http://www.paratrooper.net/commo/Topic167261-5-1.aspx

Navy halts Lockheed work on warship

Military tells contractor that production on two combat ships is significantly overrunning expected costs.

WASHINGTON (Reuters) -- The Navy ordered Lockheed Martin to halt work on one of its two littoral combat ships - which are designed for close-to-shore missions - due to significant cost overruns, the service said on Friday.

The Navy said Lockheed's (Charts) work would be stopped immediately for 90 days, while costs are reviewed. The Navy would not disclose how much costs had risen, but defense officials called the overrun "significant."

The $1.3 billion littoral combat ship program is a major piece of the Navy's vision for its future fleet. Littoral ships are designed for coastal missions, such as warfare involving mines and submarines, as well as humanitarian relief.

Lockheed, the top U.S. defense contractor, is building the first and third of the Navy's littoral combat ships while General Dynamics (Charts) is building the second and fourth.

Lockheed won the $198 million contract in June for the second ship. According to the Navy, work will be stopped on the second ship because of cost overruns on both its vessels.

"I determined that at this point in time it was critical to stop work on LCS 3 to assess the LCS program and ensure we understand the program's cost and management processes before we move forward," said Navy Secretary Donald Winter.

"It is essential that we complete LCS 1 and get it to sea so we can evaluate this new ship design."

Lockheed Martin said it was disappointed with the Navy's decision.

"We take very seriously our commitment to our customers and it is for that reason we kept the Navy fully informed of LCS 1 cost issues and worked with the Navy to identify opportunities to reduce costs on subsequent ships," said company spokesman Craig Quigley.

Navy shipbuilding has been plagued by billions of dollars in cost overruns and lengthy schedule delays. The Government Accountability Office has estimated cost growth of 27 percent for first-in-class ships.

In September, however, the Navy's acquisition chief, Delores Etter, praised Lockheed's and General Dynamics' work on the littoral combat ships and said that program would become an example of a new way of building ships affordably and quickly.

Defense officials on Friday said the cost overruns on Lockheed's littoral combat ships now exceeded typical cost growth in shipbuilding.

One defense official said the Navy was searching for the root causes of Lockheed's cost problems on the program. Higher-than-expected labor costs may be among the driving factors, the official said.

Source: http://money.cnn.com/2007/01/15/news/companies/lockheed.reut/index.htm?cnn=yes

See generally, http://peoships.crane.navy.mil/lcs/program.htm

On the other side of the coin, it has been reported that there is considerable opposition within the Navy for this type of ship, which is viewed as a "Rumsfeld" transformation vessel that robs Peter to pay Paul so to speak. 

See, http://64.233.167.104/search?q=cache:0O8QgrPa_dEJ:www.oft.osd.mil/library/library_files/article_217_Washington%2520Post.doc+LCS+Defense+Donald+Rumsfeld+%22Streetfighter%22&hl=en&gl=us&ct=clnk&cd=1

Thanks for the insight........Congress slapping on price caps before the design work ?!?!?    Then the Navy pulls out their dream sheet of requirements....It's a marvel then that Lockheed got a ship even floating.

Navy Terminates Littoral Combat Ship 3

Not surprised at this move by the Navy......wouldn't be the first time a major project has had a stop-work order issued as a control measure....although it comes at a time when the SECNAV is working under some pretty heavy constraints. 

http://www.news.navy.mil/search/display.asp?story_id=28858

"Let's Go Downtown" - Flight of the Intruder
 

http://www.327infantry.org/second/c_co 

Same Mud Same Blood - NBC documentary filmed 1967 RVN, chronicle Frank McGee

SO let's follow along together:

1 - Start construction, then; 2 - Create the design.

That, brothers and sisters, is a recipe for disaster.  And I will bet you, sight unseen, that the contract for these vessels are "cost plus" rather than "firm fixed price."  Every change order, every light switch moved from one side of the bulkhead to another, comes with added expense as the contractor reworks his costs (and don't forget the indirects).

Is there one of us on this site who would let a contractor add a garage to our house on such a basis?

"Now, start work, pouring a foundation, we'll make up the floor plan, the electrical, the plumbing, the HVAC, the windows and doors, as we go along.  You submit to me the costs, and I'll pay you more as we go along. If I make a change, of course, feel free to rip out whatever you have already done (and I'll pay you for ripping it out) and then install the new design and I'll pay you for that as well. Of course, if the change in plumbing means you have to tear up the foundation slab to add pipes, that's OK, just start work pouring the foundations and send me your bills."

About time your billings reach $20,000 - $30,000 and you still have a half finished garage and some marked-up blueprints, you would order a stop work, too.