Lockheed Martin Faces a Devastating Blow to Its Littoral Combat Ship

Littoral Combat Ship. Photo: U.S. Navy.

Lockheed Martin (NYSE: LMT  ) is no stranger to cost overruns, and extensive delays -- just look at its F-35 for more than one example. However, Lockheed's latest debacle has nothing to do with the F-35. It doesn't even concern a plane. Lockheed's latest contract catastrophe concerns the $32 billion Littoral Combat Ship, or LCS. Here's what you need to know.

Low survivability
Originally, the LCS was designed to defeat threats like submarines, swarms of small boats, and mines, as well as provide dominance in the coastal water battlespace. Unfortunately, according to a report by the Pentagon's independent Director of Operational Test and Evaluation, the "LCS is not expected to be survivable in high-intensity combat because its design requirements do not require the inclusion of survivability features necessary to conduct sustained combat operations in a major conflict as expected for the Navy's other surface combatants."  

Littoral Combat Ship. Photo: U.S. Navy by Cmdr. Jason Salata via Wikimedia Commons.

In other words, the LCS can provide dominance on the battlespace -- as long as it's not really challenged. Yes, you read that right: The LCS is a "combat" ship that can't survive a hostile combat situation. In addition to this blow, the LCS has faced numerous delays and major cost increases, and in its first foreign tour to Singapore, the LCS Freedom suffered a barrage of problems, including a power outage that shut down its engine. Perhaps, then, it's no wonder that acting Deputy Defense Secretary Christine Fox advised the Navy to scale back its LCS purchase from 52 to 32. 

Of course, Fox is only the acting deputy defense secretary, and President Obama's formal nomination to the post is Robert Work -- who just so happens to like the LCS program.

What to watch
The current budget environment will force cuts, even to "essential" programs. And when a program is this plagued with problems, its chances of being on the chopping block go up. But that doesn't guarantee that the LCS program is doomed. The fact is, the Navy needs ships, and the LCS is supposed to help in that regard. Consequently, the LCS could escape Congress' budget wrath. However, if the LCS does get cut, that would undoubtedly be an unpleasant blow to Lockheed, as well as General Dynamics' (NYSE: GD  ) partner, Austal, which is also building a variant of the LCS. Consequently, this is something to keep your eye on.

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Read/Post Comments (13) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 16, 2014, at 1:34 PM, cityperson wrote:

    Interesting how long it takes to apprve these ships and pane to be built, then complain of all th cost overruns. The cost over runs come in when it takes years for approval and the politicains think they should pay the same porices as orignilly quoted, for all the newer tachnology. The the media jumps on the same bad wagon. The government always loves to get things for nohting.

  • Report this Comment On February 16, 2014, at 4:20 PM, etsosie wrote:

    I really don't like it when Motley Fool mixes stories that don't relate. No indication of who the author is or separation between ad and story.

  • Report this Comment On February 16, 2014, at 6:52 PM, demccloskey wrote:

    The ship was originally designed not to have the survivability of destroyers or battleships. It is a ship designed to work with minimum crew and speed in littoral waters. What we have here is the old Navy wanted what they always had, large, slow ships with plenty of firepower and able to take torpedoes. The littoral combat ship is not of the design. Therefore all the old Navy crowd wants it downsized so they can build aircraft and subs. Believe me I know because i was involved in the original procurement. The ship is capable to what it was purchased for. The rest of old Navy duds need to shut up.

  • Report this Comment On February 17, 2014, at 4:55 AM, jasski wrote:

    Lockheed Martin corp tries always to produce more advanced weapon and war machines. Its new modern product of littoral combat ship will make a change in the navy troops as it has a superior ability.01009873794

  • Report this Comment On February 17, 2014, at 9:35 AM, YoodenVranx wrote:

    Mostly to the point, other interesting point, trimaran design: the other littoral combat ship. same problems or just sidelined because of more foreign origin?

  • Report this Comment On February 17, 2014, at 3:23 PM, nmwander wrote:

    The Litoral Combat Ship doesnt have any failings that a couple of billion in lobbyist baksheesh cant fix.

  • Report this Comment On February 17, 2014, at 3:27 PM, nmwander wrote:


    I read several comments explaining what the LCS was NOT designed to do.

    1. It's not designed to survive high intensity combat.

    2. According to the article. the engines arent reliable yet.

    3. At least it floats.

    Specifically what was this ship designed to do?

  • Report this Comment On February 17, 2014, at 3:28 PM, nmwander wrote:

    Sounds like PT-109.

  • Report this Comment On February 17, 2014, at 10:39 PM, pwm02176 wrote:

    The question that needs to be asked and answered is what are the prospects over the next 50 years of 'high intensity' naval actions? If you can answer that question then you'll know if we need 52 or 32 of these boats. If you're just going to build these boats to get blown away in high action naval fighting then perhaps we'd do better to build fewer of them and focus on ships with less vulnerability......I'm a 32 ship build myself.

  • Report this Comment On February 17, 2014, at 11:14 PM, angrim20 wrote:

    To me, the answer is simple; cut the number of these ships to the number already built or started and then give them to the Coast Guard. If the navy needs a new small ship, then build a new class of frigates. If not, save the money for more destroyers. We can't keep throwing away billions on questionable weapons systems like this ship or 2500 F-35's. Give our men and women in the armed services good reliable systems, then let them do the good work they do.

  • Report this Comment On February 19, 2014, at 3:43 PM, cnyap wrote:

    Are there actually more issues with LCS than similarly sized defense products? I have not seen any objective data to back that up, including in this article which only points to one issue. Often such complaints are written by those with little or no defense knowledge. Planes and ships do not design themselves - it's work! The commercial world has similar issues.

    Airbus had years of delays on their new huge plane - is it done yet?

    Boeing's recent new designs had delays - issues with subcontractors all around the world…and then the batteries were burning - remember that?

    The fact that the government/Navy/customer did not ask for a ship which could survive a major battle is hardly Lockheed's (nor Austal's) fault. Does your car go 200MPH? No...why is that? do you feel cheated? Of course not - you did not expect a 200MPH car.

    Hardly would scaling back on purchasing these ships solve anything. The replacement ship’s design won’t be perfect on the first day it slides into the water either. Also, designing a new ship (which also involves a boatload of electronics – pun intended) is time consuming and costly.

  • Report this Comment On February 19, 2014, at 3:51 PM, cnyap wrote:

    In response to comments above, hardly should we only buy destroyers and other "Grade A" ships. You want extremely expensive (and slow) destroyers chasing pirates? If so, you better REALLY open up your wallet (assuming you pay a meaningful amount of taxes that is).

    To remain powerful yet be at all cost effective, having a diverse military is the way to go - not only cover the worse case, yet not penny pinch and not have no top performing weapons such as F22 and F35.

    $32B is likely based on 52 ships...that's still a bargain in today's world.

  • Report this Comment On May 19, 2014, at 9:51 PM, notsure1 wrote:

    Maybe Lockeed can refit the ship to the navy's intense combat specs and make everybody happy.

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Katie Spence

Katie Spence has been a financial journalist for The Fool since 2011. She specializes in defense companies, “green" technology, autos, and robots. Follow her on Twitter for breaking news in the defense, auto, and robot industry.

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