Contact: Josh Holly (HASC), 202-226-3988 Lisa Wright (Bartlett), 202-225-2721
Washington, D.C. – “Mr. Chairman, I would like to thank the witnesses for being with us today. Dr. Etter, on January 11th you announced publicly that the Navy was aware of significant cost growth on LCS 1 and that the Navy would be taking prompt action to investigate the matter further to determine the exact amount of cost growth, as well as root causes.
“The following day, Secretary Winter delivered a stop-work order to Lockheed Martin, the lead systems integrator, for LCS 3, which had not yet begun construction. While I applaud your efforts and the efforts of your staff to keep members of Congress apprised of the steps being taken by the Navy over the last four weeks, I have also expressed my concern to you regarding our apparent inability to learn from past lessons.
“Today will be the first opportunity for this subcommittee to receive testimony on:
- “The Navy and Lockheed Martin’s preliminary findings regarding root causes of cost growth;
- “The LCS acquisition strategy, which was widely heralded as a paradigm shift for shipbuilding, but which may have inadvertently created challenges for the Navy and industry team;
- “The Navy and Lockheed Martin program management structures for LCS – how well did these structures perform their duties and what lessons have been learned to mitigate further cost growth on follow-on ships and other shipbuilding programs; and
- “The reporting mechanisms and the incentives in place to minimize cost, schedule, and requirements growth, particularly within the confines of a ‘cost-plus’ contract and using a lead systems integrator.
“I cannot over emphasize the importance of your testimony in this regard. This subcommittee has been committed to ensuring that the Navy and Marine Corps receive the necessary resources to maintain sufficient force structure to meet current and future operational requirements. However, if LCS costs cannot be controlled, we will meet neither the operational requirements of our Navy, nor the needs of our industrial base. I consider this a serious threat to our national security.
“In the near term, the President submitted his budget request this week. The request includes funding for an additional three LCS seaframes, which would provide authority for hulls seven, eight, and nine. It is critical for this subcommittee to understand what measures the Navy proposes to take and the point at which the LCS design stabilizes, in order to adequately evaluate the budget request and to make appropriate decisions. I would ask all our witnesses to maintain an open dialogue with this subcommittee, even after this hearing, to ensure a sensible outcome for fiscal year 2008.
“Lastly, I would like to remind members that while the Navy has awarded contracts to both Lockheed Martin and General Dynamics for Flight 0 of LCS, both contractors remain in a competitive environment. As a result, some of the information relevant to this hearing, such as exact cost and man-hour estimates or engineering data that may provide a competitive advantage, is considered business sensitive. We should all respect the proprietary nature of such information and the laws which govern the witnesses’ testimony. Both the Navy and Lockheed Martin have done an extraordinary job of sharing such information as may be necessary for this subcommittee to perform its oversight function. As a result, much of that data has been provided to committee staff and is available to members upon request.
“Again, I want to thank all of you for your distinguished service to our country and for participating in today’s hearing.