Congressional Budget Office Raises Alarm on Soaring Costs of Navy’s LSM Fleet

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The Congressional Budget Office has quietly that the projected costs for the Navy’s Landing Ship Medium (LSM) program could exceed initial estimates by billions of dollars. The office has raised concerns about the ultimate design and functionality of the LSM, which adds further complexity to the financial forecasts.

The program is anticipated to require between $6.2 billion and $7.8 billion for an 18-ship initiative, which breaks down to $340 million to $430 million per vessel in 2024 dollars. This figure starkly contrasts with the Navy’s earlier projection of $2.6 billion total or $150 million per ship. If expanded to 35 ships as advocated by the Marine Corps, costs could escalate to between $11.9 billion and $15 billion, according to the CBO’s report released on April 11.

A central point of contention is the LSM’s operational role, particularly whether these ships will function only before conflicts or also during active military engagements. This operational use will directly influence the design standards of the ships, shifting between commercial and military specifications. The report indicates that adapting to purely military standards could increase the costs by $2 billion to $3 billion for 18 ships and up to $6 billion for 35 ships.

Contrarily, adhering to commercial standards could potentially reduce the expenditure by $4 billion to $8 billion for an 18-ship program and $5 billion to $10 billion for a 35-ship lineup.

Further adding to the uncertainty, the final count of LSMs remains undecided, with the Navy proposing 18 ships and the Marine Corps pushing for 35.

This comes as the project was slated to commence in fiscal 2023 but was ultimately pushed to 2025 due to budget constraints. Despite this, preliminary contracts for design refinement have been awarded to five companies.