Austal Gets Green Light to Move Forward With Offshore Patrol Cutter

The U.S. Coast Guard is moving ahead with a contract with Austal USA to build the next set of hulls in its offshore patrol cutter (OPC) series after another bidder withdrew its objection to the deal. 

In June, the USCG awarded a fixed-price contract to Austal for up to 11 OPCs at an average price of about $330 million each (assuming all options are exercised). The tender was conducted after a modification of a long-term contract originally awarded to Eastern Shipbuilding Group (ESG). ESG still holds a firm contract for the first four hulls, but Austal submitted a lower offer when the Coast Guard re-bid the next 11 follow-on hulls. Wednesday's notice allows Austal to move ahead with detail design work for future OPC production.

The Coast Guard issued the notice after ESG withdrew a protest it had filed with the Government Accountability Office. In its letter of protest, ESG asserted that Austal had an unfair advantage because it had hired a former Coast Guard officer with knowledge of ESG's proprietary information. ESG also claimed that its bid was higher rated and provided lower risk for the procurement program. “Austal’s purported lower price is overwhelmed by the substantial risks associated with an award to Austal, a new entrant to the steel shipbuilding industry with a record of well publicized cost overruns and performance issues," ESG alleged.  

In a statement, ESG said that it withdrew its GAO protest in order to move to the Court of Federal Claims.

“The federal procurement process is designed to be fair and transparent. Ordinarily, the government discloses reasonable justification for its award decisions to the attorneys representing the parties in a protest. The government has declined to voluntarily disclose the information that might offer that justification. As a result, we are seeking the information and justification through a different legal pathway,” said Joey D’Isernia, President of Eastern Shipbuilding Group.

For the next stage of OPC production, the Coast Guard has asked Austal to keep the hull and propulsion system the same in order to maintain commonality with the first four vessels built by ESG. Other elements of the new detail design may differ if Austal's engineers find ways to improve lifecycle cost, production, efficiency and performance. 

The new contract sets up the Coast Guard for the first 15 hulls in the series, assuming that each incremental funding block is provided by Congress and all options are exercised. The service intends to build 25 OPCs in total. These vessels will be at the center of the cutter fleet for decades to come, filling an intermediate slot between the small but capable fast response cutter (FRC) and the long-range, oceangoing national security cutter (NSC). Most importantly, they will replace the aging fleet of medium-endurance cutters, some of which are still out performing drug interdictions and rescues in their fifth decade of service.