Coast Guard Cutter Award Means Trouble for Bath

The destroyer Zumwalt alongside at Bath (file image)

Published Sep 19, 2016 9:33 PM by The Maritime Executive

Eastern Shipbuilding, Bath Iron Works and Bollinger are still reacting to the news released Thursday that Eastern – a Florida yard with a long history in commercial shipbuilding – has won a multi-billion-dollar contract for the first nine hulls in a 25-vessel series of Offshore Patrol Cutters (OPCs). The contract calls for the lead ship and options for eight more, worth up to $2.4 billion in total. If Eastern ends up building all 25, the contract value will exceed $10 billion - the Coast Guard's largest acquisition ever.

Eastern's OPC design is based on the Vard 7 110; Vard says that its 7 series uses commercial design standards and commercial equipment where possible to keep down costs. Earlier this year, when Eastern was selected as one of the three final competitors, shipyard president and CEO Brian D'Isernia suggested that Eastern would compete hard on price and value. "Affordability will be the central consideration for this acquisition. With a track record of 110 vessels built on-time and on-budget since 2002, we at Eastern believe that we are the best shipyard to produce the vessels which will cost effectively fulfill the [requirement]," he said. 

Coast Guard Chief Warrant Officer Chad Saylor told media that although he could not provide details about the selection criteria, "affordability was a good piece of the decision into selecting the ultimate winner."

The award is expected to create more than 2,000 direct jobs in Northwest Florida.  

Unlike Eastern, Bath Iron Works is fully dependent on complex naval shipbuilding, and executives had cast the contract as a make-or-break deal to avoid up to 1,000 layoffs at the end of the Navy's Zumwalt-class destroyer program. As a measure of the Offshore Patrol Cutter's importance to BIW and to the state economy, Maine's congressional delegation immediately promised to scrutinize the Coast Guard's decision. "We intend to evaluate the details of the award to ensure that the Coast Guard properly met all of its decision criteria," said Maine Senators Susan Collins and Angus King; "I will investigate the Coast Guard's decision on this and will continue to support [Bath's shipbuilders]," said Rep. Bruce Poliquin. 

In an internal memo obtained by local media, BIW president Fred Harris said that it was time to move forward. "“We must draw lessons from the experience and apply them to submitting a competitive bid for the upcoming [Aegis destroyer] multiyear contract. We expect to start working on that bid next year.”

Construction of the first OPC is set to begin at Eastern in 2018. As they are delivered, the new 360-foot vessels will replace the Coast Guard's aging Famous- and Reliance-class Medium Endurance Cutters - the oldest of which date to the mid-1960s.