Building a Small Surface Warship Mission Impossible?

Following on the demise of the Arsenal Ship and DD-21, the suspension of construction of a second Littoral Combat Ship (LCS) by each of its two shipbuilders suggests that the United States can no longer build a new class of surface warship. The LCS debacle is the result of dozens of failures, but the chief culprit is the acquisition philosophy and related organizational changes begun after the Goldwater-Nichols Act that shifted shipbuilding from a technical exercise in ship construction into a financial accounting enterprise. This blunder was then aggravated by theorists with little technical foundation who declared in essence that "Everything is better managed by industry than by government" while denouncing military specifications as bureaucratic obstacles to progress. The resulting decay in the competence of the Navy to design and then oversee construction of warships has led to the present imbroglio.

Acquisition in the Department of Defense is supposed to begin with a mission requirement. Under the Goldwater-Nichols Act, such requirements are to come from the combatant commanders who specify to the services the mission(s) to be accomplished. The services then buy the products necessary to fulfill the missions. While this might do for "Footwear, Desert Boots," the process is totally impractical when looking into the distant future, or for developing sophisticated hardware requiring years to acquire and lasting a generation or more, or applicable to the whole spectrum of national security interests. Ships have to be able to serve in every theater and can take up to 20 years to conceive and build. Commands occupied with the immediate concerns in a particular theater cannot be expected to exercise wide and distant vision. Such vision and its execution has to be provided by an overarching entity not caught up in the urgency of the day and so able to reflect a global perspective over a long period.

Foggy Characteristics Yield Concrete Problems

No combatant commander asked for the LCS. That ship was a product of the imagination of the leaders of the Department of the Navy encouraged by the enthusiasm of those who saw it as part of the transformation mantra that engulfed defense planning in the late 1990s. As retired Navy Captain Robert H. Smith notes, it grew out of an "addiction to the kinds of advocacy that sweeps aside damning truths, with our Navy foremost among the deceived."¹ Only superficial analyses of the missions to be performed were conducted. These descriptions limped enough to be called into question repeatedly by the Congressional Research Service. In what littorals are the ships to be used? How are they to be supported when deployed? What weapon systems would be needed in the missions assigned, and could the LCS bring them to bear? 

Designing a new ship without a well-founded understanding of its mission and a well-developed operational concept is fraught with difficulty. In the past, such activity has generally led to an expensive exercise with not very satisfactory results. The birth of the LCS in many ways resembles that of the Oliver Hazard Perry design of the 1970s. The class was mandated by Admiral Elmo R. Zumwalt Jr. rather than justified, but the frigates' mission—open-ocean escort of convoys in a major war against the Soviet Union—was clear and unambiguous. While that mission could not be accomplished until long after commissioning, when long-line passive sonar arrays and helicopters finally added the necessary long-range sensor and weapons delivery system, the Perrys did useful work in missions that showed the flag, demonstrated presence, and provided training opportunities. Some of those missions may still be appropriate for a small combatant ship the size of the LCS. But a ship with these kinds of missions would resemble the Coast Guard's National Security Cutter, not a 45-knot speedboat with an aluminum hull. An article in the January 2008 Proceedings by Coast Guard Captain James C. Howe addresses this point. Further, retired Navy Captain Wayne P. Hughes Jr., professor of Operations Research at the Naval Postgraduate School and author of Fleet Tactics and Coastal Combat (Naval Institute Press, 1999), argues that such a "low-end" vessel is needed for just these purposes but proposes that only minimal effort and sophistication be devoted to these small ships. Arguments like his evidently carried little weight in the formulation of the LCS.

Form (Not Always) Follows Function

LCS proponents relied on a series of war-game scenarios to justify their ideas rather than a rigorous analysis of needs and physical and fiscal realities. The result was a set of desired characteristics rather than specifications that could become the basis for a clear and definable contract. Enamored with networking many small sensors and the massing of numbers of individual weapon carriers with small individual loads, the characteristics advocated by the proponents of the very small, very inexpensive "Streetfighters" eventually morphed into those of the LCS. These form, fit, and function characteristics were not then translated into a series of detailed designs so that their various attributes could be weighed against costs and mission contribution. The shipbuilders were expected to bring cutting-edge technology to develop designs in response to these general ideas. The government then failed to examine the technical details of the designs until after construction demonstrated many inadequacies. 

This late arrival on the scene of competent engineering judgment was one result of the emphasis on budget management and financial controls that began with then-Secretary of the Navy John F. Lehman Jr.'s reorganizations. Emasculating the technical competence of the Naval Sea Systems Command led to a subsequent related change replacing the chief of what had been the Bureau of Ships with the Assistant Secretary of the Navy for Research, Development and Acquisition as the authority responsible for building new warships. This arrangement put the administration of a highly technical, complex process in the hands of officials who were schooled in accounting and budgeting and overseen by political appointees with short tenures and little experience. The present Chief of Naval Operations and his predecessor vowed to rein in the cost of these ships, but that office has no official authority or even much leverage to do this. Compounding this blunder, frustration with the military specification process led to the widespread adoption of the philosophy in the Department of Defense that industry could manage everything better than the government and that such standards were wastefully detailed, blocked innovation, and slowed introduction of new technology. The recent announcement by Secretary of the Navy Donald C. Winter, vowing to restore the technical competence of the Naval Sea Systems Command, demonstrates a belated recognition that the Department of the Navy currently lacks the ability to manage large surface ship projects.²

LCS: Little Cruise Ship?

Translation of the desired characteristics of the LCS into specifications foundered on a number of shoals. Foremost was the lack of technical competence within the government to develop or at least oversee the tradeoffs between various characteristics in the new ship. Contributing to the faulty planning was the enthusiasm for converting from government specifications into commercial standards. Yet the American Bureau of Shipping standards originally used in the LCS are codes for cruise ships and freighters—not for warships. Construction completed using these standards required major rework when their inadequacies became evident. In layman's terms, this was similar to building a 20-story hospital using the building codes for single-family residences and not recognizing the failure until the building inspector arrived.

Further complicating the future of the LCS was the Navy's demand that the ships be constructed in yards that had no previous experience building warships. Theoretically, this was to encourage innovation and prevent being stuck in the rut of history. In essence, this mandate put a research and development project—for lead ships of the class are always such—into the hands of inexperienced constructors without specific requirements describing the standards required of a warship. This method of encouraging innovation was a prescription for cost overrun and late delivery.

The concern with unit cost concealed the problems associated with all lead ships—that they are developmental, almost experimental—and predictions of costs invariably err on the low side. This error is, in part, caused by the nature of budgeting in the Department of Defense and partly because of technical ignorance. The two factors compounded guarantee that no lead ship can ever come in under budget. When budget managers are ignorant of the design process and the Navy fails to maintain its competency in the design and construction of ships, the government has no alternative to accepting the cost estimates of the shipbuilders. To reject those estimates as unreal without an accompanying strategy for reducing them or accepting that they are in fact true costs but not admitting them, the Navy leadership is always playing catch-up in the eyes of Congress and the public press.

Who's Responsible?

Like it or not, orders for small numbers of products are expensive. Blaming the shipbuilders for cost overruns on this project indicates that, in spite of the emphasis on financial controls, the Navy's financial managers are not capable of accurately estimating, budgeting, or controlling the costs of such an endeavor. Effective business enterprise relies on understanding the business. At least once before in history, between the two World Wars, this situation led to construction of warships in government-owned and operated yards. The goal was to ensure that civilian yards had a competitor. One of the two sources could be counted on to provide factual data and the true price. With no government yard building new ships, those who estimate the costs must rely on the shipbuilders to provide honest and accurate information. When such information is rejected out of hand, the governments' representatives are left without resources in contractual negotiations. One thing is certain, the shipbuilder will not produce the desired finished product at a loss.

Seeking the responsible person in the present Byzantine organization of the Navy Department is an exercise in frustration. Today, acquisition of new warships is the responsibility of the Assistant Secretary of the Navy for Research, Development and Acquisition. Presently occupied by an "acting" appointee, John S. Thackrah, the last incumbent's previous post was as an electrical engineering professor at the U.S. Naval Academy. Reporting to her were 11 Deputy Assistant Secretaries of the Navy, 14 Program Executive Officers, and seven System Commanders. In this organizational swamp, six Deputy Assistant Secretaries, three System Commanders, and seven Program Executive Officers had responsibility for some portion of the LCS or her equipage. To complicate this division of responsibility, the ships were in the research and development budget while the mission modules were funded as part of the operations budget. Even today parts of the designs are not mature enough to guarantee that the mission modules that carry the bulk of the armament and sensors will fit in the ships. As admonished by Admirals Ernest J. King, Chester W. Nimitz, and Hyman G. Rickover, if you can't point your finger at who is responsible, no one is.

We Knew How to Build Ships

No amount of bureaucratic bumf like the Cost Analysis Improvement Group (DoD Directive 5000.4) can substitute for careful and competent architectural development. The problems are not with financial accounting or cheating contractors but with understanding how to build a complicated machine: the sine qua non in estimating and containing the costs of making any product—in this case a warship. Without that knowledge, costing is reduced to guessing. When that product is brand new or cannot be exactly specified—as in the case of the LCS' hull design and engineering plant—the effort is a research and development operation. Costing is harder but not impossible. In this effort, input from the Joint Requirements Oversight Council or similar high-level organizations is of much less value than the opinion of an experienced naval architect.

There is no quick way out of this dismal situation. There are some lessons, however, from successful shipbuilding programs, e.g., the Arleigh Burke—class guided-missile destroyers and the Virginia-class submarines. First is that no successful program begins with a blank sheet of paper. Intelligent design depends on definitions of missions and an operational concept based on history, experience, and expectation. Design must be continuous and on-going, drawing on lessons from the past and seeking to incorporate the technology of the future. Design work must continue even when there is no immediate construction portending.

The Navy must return to acting as an intelligent customer. Designs must be mature (that doesn't mean complete) before construction starts. The exact specifications for the ship must be evident and agreed to by the shipbuilder and the government. There are no commercial standards that can be used in warship construction. When products come in ones and twos, the system cannot function like a commercial business. Neither the government nor the shipbuilder can wait for customers to indicate what sort of grill on the car sells best.

A Business-Model Failure

Throughout the process of building, the Navy must retain design authority. That means that whoever drafts the specifications, an appropriate officer of the Department of the Navy must approve them. Starting with a master ships' specification document and plans that in fact specify how things are to be built and finished, change orders are written and priced for every modification of those specifications. This requires officers and civilian personnel who are competent in naval architecture, in details of engineering plants, sensors, weapons, and communication equipment. Skilled designers and technical people must be maintained. Because these officials do not now exist in adequate numbers, a generation will be required to fully restore that competency.

In essence, the LCS provides evidence that the management-professional/acquisition-professional methodology has failed, at least in the procurement of warships. Loren Thompson of the Lexington Institute stated it succinctly, "The Navy acquisition community has a death wish." Counting the money is not enough. There is a way to build warships that has been satisfactorily tested in years past. The chief ingredients are the participation of technical experts with the operators during the design, development of careful and complete specifications, and oversight in the building yard. Shipbuilders will not accept risks involved in contracts where the customer is unconstrained in making unilateral changes. What business enterprise or financial management theory led officials in the Navy to expect the LCS contractor would be willing to accept a contract where the product's price is fixed but the customer is unrestrained in making changes during the construction?

The organization of the Department of Navy as it exists today has a reputation for cost over-runs, late delivery, long post-shakedown availabilities to bring new ships into serviceable condition, and for many ships, short service lives. Reorganization in a manner to return a degree of confidence in the capability to build surface warships is unlikely. Outside of the submarine force, the Arleigh Burke class continues to be well constructed with costs reasonably close to the estimated price and performing well after commissioning. Returning to an organization similar to that existing when that ship was developed, designed, and built might be a good start to solving some of the present problems in shipbuilding. Such steps require decisive actions probably beyond the capability of an administration in its last year in office. As to the next class of small surface warships—if there is to be one—seven to ten years have been lost while various officials labored in hope and hype rather than in analysis and technical details.