Unit cost of Army watercraft more than twice the original price

WASHINGTON — The U.S. Army’s brand new watercraft will cost the service more than double the original price tag to build, according to the Army acquisition chief.

The unit cost, after the most recent contract negotiations with the Maneuver Support Vessel-Light’s builder Vigor, increased from $27.8 million to $63.1 million per unit, 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. A number of years ago, the Army shifted its priority away from the capability as it focused on operations in the Middle East. Now that the focus has returned on deterring China and 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.”

The cost increase did not surprise Bush. “Material costs more, labor costs more, and then on the Army side… requirements drive the cost. 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 increase material cost, supply chain disruptions, workforce availability and labor rate increases,” the spokesperson said in a Nov. 8 statement to Defense News.

Increases in material cost made up 75% of the increase, the spokesperson said, with labor and overhead accounting for the remainder.

The Army took a long time to negotiate the new price, Bush said, “but I think we’ve got the program in a good place now to hopefully get additional funding within the budget for next year to get on a stable production path that delivers.”

A year ago, the service was just placing the new vessel into the water in Portland, Oregon, marking the first time since 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 Army 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.

Jen Judson is an award-winning journalist covering land warfare for Defense News. She has also worked for Politico and Inside Defense. She holds a Master of Science degree in journalism from Boston University and a Bachelor of Arts degree from Kenyon College.

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