The U.S. Department of Homeland Security has granted Eastern Shipbuilding Group (ESG) limited extraordinary relief due to Hurricane Michael, reducing the company’s construction contract for Coast Guard offshore patrol cutters (OPCs) to four vessels maximum.
ESG applied for extraordinary relief in June after its shipbuilding facilities in Panama City, Fla., suffered significant damage from the Category 5 hurricane in October 2018. The original contract for as many as 25 OPCs, awarded in 2016, was worth up to $10.5 billion. The Coast Guard exercised contract options with ESG for the first vessel the month before the storm hit. Coast Guard officials plan to reopen bidding for the remainder of the OPC contract and issue a request for proposals (RFP) later this year.
The impact of the hurricane on ESG included the partial capsizing of a newly launched factory trawler, North Star, at the Panama City yard. Construction of the first OPC, Argus, resumed the month after the storm. Delivery was initially scheduled for fiscal year 2021.
The Coast Guard evaluated ESG’s request for extraordinary relief along with the Department of Homeland Security, the Navy and third-party experts. After evaluating cost, schedule and performance factors, the parties determined the company’s continued work on the OPC project was essential to national defense, according to Coast Guard Chief Warrant Officer Barry Lane.
The 360-foot OPCs will replace the Coast Guard’s fleet of medium-endurance cutters and help secure the border, disrupt drug cartels and prevent illegal immigration. The 210-foot and 270-foot medium-endurance cutters were commissioned between 1964 and 1991.
“This solution minimizes the production gap in OPC delivery while maintaining ESG’s near-term productive ability,” Lane said about the decision to grant limited extraordinary relief. “The existing contract will be limited (to) up to four OPCs due to the uncertainties associated with the impacts of Hurricane Michael on ESG, and ESG’s ability to ramp up the workforce needed to support the production of two OPCs per year.”
Despite the hurricane, 90 percent of ESG’s roughly 800 workers returned to their jobs by December 2018, Professional Mariner reported early last year. In addition to the OPCs, the shipbuilder is working on three Ollis-class Staten Island ferries for the New York City Department of Transportation; two Canal-class inland towboats for Florida Marine Transporters; two Robert Allan Ltd. z-drive tugboats for Bisso Offshore; and an expedition sailing schooner.
ESG is eligible to compete for the follow-on OPC construction contract. Lane said the Coast Guard anticipates releasing a new production RFP late in fiscal year 2020 and making an award for production in fiscal year 2022.
Bath Iron Works in Maine and Bollinger Shipyards in Louisiana submitted bids for the original OPC contract awarded to ESG in 2016. A representative from Bath Iron Works declined to comment on whether the shipyard would submit a new bid, and a Bollinger representative did not return a request for comment.
In the initial competition, the Coast Guard awarded contracts to three vendors for preliminary design, then selected ESG for the detail design and construction phase. For the follow-on procurement, the Coast Guard will build upon this effort to reduce variation, acquisition cost and production timelines, Lane said.
“The Coast Guard is committed to conducting a fair and open follow-on competition in order to acquire the OPC fleet needed to address the nation’s security needs, while maintaining public trust and stewardship of the American taxpayers’ dollars,” he said.