The Navy said its Ship-to-Shore Connector (SSC) program breached the Nunn-McCurdy acquisition threshold due to increasing costs, but noted it is not critical and production will continue.
The SSC consists of the Textron Systems [TXT] Landing Craft Air Cushion (LCAC)-100 class vessels that are meant to replace the Navy’s current fleet of LCACs reaching the end of their service lives. The new SSCs are designed to operate for 30 years and transport 60 to 70 tons of surface force weapons systems, equipment, cargo and personnel at over-the-horizon distances from amphibious ships. Vessel improvements include improved engines, fly-by-wire controls, higher payloads, smaller crew, and simpler maintenance.
The Navy plans to ultimately procure 72 LCAC-100s, largely built at the shipyard in New Orleans, La.
In a June 11 announcement, the Navy said it notified Congress on March 26 that the SSC experienced an increase in the Program Acquisition Unit Cost and Average procurement Unit Cost for the program which exceeds the current baseline estimate, breaching the Nunn-McCurdy cost threshold. The service did not provide specifics on cost changes by time of publication Monday evening.
“The breach is attributed to first in class challenges that led to increased construction costs resulting from labor and material cost growth and schedule related issues on early craft,” the Navy statement said.
It underscored this is not a “critical” breach requiring recertification of the program and “program production is now stable as the first in class challenges have been resolved.”
Under the law, the Defense Department must notify Congress if a program breaches the Nunn-McCurdy limits. In a more serious case, a significant breach counts as when unit costs increase by over 15 percent and less than 25 percent of the current acquisition program baseline or over 30 percent and under 50 percent of the original baseline.
The program has had a choppy history of delays and issues. In 2012, Textron won a contract for the initial aircraft, LCAC-100 and as of 2016 won options on the initial contract covering up to vessel LCAC-108.
In the Navy’s fiscal year 2020 budget request, the service cut SSC procurement numbers in the near-term due to contractual delays from FY 2017 to 2019 and delivery delays of craft awarded in FY 2015 and 2016 (Defense Daily, March 15, 2019).
In 2019, Defense Daily reported the reduction in FY ‘20 vessels was related to continued challenges in testing including electric system stability and command, control, communications, computers and navigation integration. Those delays increased cost and risk in the program as well as pushed back operational dates (Defense Daily, April 3, 2019).
In January 2020, then-Program Executive Officer Ships’ Amphibious, Auxiliary and Sealift Office Executive Director Matt Sermon said the budget decisions were based on getting LCAC-100 to builders trials and acceptance trials while following up on a “large handful of not-atypical first of class kind of integration issues,” (Defense Daily, Jan. 23, 2020).
A 2019 Government Accountability Office report provided further details of initial key SSC issues. This included how the SSC gearbox was showing gear slippage during testing, after already dealing with premature wear. At the time, the solutions to the issue were the third iteration of design changes related to problems with the gearbox. Notably, in October 2018 the LCAC-100 test vessel lost propulsion and drifted into a bridge during a test caused primarily by overheating in the propulsion power control module, which has since been fixed (Defense Daily, May 13, 2019).
Last year, the Navy awarded Textron a $386 million modification to build another 15 LCAC-100 SSCs, covering LCACs 109 to 123 over fiscal years 2017 to 2020 (Defense Daily, May 17, 2020).
The service accepted delivery of the first SSC last year and is using it as a test and training craft (Defense Daily, March 10, 2020). Then last August, the Navy accepted the second SSC, LCAC-101, as the first operational unit (Defense Daily, Aug. 31, 2020).
The service recently accepted delivery of the third SSC, LCAC-102, earlier this month after it completed acceptance trials with the Navy’s Board of Inspection and Survey (Defense Daily, June. 4, 2021).
In this announcement, the Navy said LCAC-102 arrived at Naval Surface Warfare Center Panama City Division on June 9 to conduct additional tests. The service said deliveries of LCAC-100 and 101 allowed the Navy to move forward with the initial operator training pipeline and move into post-delivery test and trials at the Naval Surface Warfare Center Panama City Division.
The service added that LCACs 103 to 115 are currently in production and “show reduced overall man hours and expedited outfitting in earlier stages of construction for improved cost and schedule performance.”
The Navy also noted the updated acquisition program baseline is based on procuring the originally planned 72 operational craft with “actual serial production cost experience if the shipbuilder and its vendors.”
The last notable Nunn-McCurdy breach by the Navy was in 2019 when the Long-Range Anti-Ship Missile sustained a “significant” unit cost breach (Defense Daily, Aug. 2, 2019).