Secretary of the Navy Donald C. Winter and Chief of Naval Operations Adm. Gary Roughead announced today that the Department of the Navy is terminating construction of the fourth littoral combat ship (LCS 4) for convenience under the termination clause of the contract because the Navy and General Dynamics could not reach agreement on the terms of a modified contract.
The Navy had not yet authorized construction on LCS 4, following a series of cost overruns on LCS 2. The Navy intended to begin construction of LCS 4 if the Navy and General Dynamics could agree on the terms for a fixed-price incentive agreement. The Navy worked closely with General Dynamics to try to restructure the agreement for LCS 4 to more equitably balance cost and risk, but could not come to terms and conditions that were acceptable to both parties.
The Navy remains committed to the LCS program. –LCS continues to be a critical warfighting requirement for our Navy to maintain dominance in the littorals and strategic choke points around the world,” said Winter. –While this is a difficult decision, we recognize that active oversight and strict cost controls in the early years are necessary to ensuring we can deliver these ships to the fleet over the long term.”
–I am absolutely committed to the Littoral Combat Ship,” said Roughead. –We need this ship. It is very important that our acquisition efforts produce the right littoral combat ship capability to the fleet at the right cost.”
The fixed-price deal the Navy was trying to switch to was apparently not acceptable.
The second ship from both the LCS 1 Freedom-class and the LCS 2 Independence-class have now been canceled. Cost overruns have plagued the program, with the Navy and the builders blaming each other.