. Gilmore. I just emphasize what I said in my opening 
comments, which is we need to acknowledge the many problems 
that exist and fix them. And I am glad the Navy is now 
acknowledging many of these problems, but in the past, that 
always hasn't been true.
    For example, in 2014 testimony from senior Navy officials, 
they said the Remote Minehunting System completed its 
reliability growth program this past year and continues to test 
well. At that time, that simply wasn't the case. It was testing 
poorly.
    So I hope that the Navy, as it is now doing and as it did 
with its mine countermeasures independent review team, 
thoroughly reviews all of the test results that are available, 
takes those onboard, and provides the resources, with your 
help, to fix these problems. And it seems that Mr. Stackley and 
Admiral Rowden are committed to doing that, and I hope they 
continue to do that in the future.
    Mrs. Hartzler. Very good. Thank you.
    Mr. O'Rourke.
    Mr. O'Rourke. Thanks for having me at the hearing today. 
Just to close the loop on your earlier question about block 
buys and oversight. There is a lot of aspects of oversight. We 
talked about Q&A [question and answer] at the hearings. There 
is legislative provisions, there have been many of those over 
the years, lots of report language in the committee reports, a 
lot of GAO reports also, as well as--as well as my tracking 
report and CBO [Congressional Budget Office] report. So those 
are all other aspects of oversight that have taken place during 
the block buy contracts that we have executed.
    There is one additional aspect of conducting oversight, and 
that is the ability to terminate the program if you are just 
dissatisfied with it. Congress does retain the ability to 
terminate a block buy contract, and a block buy contract can be 
written without a cancellation penalty. Furthermore, a block 
buy contract can be implemented without upfront batch buys of 
components that might add to your reluctance to cancel the 
contract, and in fact, that is how the Navy has done the LCS 
block buy contracts, without any upfront batch buys.
    The block buy contract does add to your reluctance to 
cancel the program, but it might also be argued that most of 
the reluctance for terminating a program arises from the mere 
fact that the program has begun procurement. There have been 
relatively few defense acquisition program cancellations over 
the years, and the vast majority of those programs that have 
not been canceled were done under annual contracting.
    One final note. If we were to do a down-select as currently 
planned and then use annual contracting, we could be getting 
ourselves into a situation of limiting the Navy's ability to 
use leverage in its negotiation with the contractor. When you 
down select to a single builder, you are creating a monopoly 
supplier at that point. And if the Navy then has to go back to 
that sole builder and contract on an annual basis and get into 
an annual negotiation with that builder, the Navy's leverage in 
that situation might be reduced.
    That is a situation we are in, for example, with aircraft 
carriers, and people have expressed dissatisfaction with the 
fact that we have only one builder of aircraft carriers and we 
have to then negotiate with them every time we build a carrier. 
If you were to do a down-select on the LCS program and then 
also use annual contracting rather than block buy, you are 
creating a situation not too unlike that one that people have 
expressed dissatisfaction with.
    Mrs. Hartzler. Great. Thank you all for your service to 
this Nation. This hearing is now adjourned.
    [Whereupon, at 12:10 p.m., the subcommittee was adjourned.]

      
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                            A P P E N D I X

                            December 8, 2016
      
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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                            December 8, 2016

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                   DOCUMENTS SUBMITTED FOR THE RECORD

                            December 8, 2016

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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                            December 8, 2016

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              RESPONSE TO QUESTION SUBMITTED BY MS. SPEIER

    Secretary Stackley. USS CORONADO (LCS 4) transited the Panama Canal 
in February, 2014. As the ship transited the canal, CORONADO suffered 
four separate allisions (instances where the ship structure was pierced 
or deformed by hitting the Panama Canal wall structure). Two of the 
allisions were created transiting the Gatun Locks and the two others 
were created in the Pedro Miguel Locks. The total cost to repair 
CORONADO as a result of the damage was $820,492. Initially, temporary 
repairs were conducted to remove debris and install additional 
structure to the damaged areas to continue operating at sea, until the 
ship was able to conduct more permanent repairs. Permanent repairs were 
completed during CORONADO's Post Shakedown Availability (PSA). Lessons 
learned from prior LCS ships transiting the Panama Canal are being 
incorporated to mitigate the risk of recurring instances of the damages 
referenced above. For instance, prior to the transit of the Panama 
Canal, both LCS 6 and LCS 8 had a temporary fendering system installed 
to provide additional mooring fender strengthening. Permanent 
Independence variant improvements to protect against ship damage in the 
canal and in port include strengthening for fendering and tug loads. 
This improvement will be accomplished during PSA for LCS 6 through LCS 
12 and in line construction on LCS 14 and follow. The decision for the 
point of incorporation for each of these improvements is based upon 
available funding, and considerations for minimizing schedule 
disruption and significant amounts of re-work in the construction yard. 
In addition to addressing hull strengthening issues, a delegation from 
the Navy has held on-going meetings with the Panama Canal Authority 
(ACP), most recently on February 7, 2017 to discuss lessons learned and 
actions that could be taken by the ACP to mitigate or eliminate damage 
to LCS ships during canal transits. The February 2017 meeting was very 
productive and Commander, FOURTH Fleet is codifying the agreements 
reached in a letter to the ACP.   [See page 32.]
                                 ______
                                 
              RESPONSE TO QUESTION SUBMITTED BY MR. BYRNE
    Admiral Rowden. The following table summarizes all known incidents 
of ships sustaining damage while transiting the Panama Canal:

 
----------------------------------------------------------------------------------------------------------------
              SHIP                     Hull Number          Date of Incident                 Incident
----------------------------------------------------------------------------------------------------------------
 
USS TORTUGA-----------------------LSD 46----------------13 Feb 06----------------Allision-----------------------
----------------------------------------------------------------------------------------------------------------
SWIFT                             HSV 2                 02 Apr 07                Allision
----------------------------------------------------------------------------------------------------------------
USS HALYBURTON                    FFG 40                16 Nov 07                Grounding
----------------------------------------------------------------------------------------------------------------
USNS COMFORT                      T-AH 20               21 Jul 09                Allision
----------------------------------------------------------------------------------------------------------------
USNS DAHL                         T-AKR 312             03 Jan 10                Allision
----------------------------------------------------------------------------------------------------------------
USNS 1st LT JACK LUMMUS           T-AK 3011             10 May 10                Allision
----------------------------------------------------------------------------------------------------------------
USS PASADENA                      SSN-752               25 Aug 11                Allision
----------------------------------------------------------------------------------------------------------------
USS INDEPENDENCE                  LCS 2                 15 Apr 12                Allision
----------------------------------------------------------------------------------------------------------------
USS CORONADO                      LCS 4                 23 Feb 14                Allision
----------------------------------------------------------------------------------------------------------------
USS BARRY                         DDG 52                09 Feb 16                Damage to Flight Deck Nets
----------------------------------------------------------------------------------------------------------------

[See page 36.]

     
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              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                            December 8, 2016

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                  QUESTIONS SUBMITTED BY MRS. HARTZLER

    Mrs. Hartzler. In your written testimony you stated that the 
revised Independent Review Team (IRT) implementation plan focuses on 
one delivery vehicle with the current MCM package sonar; however, the 
FY17 NDAA Conference report requires a review of synthetic aperture 
sonar technologies for the MCM package. Please provide the subcommittee 
the following information:
      Does the Navy plan to test and evaluate any additional 
conventional or synthetic aperture sonar technologies as part of its 
revised IRT implementation plan briefed to the committees in September 
2016?
      In light of the Conference Report requirement (section 
1071), does the Navy intend to revise its September 2016 implementation 
plan for testing sonar technologies for the MCM package?
      Has the Navy considered all available synthetic aperture 
sonar technologies to include those from our ally navies?
      How many conventional and synthetic aperture sonar 
technologies does the Navy plan to test to meet the requirements of the 
FY17 NDAA and to ensure the success of the MCM package?
    Admiral Rowden. The Navy has selected the Common Unmanned Surface 
Vehicle as the tow vehicle for the minehunting sonar as part of the MCM 
Mission Package. The Navy continues to conduct testing and evaluation 
of synthetic aperture sonar technologies through existing program of 
records (POR).
    Does the Navy plan to test and evaluate any additional conventional 
or synthetic aperture sonar technologies as part of its revised IRT 
implementation plan briefed to the committees in September 2016?
    Yes, additional direct testing and evaluation of synthetic aperture 
sonar technologies is being conducted through existing programs of 
record (POR).
      The AQS-20C production configuration of the towed sonar 
is conducting sub-system testing.
      The AQS-24C towed sonar and the Surface Mine 
Countermeasure Unmanned Underwater Vehicle (SMCM UUV) POR containing 
the Knifefish Engineering Design Model (EDM) are both currently 
undergoing in-water developmental testing.
      The AQS-24C sensor configuration for the MH-53E 
helicopter is undergoing production testing with an anticipated 
completion date of July 2017.
      In addition to these POR efforts, the Navy has 
coordinated with and sent observers to the UK Royal Navy through 
technology exchange agreements to participate in ongoing evaluations of 
the Thales sonar system towed by both the ATLAS Elektronik and Thales 
unmanned surface vehicles.
    In light of the Conference Report requirement (section 1071), does 
the Navy intend to revise its September 2016 implementation plan for 
testing sonar technologies for the MCM package? 
    No, the current test and evaluation approach is sufficient to 
provide a sound technical and operational assessment to support the IRT 
Implementation for the MCM mission package and the Congressional 
reporting requirements.
    Has the Navy considered all available synthetic aperture sonar 
technologies to include those from our ally navies?
    Yes, the Navy has evaluated foreign produced systems and continues 
through technology exchange agreements to monitor ongoing allied 
efforts of the most mature systems that have potential application for 
the MCM mission package. The most mature foreign systems under review 
are produced by ATLAS Elektronik and Thales, both of which are being 
assessed by the UK Royal Navy.
    How many conventional and synthetic aperture sonar technologies 
does the Navy plan to test to meet the requirements of the FY17 NDAA 
and to ensure the success of the MCM package?
    The current Navy plan assesses a total of six (6) sonar 
technologies that will inform the final configuration of the MCM 
mission package: 1) AQS-20C configuration with a synthetic aperture 
sonar, a digital gap filler sonar, and a high frequency wide band 
forward looking sonar is the primary candidate at present. 2) AQS-24C 
configuration with a high speed synthetic aperture sonar and high 
frequency wide band rear looking sonar. 3) Knifefish UUV with low 
frequency broad band synthetic aperture sonar. 4) AQS-20A configuration 
with conventional real aperture sonar. 5) AQS-24B configuration with 
high speed synthetic aperture sonar. 6) Thales towed sonar with 
synthetic aperture sonar.*
---------------------------------------------------------------------------
    * U.S. Navy controlled testing is not planned but performance data 
will be captured for comparison via existing data/technology exchange 
agreements.
---------------------------------------------------------------------------
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MS. SPEIER
    Ms. Speier. Your written testimony states that ``the department 
chose a frigate concept based on a minor modified LCS in lieu of more 
capable--and more expensive--small surface combatant options.''
    What are the key mission capabilities that the Navy identified and 
prioritized as needed for a potential frigate in its recent study of 
alternatives?
    Ms. Mackin. Our report GAO-16-356, ``Littoral Combat Ship: Need to 
Address Fundamental Weaknesses in LCS and Frigate Acquisition 
Strategies'' described our evaluation of the Navy's Small Surface 
Combatant Task Force's efforts to meet the Secretary of Defense's 
direction to study alternatives to the LCS that would provide 
capabilities ``consistent with a frigate''. As we reported, the task 
force identified eight concepts for the capability of the small surface 
combatant (SSC)--known as capability concepts--representing the range 
of operationally acceptable mission alternatives. These are shown 
below.

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    .epsThe task force found that a minor modified LCS (of either 
variant) was the least technically feasible of meeting any of the eight 
capability concepts among all of design categories that it considered. 
As shown, 7 of the 8 concepts included local surface warfare (meaning 
the ship can defend other ships against threats and attack targets 
within a medium range); 5 feature local anti-air warfare (meaning the 
ship can defend other ships against air-based threats within a medium 
range), and 5 also featured anti-submarine warfare capability. However, 
based on direction from senior Navy leaders, the task force ultimately 
focused on creating ship design concepts based on capability concept 7, 
which does not include a local anti-air warfare capability.
    As part of its methodology, the task force solicited feedback from 
fleet operators. In these fleet engagement sessions, Navy operators 
were given a set of performance capabilities--like speed, range, over-
the-horizon surface warfare capability, and others--and were told to 
prioritize them. All of the concepts featured some degree of multi-
mission capability--meaning that the ship can conduct more than one 
type of mission (e.g., surface warfare and anti-submarine warfare) at 
one time. The fleet operators consistently ranked local anti-air 
warfare and over-the-horizon surface warfare with anti-submarine 
warfare as their highest priorities for a future SSC. However, as noted 
above, capability concept 7 does not have local anti-air warfare 
capability. Other trade-offs were also made. For example, the fleet 
operators also highly valued an endurance range of 4,000 nautical miles 
and an ability to remain underway for 30 days. The chosen capability 
concept will have a range of less than 4,000 nautical miles, and only a 
14 day underway duration.
    As shown below, the task force found that an LCS with minor 
modifications was the least feasible at meeting the Navy's identified 
capability requirements, meaning that LCS with minor modifications was 
the least capable option considered.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


    .epsMs. Speier. How does GAO rank-order the capabilities and design 
characteristics of each of the ships that the Navy considered during 
its study to determine how to develop the frigate platform, and how 
does GAO assess the capabilities of the ship that the Navy ultimately 
chose as the baseline for the frigate?
    Ms. Mackin. GAO does not have the information to conduct a detailed 
analysis such as this, because the task force used statistical analysis 
software that GAO does not possess to assess the most likely cost and 
characteristics of over 19 million potential ship designs. Since new 
designs provide the most flexibility, the Navy would be able to 
identify many potential new design configurations to meet any set of 
SSC requirements. For existing designs, the task force analyzed 23 
designs, but its supporting workpapers do not contain adequate 
information for a rank-ordering since limited information is presented 
about each option and the relative cost.
    We found that the task force considered both new and existing ship 
design options that were more capable than the LCS with minor 
modifications than the Navy ultimately selected. According to task 
force documentation, the inherent space, weight, power, and cooling 
constraints of the LCS with minor modifications limited the extent of 
changes that could be accommodated. With modifications, the task force 
found that other existing designs could provide additional capability, 
including local anti-air warfare. For example, the task force 
identified that an LCS with major modifications and a modified U.S. 
Coast Guard National Security Cutter--which, like LCS, is also 
currently in production--could both provide a full multi-mission 
capability, would provide greater weight and other margins which would 
allow for future upgrades, and have greater range and underway days. 
The task force also found that most of the existing designs considered 
could accommodate survivability improvements above those found on LCS.
    Ms. Speier. Does GAO believe that the minor modified LCS will or 
will not meet the combatant commander's stated operational requirements 
for a frigate? Why, or why not?
    Ms. Mackin. A frigate based on an LCS with minor modifications will 
not meet all the requirements prioritized by the fleet operators during 
engagement sessions. The results of the fleet engagement process imply 
that the fleet prioritized local anti-air warfare capabilities which 
are not included in ability concept 7, and the Navy subsequently based 
its frigate requirements on a reduced capability concept 7, so it may 
no longer be reflective of the concepts developed in consultation with 
the fleet. An LCS with minor modifications could not achieve these 
requirements. The task force also determined that a minor modified LCS 
could not be modified to the level of vulnerability resistance like 
that of a legacy FFG 7 class frigate due to LCS weight and design 
constraints that would prevent adding more physical structure. If a 
greater level of vulnerability resistance was desired, a minor modified 
LCS would also not meet these requirements.
    The task force found that a minor modified LCS (of either variant) 
was the least technically feasible of meeting any of the eight 
capability concepts among all of design categories that it considered. 
According to the task force's report, the Navy would need an LCS with 
major design modification, a new design, or a modified (non-LCS) 
existing design if it wanted an SSC with multi-mission surface warfare, 
anti-submarine warfare, and local anti-air warfare capability and/or 
major survivability improvements. An LCS with minor modifications could 
not support these upgrades. Moreover, a minor modified LCS will not 
fully address all lethality and survivability concerns raised by the 
former Secretary of Defense.
    The planned modifications to LCS will offer some improvements 
(multi-mission capability and some survivability improvements related 
to reducing the susceptibility of the ship to attack). However, beyond 
the addition of an over-the-horizon missile that is also under 
consideration for addition to LCS, the proposed frigate does not add 
any new offensive anti-submarine or surface warfare capabilities that 
are not already part of LCS.
    Ms. Speier. Were other options considered that were more capable at 
meeting all of the Navy's capability priorities other than LCS?
    Ms. Mackin. The task force identified a number of designs that were 
more capable than the minor modified LCS, including a major modified 
LCS (of either variant), a modified National Security Cutter, and some 
foreign frigate designs. New designs--since they are by definition the 
most flexible--could also be developed to achieve the higher levels of 
capability sought by the Navy. However, Navy leaders, based on 
affordability concerns and a desire not to have a production break at 
the current LCS shipyards, ultimately recommended the minor modified 
LCS.
    Ms. Speier. What role did industrial base considerations have in 
the frigate study and in the Navy's choice of using a minor modified 
LCS for the frigate baseline?
    Ms. Mackin. In a November 2014 memo in which it recommends 
selecting a minor modified LCS, senior Navy leadership highlighted the 
speed with which they believe a minor modified LCS based frigate could 
be fielded as a deciding factor in its deliberations, as well as a 
desire to maintain stability in the LCS industrial base and vendor 
supply chain. The task force report stated that this option could 
achieve full capability faster than the others, and with a neutral 
impact to the industrial base (i.e., the LCS shipyards). In particular, 
the task force wrote that a minor modified LCS design would provide the 
shortest timeline to first ship delivery and that a major modified LCS 
and new and existing designs would result in production gaps of 1 to 5 
years. Due to the scope and timeframe for our audit, we did not verify 
these task force findings.

                                  [all]