Lockheed Martin is Having a Really Good Week

Have you seen a picture of LCS-1 Freedom yet? If the answer is no, that makes you the only person on the internet yet to see the pictures. Lockheed Martin deserves a lot of credit, the recent news that Israel wants to buy 4 of Lockheed Martin's multi-mission combat version of the LCS, known as the LCS-I, began a string of stories that puts Lockheed Martin in a positive light, and some smart marketing guru at LM is earning their paycheck.

Following the announcement of a potential sale to Israel, we got some photo's of the inside of Freedom just 5 days before builders trials. Have we been duped into being a stooge for Lockheed Martin? If we have, good for them, the way we see it Lockheed Martin just as much a part of this community as everyone else. We've certainly given their executives hell in the past, and will again should it be deserved. Not this time though, the Navy is in dire need of a feel good shipbuilding story and you can credit Lockheed Martin for doing their part. They are in the business of selling ships, and right now business is looking good.

With the arrival of LCS-1 builders trials, it has taken just 3 days for the Navy to get 18 very clear photos of LCS-1 up in their "Eyes on the Fleet" section, all courtesy of Lockheed Martin. Throw in not one, but two videos, and the only thing missing is the ability to embed the videos on blogs. Tim Colton, who sees the PR machine in motion too, has often commented on the inability of Lockheed Martin to build ships. We default to his expertise on that subject, but whether they can build ships or not, they can certainly sell ships better than say, Northrop Grumman.

Consider for a moment that when the USS Green Bay (LPD 20) had builders trials, we are the only ones on the internet who had photos for the public, and they weren't courtesy of Northrop Grumman, who published no photos. Brett Favre and the Green Bay Packers have been the talk of sports news for a hundred million Americans since mid June, and the Northrop Grumman marketing men never came up with a way to showcase their product? In a month, the overpriced LCS is likely going to have a much improved reputation, and the LPD-17, which has been meeting cost targets, will still be a bastard of shipbuilding because of a cost problem of eight years ago.

While the LCS is a feel good story for Lockheed Martin, consider how events completely out of their control only elevate their good news. The Congressional Hearing tomorrow could turn into a major endorsement of AEGIS Ballistic Missile Defense. If Congress decides to build more DDG-51s, and cancels the DDG-1000, the net result allows Lockheed Martin to beat back competition from Raytheon's combat system, which is intended for the DDG-1000. That is a major coup btw, Raytheon's combat system is truly open while AEGIS is not.

As if that isn't enough good enough news for Lockheed Martin, the bad news regarding LCS-2 Independence is just terrible timing for Austal. The good folks at the Mobile Press-Register newspaper deserve a lot of credit. DefenseNews tells the tale.

An internal U.S. Navy audit found a "significant breakdown" in oversight and cost controls for the second littoral combat ship, now about $300 million over budget and a year behind schedule at its shipyard in Mobile, Ala., according to a July 30 report.

The Navy document, obtained under the freedom of information act by the Mobile Press-Register newspaper, reported that project managers at Austal USA, the shipyard building the General Dynamics-designed LCS 2, were not keeping Navy acquisitions officials in the loop about the Independence's cost and schedule problems.

The Press-Register blog has the report linked for download. From the report, this is an example of how a shipbuilder, AND the Navy leaves a really terrible impression of management and oversight.

We found that EVM was not sufficiently implemented and overseen by any of the responsible parties on the LCS-2 “Independence” detailed design and construction contract. Our audit identified the following risks associated with the implementation and use of EVM on the LCS program: (1) Austal’s EVMS as related to the LCS program, did not comply with 20 of the 32 DoD established EVMS guidelines; (2) SUPSHIP Bath did not provide adequate surveillance over Austal’s EVM implementation; (3) GD/BIW, as the prime contractor, did not effectively oversee Austal’s EVM implementation; and (4) PEO Ships and PMO did not have adequate visibility over the LCS contractor’s cost, schedule, and technical performance. These conditions occurred because (1) DCMA, as the Executive Agent for EVM, and NAVSEA did not provide sufficient oversight to ensure EVM was properly implemented for the LCS-2 “Independence” contract; (2) Defense Contract Audit Agency had not performed required audits of Austal’s EVMS; (3) SUPSHIP Bath and the contractors did not implement a fully effective surveillance program; and (4) LCS PMO and the contractors placed limited emphasis on the implementation of EVM for the LCS program.

Considering the turmoil surrounding the shipbuilding budget right now, the frustration of so many regarding poor management in shipbuilding across the board, and that "Austal’s EVMS as related to the LCS program, did not comply with 20 of the 32 DoD established EVMS guidelines" which at this point in shipbuilding there is absolutely no excuse for, all that money invested in Austal is starting to look like a questionable investment.

This news comes on the same day it was reported Austal delivered the JHSV Phase II design to the Navy. We have previously covered the JHSV program. That is just terrible timing. Austal is in competition with General Dynamics, who wants to build their Rolls Royce JHSV design (PDF) in Bath, but is also in competition with Incat, who would build their JHSV at Bollinger Shipyards, which happens to be the other shipyard Lockheed Martin would build Littoral Combat Ships.

Lockheed Martin is enjoying a great public relations week, and the competition just happens to be simultaneously dealing with terrible public relations. Lockheed Martini is clearly having a really good week, and it only gets better if the DDG-1000 program dies tomorrow.