Why Would the Pentagon Waste $1.4 Billion on This Ineffective Warship?
After months of spending little or nothing on major weapons purchases, the U.S. Pentagon finally took out its wallet this week and started spending. Over the course of five days, the Pentagon awarded nearly $4.6 billion in new contracts -- including about $1.4 billion to buy four of the U.S. Navy's new Littoral Combat Ships, or LCSes, from defense contractors Lockheed Martin and General Dynamics , and Austal .
But should it have?
A word to the wise
"LCS is not expected to be survivable in high-intensity combat because its design requirements do not require the inclusion of survivability features necessary to conduct sustained combat operations in a major conflict as expected for the Navy's other surface combatants."
This assessment by the Pentagon's independent director of operational test and evaluation, or DOTE, released last month, got a lot of attention in the media. After all, the U.S. Navy's Littoral Combat Ship is ... a littoral combat ship. "Combat" is part of its job description.
But for those who know the LCS, this assessment shouldn't come as a huge surprise. After all, the aluminum hull on the USS Independence-class LCSes, and the small crew sizes and limited armaments of both classes of LCS, mean the LCS was never designed to take the kind of punishment dished out in a "high-intensity combat" -- the kind where bullets and bombs (and sea-skimming missiles) are flying fast and furious.
And in fact, the situation's even worse than the 2013 assessment suggests. One year ago, DOTE issued a similar report on the LCS, and concluded:
"LCS is not expected to ... maintain mission capability after taking a significant hit in a hostile combat environment."
One strike, and out
Now that really was a revelation. The fact that just one solid hit on an LCS might be enough to sink the ship, or at least knock it out of commission, seemed to raise serious questions about the ship's viability. Negative publicity surrounding these revelations probably contributed to the Pentagon's decision to significantly scale back its ship-buying program for the LCS, cutting planned purchases from 52 to 32.
But in fact, in the age of modern warfare, "one strike and out" is hardly an uncommon fate for naval warships. Consider: At just 3,000 tons displacement each, the Independence- and Freedom-class LCSes are among the smallest warships built for the U.S. Navy. Yet recent naval conflicts have shown that even much larger vessels can be taken out of commission by just one single "significant hit."
For example, during Britain's short conflict with Argentina during the Falkland Islands War in 1982, a single Exocet missile strike was enough to sink the 4,800-ton British destroyer HMS Sheffield.
Two days before the sinking of the Sheffield, the Argentine warship ARA General Belgrano, a 12,000-ton light cruiser, was hit twice by British torpedoes. The first torpedo struck the ship too far forward to be fatal, but the second hit, taken amidships, knocked out the Belgrano's power and forced the crew to abandon ship within 20 minutes.
More recently, on Oct. 12, 2000, the 9,000-ton U.S. guided missile destroyer USS Cole (DDG-67) was struck by suicide bombers in a bomb-laden skiff. That single "hit" blasted a 40-by-40-foot hole in the Cole's side, killing 17 sailors, and knocking the ship out of commission.
The upshot for the LCS
If warships 150% (Sheffield), three times (Cole), and four times (Belgrano) the size of the USS Independence could all be taken out of commission, or even sunk, by "a significant hit in a hostile combat environment," it only stands to reason that a similar strike would inflict a similar fate upon a much smaller LCS.
Viewed in this light, the Pentagon's reports of the LCS's "vulnerability" don't sound quite so serious as they've been portrayed in the media. While it's certainly worth debating whether the LCS is the right ship for the missions it's designed to perform, or whether it's worth the billions of dollars the Pentagon (still) plans to spend on it, the fact that the ship may not survive a missile strike isn't necessarily a good reason to kill the program.
Investors who've been led to believe that the Littoral Combat Ship program is doomed for this reason alone... have been misinformed.
Conflict is eternal, and defense stocks will never let you down
So long as countries go to war against other countries, defense contractors that protect the one from the other will make money for investors. Over time, generous dividend-paying stocks can make you rich -- and defense stocks are some of the richest dividend payers out there. General Dynamics, for instance, pays its shareholders 2.2%, while Lockheed is even more generous -- 3.2%! While they don't garner the notability of high-flying tech stocks, dividend-paying stocks are also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With that in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.
The article Why Would the Pentagon Waste $1.4 Billion on This Ineffective Warship? originally appeared on Fool.com.Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics and Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.