How the Navy Blew $30 Billion on 10 ‘Cheap’ Ships

In March 2004, the Navy bet big on the Littoral Combat Ship, tapping not one but two shipyards—one belonging to Lockheed Martin and another to Australian firm Austal—to begin building as many as four of the new warships ever year. “We need this ship today,” said Adm. Vern Clark, then the sailing branch’s top officer.

Back then, the Navy anticipated that by 2019 it would have bought 49 LCSs on its way to a total force of 56 of the versatile vessels, all at a cost of less than $30 billion, according to a 2003 report from the Congressional Budget Office. The way Navy planners imagined it, the first LCS would deploy as early as 2010.

By 2025 the shallow-water vessels would be the backbone of the Navy, the thinking went. “I predict when it is all said and done that they will be the workhorses of the fleet,” Adm. Gary Roughead, one of Clark’s successors, said in 2009.

Then the problems started. The first LCS, USS Freedom, was $400 million over its original cost estimate when it launched in 2006. To make matters worse, mechanical and structural problems festered inside the ship, the symptoms of a rushed design process. In 2010 and 2011, Freedom and a sister vessel both suffered serious maintenance failures within months of each other, sidelining the ships for months.