The Navy's Next Warship Could Give One Lucky Company a $50 Billion Bonanza


Lockheed Martin's Littoral Combat Ship -- bigger than a bread box, but still not big enough? Photo: Wikimedia Commons.

The U.S. Navy needs a new warship.

Maybe it doesn't need more warships. But the way the Navy has been spending its money lately doesn't make a whole lot of sense.

  • Spending billions of dollars to develop a fleet of Littoral Combat Ships -- then cutting the fleet in half, and increasing the per-ship cost in consequence, after the Pentagon determined the ship "is not expected to be survivable in high-intensity combat."
  • Investing billions more in developing a stealth superdestroyer called the USS Zumwalt, with plans to keep development costs manageable by spreading them out over a fleet of 32 ships ... then reversing course on that one, too -- forcing the entire $9.6 billion program cost to be borne by just three ships.
  • And of course, building what could easily become the world's biggest, and most expensive, floating target for China's new DF-21D "carrier killer" ballistic missile -- the USS Gerald R. Ford supercarrier.

The result of all this one-step-forwarding, two-step-backing is that the U.S. has been left with fewer, and more expensive, warships. Perhaps too few to fulfill its missions.

That's the result. But what's the solution?


China's massive DF-21D carrier killer ballistic missile -- packaged for home delivery. Photo: Wikimedia Commons.

Meet the solution
As I said before, the U.S. Navy needs a new warship. Specifically, a new kind of warship. Last month, the service invited defense contractors to put forward ideas for how to build it, calling the new concept vessel the "Small Surface Combatant," or SSC. And what would SSC look like?

Ideally, SSC would occupy a place in the spectrum of U.S. naval warships somewhere between that of a small Coastal Patrol boat...


Cyclone-class Coastal Patrol boat USS Firebolt (PC-10). Photo: Wikimedia Commons.

... or Littoral Combat Ship...


America's first Littoral Combat Ship, the USS Independence (LCS-1). Photo: Wikimedia Commons.

... and something bigger, like a guided missile destroyer.


At $3.5 billion a pop, the Navy's new Zumwalt-class superdestroyer may be too expensive to risk in combat. Illustration: U.S. Navy.

The SSC needs to be big enough to carry a large arsenal of rockets and missiles, high-tech enough to survive in a modern warfare environment, and yet still cheap enough that we can afford to build a lot of them. DefenseNews.com reported last month that any ship with a price tag of $1 billion or above will be "far too expensive" to pass muster. (For comparison, when the Oliver Hazard Perry-class frigate was first built in 1978, its cost would work out to about $683 million in today's dollar terms.)

Can we buy off the rack?
Hoping to keep the SSC's price down, defense contractors Lockheed Martin (NYSE: LMT  ) , Huntington Ingalls (NYSE: HII  ) , and General Dynamics (NYSE: GD  ) partner Austal USA (NASDAQOTH: AUTLY  ) say they have existing ship designs that might be tweaked to suit the Navy's new requirements.

For example, Lockheed or Austal might take one of their two Littoral Combat Ship designs, scale them up in size, and replace the LCS' fungible "mission modules" with a more permanent package of guns, missiles, and radar systems. Or Huntington, already a preferred provider of "cutter" vessels to the U.S. Coast Guard, could militarize its new National Security Cutter a bit to suit the Navy's tastes.

Recycling designs is not a half-bad idea. Indeed, it already has the imprimatur of Secretary of Defense Chuck Hagel, who has advocated developing "a capable and lethal small surface combatant generally consistent with the capabilities of a frigate." Hagel, at least, sees nothing wrong with tweaking existing ship designs to arrive at that result.

Which company will win the contract?
But at this stage in the process, development of a SSC -- by anybody -- remains up in the air. The Navy has canvassed the industry for ideas, which it expects to begin reviewing later this month. But it has not yet issued an official "request for proposals" from defense contractors looking to bid on SSC.

All three ship designs have their merits. Naval analyst Craig Hooper, writing on the NextNavy.com blog, believes Lockheed Martin has the advantage, given that its Freedom-class LCS basically looks like what a standard-issue warship should look like, and that plans to build a larger version of the Freedom as an SSC are already "in the can" and ready to be submitted by the Pentagon's May 22 deadline.

I personally think a scaled-down version of Huntington Ingalls' and General Dynamics' Zumwalt-class superdestroyers could win a bid. With billions of dollars of research and development already sunk into the Zumwalt's design, reworking some of that research into a smaller, "stealth frigate" -- and spreading the costs over multiple copies, might be a good way to maximize returns on the Navy's investment.

How much could the contract be worth?
What might an SSC contract be worth to the lucky winner(s)? It depends on what you think the Navy is aiming for. Say the service thinks the LCS is a good ship, just not capable enough of performing "frigate missions" to justify building all 52 units it initially planned to build. In that case, the Navy might stop at the 32 LCSes presently envisioned and build the rest of the production run as SSCs. That would suggest a 20-ship SSC fleet, and a top value of perhaps $20 billion on the contract.

Alternatively, if the Navy views the entire LCS project as a bust, and decides to start again from scratch, then it might well still believe it needs a fleet of 52 small surface combatants. That would lift the ceiling on the contract value past $50 billion.

For now, we seem to have more questions than answers. But we'll surely know more later this month when the Navy issues an official request for proposals. Stay tuned.

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  • Report this Comment On May 11, 2014, at 12:58 PM, mark204 wrote:

    That the military for you never think things out before the start a project. They get a few hundred million or billion dollars into something and finds out it doesn'twork

  • Report this Comment On May 11, 2014, at 1:12 PM, Freddyfreebe1 wrote:

    Price doesn't get you qu

  • Report this Comment On May 11, 2014, at 1:19 PM, Freddyfreebe1 wrote:

    Price can give you looks but price is a scam when it comes to quality. When it comes to a billion dollar, it doesn't go very far to help people but to drop 20 billion on a helicopter and 50 billion dollars for a ship , not enough is said about the over price junk they get. But we all know it is part of the water bucket with holes in that has to pay for these items. How many pockets have to get fat before the money gets to the item. Congress and the Defense budget is the greatest stories ever told.

  • Report this Comment On May 11, 2014, at 1:22 PM, dking2063 wrote:

    $50 Billion for a boat. Why are we thinking of building a boat that can be taken out with one missile. These platforms are 1000's of years old and a worthless technology. Time to do like other countries and invest in the future of space technology. One satellite sitting in orbit 200 miles above a country is a lot more threatening than a boat. And for a $50 billion boat you can build 100 armed satellite platforms

  • Report this Comment On May 11, 2014, at 1:37 PM, airvetreprenuer wrote:

    ". . .And of course, building what could easily become the world's biggest, and most expensive, floating target for China's new DF-21D "carrier killer" ballistic missile -- the USS Gerald R. Ford supercarrier."

    -only befitting that the same politicians who insist on doing "business as usual" would waste taxpayer finances in a rush to dedicate a monument to the co-conspirator of the Iran-Contra scandal.

    After decades of undermining our foreign policies (and integrity), and putting countless Americans at risk, the people who were/are responsible are either fighting, or conspiring with extremists to hijack the g o p, -in pursuit of an agenda that will continue to divide our country, and expose us to greater security risks, internally, and externally.

    Yet, they have the audacity to politicize the 2012 attack in Benghazi, of all things.

    Perhaps we should wait until after the midterm election, and (hopefully) we'll have a responsible congress that will ensure that the Pentagon (and contractors) will complete their homework before awarding any multi-million, and multi-billion dollar contracts.

  • Report this Comment On May 11, 2014, at 1:45 PM, thecreeper wrote:

    What the Navy needs is a Six Pack ship. 6 individual ships that are designed to fit together on the high seas and form a large ship enough for planes to land. If the need arises they could detach and go six different ways.

  • Report this Comment On May 11, 2014, at 1:48 PM, MPA2000 wrote:

    $50 billion? What the hell do we need new Frigates for? The ones we have now can still out perform anything in the western world and we aren't going to be fighting any Western countries

  • Report this Comment On May 11, 2014, at 2:06 PM, yank1776 wrote:

    There is no need to reinvent the wheel and blow all this taxpayer money. The French FREMME class or the Italian Horizon class, or the Dutch Zeven Provincien class are ships that are proven and could do the job required. And last I heard they are Allies. Of course no member of congress could line their pocket if we bought those ships.

  • Report this Comment On May 11, 2014, at 2:13 PM, lester1974 wrote:

    I would think it would be interesting to develop a ship that could partially submerge. This would leave a small surface target for any incoming missiles. This would be like the civil war era monitor. With mostly the guns, launchers and upper deck house just above the surface. This would be a hybrid submarine and a destroyer. This would give us the SSC the navy is looking for.

  • Report this Comment On May 11, 2014, at 2:13 PM, JubalvHarshaw wrote:

    There are two kinds of vessels afloat: submarines and targets. Reference "The Dragon in the Sea" by Frank Herbert. Thorium reactors are smaller, more efficient, and require a smaller support crew. Subs should be smaller, deeper diving, hunter-killers, not mega launch platforms. But, then such concepts are beyond most brass.

  • Report this Comment On May 11, 2014, at 2:49 PM, MikeF wrote:

    @Yank: I'm Dutch myself and actually live 'next door' to the shipyard building the ships. The Zeven Provincien class is very up to date / modern. And it's a proven concept. Alot cheaper then throwing money at development and not being able to actually build past a prototype or experimental ships.

    But as you can read here some Americans think their old ships can out perfrom anything the western world has out there ... :D

    I wish people actually read the training exercises for the allied Navies out there. Somehow the word out performing isn't in those reports. They did have to reset one exercise cos one side got whiped out in a mere day when it was suppose to be a 3 week exercise. (go go superswarm attack)

    Surface ships do need upgrades because they are indeed floating targets. And subs are very very dangerious as suggested on here. The Dutch have 4 subs (yay!) and one of those simply took out a entire carrier fleet undetected and got away with it too. They're extremely quiet compared to U.S subs.

    The major worry now is Germany who is selling their diesel - eletric drive train to China. You won't hear those coming anymore though experience wise the Chinese will need about a decade to catch up.

    The U.S would be better off actually upgrading it's submarine fleet.

    The Dutch has a good list of modern design ships which have proven their worth and most of them are stealthclass. We had those for years now compared to the U.S just coming up with their 'designs'.

    I'm pretty sure the French or Dutch designs can be bought ofcourse. Just make sure the U.S builds them themselves cos you need the workers to be working there.

    And when they Russians do show up in the North Sea after 2 decades? We had the Zr.Ms. De Zeven Provinciën out there spotting them so they know now they cant sneak up on us. They actually brought the RFS Kuznetsov (aircraft carrier) along with an entire fleet so they're trying to impress.

  • Report this Comment On May 11, 2014, at 2:54 PM, motiveman wrote:

    The Navy has wasted billions on Frigates, just look back to the 80's-90's.

    The backbone and workhorse is the Destroyer, drop the BS and build more cheap and deadly "Tin Cans"

  • Report this Comment On May 11, 2014, at 3:36 PM, slopoke0331 wrote:

    In the 1970s, an article was published which advocated saving defense department money by getting rid of the Air Force. It seemed funny at the time but would make a lot of sense now. Take the funding for the AF and make it available to the Navy for upgraded carriers and aircraft and to the Marines for advanced close-air support helicopters and UAV craft.

  • Report this Comment On May 11, 2014, at 4:10 PM, KUBLOTNIK wrote:

    it's ALL so very expensive......so let's just cancel ALL of our military spending and declare the world "safe for democracy". worked for the "war on terror" that obama and his boys declared OVER.! then we can just sit around the campfire ,hold hands, and sing kumbaya together. all the hippies in the 60s thought that was a great idea.!

    ever since SLICK WILLY signed that executive order in 1998 giving loral space the ability to sell CHINA our missile guidance tech, the chinese have developed the capability to shoot our satellites, our ships, our planes, our subs and our cities. ....so let's just throw up our hands and say WE QUIT.! we can then convince ALL our enemies that we are no longer a threat to them ,and they WILL LEAVE US ALONE.!

    we should have done that since 1865. then we wouldn't have spent so much in blood and treasure, and we would have PEACE.!........NOT.

  • Report this Comment On May 11, 2014, at 4:50 PM, WalkerT wrote:

    If Lockheed gets the contract, I want a job!!!

  • Report this Comment On May 11, 2014, at 5:30 PM, Capistrano wrote:

    One problem the Pentagon (and there are many) is they are totally focused on their electronic toys. They seem to feel that having redudent systems, only applies to electronics. They have cut out the human factor in their weapons system. If a ship looses power, what are they going to fight with?

    As recent events have shown, the Pacific is the next sand box that they are going to have to play in, and they have a whole lot of catching up to do. After all, they closed all the bases on the West Coast, so they have no place to base out of. Yes, they need vessels to operate in restricted waters, but probably something much smaller, much simpler, and less expensive, so they could have a bunch of them for operating in the islands of the Western Pacific. They have played with so many designs over the years, and wasted so much money proving that they do not get more bang for their buck with their end product. Plus they constantly get rid of systems that work only to replace it with something that doesn't! Example: The ships mentioned in this piece. Another classic example is the up coming Reduction in Force where they are going to get rid of the Fighting Officers instead of the Dead Wood at the top!

    They should keep the Officers that have a dose of reality, and get rid of the idiots that fight the las war, and cost men's lives! Throw in all the currently elected officials, just for the fun of it, and get back to the basics of running and defending the Country!

  • Report this Comment On May 11, 2014, at 6:01 PM, jmundt wrote:

    I see a lot of bang for the BUCK, screw China.

  • Report this Comment On May 11, 2014, at 6:07 PM, KeninOhio wrote:

    Corruption in Government and the Military.

    In China the politicians and admirals would be executed for treason.

  • Report this Comment On May 11, 2014, at 7:07 PM, stockingshorts wrote:

    With a coastline thousands of miles long, Littoral ships are a must for close in protection and monitoring of our extensive coastlines. Our robust fleet of Ballistic Missile Sub Boats is THE "Checkmate" we have in any response by the Yellow Horde.I would also venture that China's, Oooooo, "Carrier Killer" ballistic missile is obsolete sitting in its tube. Just look at the truck carrying it!

  • Report this Comment On May 11, 2014, at 7:45 PM, TheAncient wrote:

    For a country who, according to the GOP is broke, we certainly have an awful lot of money to P away on war toys but not a dime for American citizens themselves. Nearly a $1T for the F-35, $15B? for a new carrier, half a trillion for that floating bullseye the Littoral ships but so broke they had to cut $8B in food stamps which btw was given to corporate farmers.

  • Report this Comment On May 11, 2014, at 7:55 PM, ronvan wrote:

    Chinas "carrier killer" missile? My question would be IF we know they have it, do we know its capabilities? IF so, then build ships to combat it! I always wonder what the cost would be to "upgrade" current destroyer's to carry out their mission? I am sure not an expert here but have heard many comments that this "stealth" stuff CAN be detected? IF so then why waste money on building a stealth ship? Provide them with the latest radars, computers, etc., and load them with tons of defensive capabilities! Even to the extent of making them nuclear powered!

  • Report this Comment On May 11, 2014, at 9:23 PM, geoJane wrote:

    @ KeninOhio - Corruption? Apparently, PLAN Admirals own luxury hotels which are given exclusive rights for official State/Mil business stays and conventions, etc.

    @ Motiveman - Pure Destroyer fleet? Current AEGIS Destroyers cost over $2B ea. to procure. They're relatively high cost to operate as 'presence' surface combatants too, among other limitations such as large-size and non-stealth. Upgraded versions of the current design would of course cost more. USN is probably looking for a more sustainable, cost-effective, 'presence' surface combatant concept to mix with larger Destroyer surface combatants.

    @ MikeF and Yank - Excellent points to note and very correct. Yes, USN could very much in fact examine existing 'modern' frigate-class (and even corvette) designs as options to further customize/adapt (to fill any potential additional requirements) too. And also true, said foreign designs could of course be license-built by US-based ship builders.

    @ MPA2000 - USN already has superior Frigates in it's fleet today? Nope. Sorry, but USN dis-armed (de-toothed), retired, or sold-off her old, obsolete Frigate surface combatants. And that's the whole point and conundrum: A big capability gap. USN brass are suddenly realizing, 'whoops'; the new LCS wonder-hulls won't sufficiently replace/perform the requirements of a cost-effective Frigate.

  • Report this Comment On May 11, 2014, at 9:48 PM, Azbill007 wrote:

    The whole military/industrial complex is out of control. The navy with huge ships that can be taken out with a determined bunch of suicide drivers in fast speed boats or the air force with its star wars F-35 which should never be built. These useless projects have to be conceived by the military and companies who want to feed off the taxpayer teat but really don't want to fight a war. Give me 100 "warthogs" in place of an F-35 anyday. Don't they understand that war is all about expendables?

  • Report this Comment On May 11, 2014, at 10:32 PM, TKK1959 wrote:

    Why make them so expensive that they cannot risk being sunk during combat doesn't make sense to me. Keep the Navy's ships as tough as nails, supply them with needed weaponry, & go kick some Communist ass! Some of their thinking.......needs re-thunk!

  • Report this Comment On May 11, 2014, at 11:46 PM, mbee1 wrote:

    If you are going to spend billions on something would it not be a good idea to say why you need something first. If the world will come to an end without this ship, than build what we need. I suspect the world will not come to an end and we really do not need any expensive sitting ducks. What we may need is a means to transport troops and materials world wide in a hurry, a few days across the pacific, base our military here and when we need it ride the ship up the Yantze river until we reach a thousand miles inlland with two divisions in two days. The carrier is a sitting duck and so are any of these ships which bassically are souped up WWI ideas dispite all the missles and guns.

  • Report this Comment On May 12, 2014, at 12:39 AM, southernshark wrote:

    The navy needs a new design, not a tweak. To hell with the costs.

    It needs a new ship which can be both and land and sea assault weapon, a ship which can transform into a giant walking robot with power fists that launch off and destroy things. That's the future.

  • Report this Comment On May 12, 2014, at 1:40 AM, smartfone wrote:

    How about we build ships that we'll actually use...it feels like some sort of art contest at the pentagon.

  • Report this Comment On May 12, 2014, at 2:34 AM, Fight4Justice wrote:

    I still find it hard to believe that the US Taxpayer was stuck with a tab in which the cost per flight hour of the F-22 had grown to $68,362, over three times as much as the F-16 and the DOD just keeps throwing more money into it and into the most recent aircraft continuing money pit called the F-35, both of which are profitable program fiascoes of Lockheed Martin. The F22 was the most costly aircraft never to have seen action and it looks like the F-35 may even top that. This said, you can rest assured that incompetence, corruption and political payoffs are the norm throughout the DOD, indeed the entire government on a scale never before seen in the history of mankind.

  • Report this Comment On May 12, 2014, at 2:45 AM, Fight4Justice wrote:

    Other than the US Government, who else would award a contract for a product and then reward the contractor with more money when he fails to deliver as agreed to in the contract specifications even to the point of total failure to meet even basic requirements? Then even after failing to deliver on the first contract reward the contractor again and again with more and more contracts to produce more and more products to accomplish what the first failed to do. Answer: None. If ever held to a basic standards of quality and timeliness, Lockheed, Boeing, Northrop, Raytheon and Gen. Dynamics will go bankrupt. If ever there was a time to clean out the government top to bottom and start all new, this is it, the time is now.

  • Report this Comment On May 12, 2014, at 8:45 AM, GCshipbuilder wrote:

    Take this from an "industry insider" that does NOT work for HII: HII has the upper hand. The NSC has the costly and cumbersome/troublesome boat recovery aft ramp thing that can be removed and replaced with Tomahawk tubes and then a tried and true slewing arm davit gets put over the side. Then the Bofors gun needs to be slightly upgraded in caliber and voila, you have your new FFG. Nothing else needed. At a current pricetag under $500M and only probably $100-200M in redesign and upgrades, that is clearly my pick for winner here. There is little to no risk to the government or the company because these things are already being built right now. The key is how soon the government awards these. When NSC is done (and it's only about 5 years away) and craftpeople move to new projects, the learning curve is back in play and it can be nasty on budgets.

  • Report this Comment On May 12, 2014, at 8:45 AM, ilsm50 wrote:

    A new class of defenseless ships aka frigates.

    Navy has other industry base problems that sustaining shipyard welfare aggravate. Its radra/sensor industry base is inept.

    Unit price of the useless Littoral Combat Ship may rise, but the total cost of operating the wasteful PT boat is vastly reduced. Concern for unit price is a con artists' line.

    The Frigate at less than half the size of the Zumwalt, which was cancelled because it does not have an adequate targeting radar (neither does new Arleigh Burke) is more shipyard welfare.

    When the navy can defend it carriers with working weapons, targeting and controls it should decide on a mix of defensive ships.

    The Frigate is still an oversized useless PT boat!

  • Report this Comment On May 12, 2014, at 8:57 AM, ilsm50 wrote:

    @geojane;

    The terrorists in Zodiaks with RPG's don't care about stealthy 4000 ton PT boats, aluminium burns at 1000F.

    A country with moderate surveillance and any number of AS missiles (or armed with cessnas like US gave to Iraq) will take these out.

    On blue water they do nothing.

    The money should go for a working MFR (radar), not in the realm of Navy's welfare queens.

    The military industry complex' critical investment data are "core spending" and picking which of the welfare queen gets the dough.

  • Report this Comment On May 12, 2014, at 12:19 PM, JSIII wrote:

    The US could look to Europe for a mature "multi mission" frigate design. The French, Germans and British all have mature designs that have proven to be capable while economical. The Germans especially have experience in tailoring designs to export customers. We should be buying SSK's from the Germans too, the whole LCS program needs to go away except as a mine hunting ship. Use the funds

  • Report this Comment On May 12, 2014, at 12:52 PM, jrp6216 wrote:

    My single biggest questions is 'why' do we allow the terrible cost over rides? Every plane and naval ship we build ends up costing us twice as much as the original quote.

    As long as we have elected officials in control of the finished product, we are going to suffer with the overrides.

    Put out a request for bids for a ship,plane, tank or canteens and when the companies submit their final bid, hold them to it. If they go belly up, too bad. I just have trouble understanding how an initial bid of $637 million suddenly becomes $4.5 billion. The politicians who say, Oh OK, that's acceptable, should be fired and dis barred from any legal employment, including any weapons manufacturer for life.

    How much did the F-35 price increase before the first plane flew?

    There is no way in hades we could beat the ChiComs in a standard land war.That was proven in the Korean Conflict. It wasn't a War. And I honestly think we could not beat the 'NEW' Soviet Union. No country with half a brain would go nuclear. Except that north korean communist dictator might try one.

    If only we had a few honest politicians. Just a few would go a long way.

  • Report this Comment On May 12, 2014, at 2:11 PM, LaryB wrote:

    It seems curious why the Navy needs a new ship with so many ships in mothballs. Certainly, an existing ship could be refurbished to fit their needs. Or perhaps put several ships back in service for the same amount of money. Navy Admirals are just like Army Generals, they need their toys but do we have to pay for them.

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