Unit cost of Army watercraft more than twice the original price
WASHINGTON — The U.S. Army’s new watercraft will cost more than double the original price tag to build, according to the service’s acquisition chief.
The unit cost, after the most recent contract negotiations with the Maneuver Support Vessel (Light)’s builder Vigor Industrial, increased from $27.8 million to $63.1 million, a spokesperson for the acquisition chief confirmed.
Army officials have stressed the importance of building up a new watercraft fleet to contend with operations, particularly in the realm of contested logistics, in the Indo-Pacific region. Years ago, the Army shifted its priority away from the capability as it focused on operations in the Middle East. Now, with the service concentrating on deterring China as well as forging allies and partnerships in the theater, the need for watercraft is high on the Army’s list of requirements.
“Like a lot of first-in-class in shipbuilding, costs were higher than expected,” Doug Bush, the Army acquisition chief, told Defense News in an interview last month. “We found all the problems in building a vessel like that. And then our vendor — there were some challenges they had with their parent company that we had to work through. But we’re now, I think, clear and running on that one.”
“Material costs more, labor costs more, and then on the Army side … requirements drive the cost,” Bush added, explaining the cost increase did not surprise him. “The Army wants it a certain way, and it’s harder to build that in a shipyard well. That adds time and money.”
The program “faced significant changes in economic conditions such as increased material cost, supply chain disruptions, workforce availability and labor rate increases,” Bush’s spokesperson said in a Nov. 8 statement to Defense News.
Increases in material cost made up 75% of the growth, the spokesperson added, with labor and overhead accounting for the remainder.
The Army took a long time to negotiate the new price, Bush acknowledged, and now hopes additional funding within the next budget can stabilize the program.
A year ago, the service placed the new vessel into the water in Portland, Oregon, marking the first time the Army embarked on a new watercraft program since the mid-1990s. The service awarded a $980 million contract to Vigor to build the new landing craft in 2017. The plan a year ago was to procure 13 of the MSV-Ls, according to the Army’s program executive officer for combat support and combat systems support.
Bush said the Army was ready to move into low-rate production. “We’re willing to take a bit of risk on the cost because the Army really wants [them],” he said.
