Amid concerns, Coast Guard set to award 2nd offshore patrol boat contract
After just over two weeks at the helm, new U.S. Coast Guard Commander Admiral Linda Fagan is set to make her first multi-billion dollar decision on the guard’s long-term future. coastal. Rumors suggest the Coast Guard is set to award a likely controversial construction contract for up to eleven medium-endurance aircraft Inheritance-Offshore Patrol Cutters class.
While four of the 25 new sets planned by the Coast Guard Inheritance class cutters are set to be built at Eastern Shipbuilding Group’s facilities in Panama City, Florida, an array of coast guards and industry players are eager to accelerate the Offshore Patrol Cutter program, either by adding to Eastern’s workload, or potentially inaugurating a second cutter manufacturing site.
The Coast Guard is eager to replace the 29 aging medium endurance cutters in the fleet. The anticipation, however, is steeped in tension over the cutter’s changing design and worries that the Coast Guard’s fleet composition is outdated, ill-suited to the rapidly changing geopolitical environment.
Waiting sixteen months to re-examine old fleet composition studies and test the first offshore patrol cutter would reduce some of the risk. But the old Coast Guard cutters aren’t getting any younger, and with contract prices expiring at the end of June, the Coast Guard appears to be moving forward, with at least four shipyards hoping for a big new contract.
Announcement of contract award could take place at any time.
Why not wait?
Testing the first ship before purchasing more would be prudent. Unfortunately, no one seems to know publicly when, exactly, the first ship – the future USCGC Argus-to arrive at. While Eastern Shipbuilding Group declared in April it only expects to “christen the first ship this year,” the Congressional Research Service, citing Coast Guard statements, reported in April that the Argus “will complete construction in fiscal year 2022.” Realistically, with the ship still on blocks ashore, the Argus probably won’t start operating until the end of fiscal year 2023, too late to inform this next installment of Offshore Patrol Cutters.
Wait and test Argus would answer a lot of questions about the increasingly controversial design of the Offshore Patrol Cutter. While the Inheritance-class cutter is, at heart, a beautiful multi-mission ship, piecemeal efforts to meet the Coast Guard’s shifting operational priorities have taken their toll on what was once a stark, stripped-down national security alternative high Coast Guard Cutter range. Designed specifically for anti-terrorism and drug war interdiction work, the Coast Guard did what it could throughout the final stages of the ship’s design process to make the new cutter a major geopolitical player.
These efforts risk fundamentally changing the ship. Originally slated to displace a trim of 3,500 to 3,750 tonnes, the new vessel is now expected to displace around 4,500 tonnes, “which basically makes it as big as the NSC in terms of displacement at full load. And it’s not good. With little reserve for rig growth, an overweight Offshore Patrol Cutter may exhibit hull fatigue faster than expected, or even, potentially, disappoint at sea.
The delay might actually be OK. Away from the ship, the Coast Guard still has to design, fund and build the shore-based infrastructure needed to support its new medium-endurance cutters. Coast Guard Base Los Angeles/Long Beach is still building piers and other shore facilities needed to moor and maintain the first two Offshore Patrol Cutters. Neither Kodiak Base in Alaska nor the Coast Guard Base in Newport, Rhode Island are remotely ready for the offshore patrol cutters they are already supposed to receive. The Baltimore Coast Guard Yard is also not ready to start servicing the new ships.
The old boats are still working. And while the Coast Guard is eager to replace its old Famous and Addiction middle-class endurance cutters, obsolete boats are still just as effective. They continue, finding their way to new regions and missions. And, rather than just letting old ships decay into a navy-like fait accompli for new ships, the Coast Guard is increasingly pushing its old medium-endurance ships, and more and more appreciating that the no-frills mid-endurance legacy cutters will likely cost a lot less to run than their updated replacements.
Decades-old mid-endurance cutters actually get high-profile roles. At least one old medium endurance cutter is being refurbished so it can be sent to the Pacific. Re-imagined as a combination “cutter tender”, floating school and embassy, the ship, reimagined as an “Indo-Pacific support platform” will be permanently based forward, tasked with doing a good job of supporting the fragile Pacific island democracies, helping small countries protect their struggling exclusive economic zones.
It makes sense to wait. A pause, while unpopular, allows the Coast Guard to better prepare for new ships, iron out ship design issues, and reevaluate a decade-old and outdated fleet mix. The Coast Guard could certainly, if Congress helped, still pivot, reinvigorate hot production lines for a 12e National Security Cutter and a few other Fast Response Cutters. Even the Navy’s soon to be decommissioned littoral combat ships could help in times of resource shortages.
A delay may be unavoidable:
Ironically enough, even if the Coast Guard steps up with the Offshore Patrol Cutter program, industry protests could cripple everything. Legal wrangling after the award announcement could delay the program to the point where the Coast Guard would have to throw it all away and start bidding again for the 2nd tranche of Offshore Patrol Cutters.
Frankly speaking, the Coast Guard’s ‘RFP’ seemed rather weak, prioritizing the ‘production’ and ‘design’ approach over the ‘price’ and ‘schedule’. With no performance data available to inform the design of the second tranche of eleven offshore patrol boats, the Coast Guard was forced to balance “a complex mix of design changes and theoretical production efficiencies”. If an unsuccessful contractor protests, the Coast Guard will have a hard time justifying its decision.
That said, the second Offshore Patrol Cutter contract is still up for grabs for Eastern Shipbuilding Group. While Eastern had some serious challenges with the Offshore Patrol Cutter contract, the incumbent builder still has an innate advantage when bidding on “follow-up” work.
Only a really hungry shipyard is capable of beating Eastern right now.
But you never know. With higher fuel prices boosting the Gulf Coast shipbuilding sector, diversified shipyards with a large volume of business activity – like Eastern – may well prefer the higher trade margins and contract bureaucracy much less complex commercial work. This abrupt change in economic circumstances may have made Eastern a little less keen on adding government business at this time, opening up an opportunity for a motivated company to really cut prices.
Bollinger Shipyards, based in Louisiana, is a reputable Coast Guard shipbuilder who is also seeking to win the Coast Guard’s Offshore Patrol Cutter program. But Bollinger has a strong business portfolio, even counting SpaceX as a customer. Bollinger has also close ties with General Dynamics
and may be well placed to help General Dynamics build the Colombia-class submarine. With all the potential work, Bollinger may not have seen the need to offer the government cut prices.
On the other hand, Huntington Ingalls and Austal USA are, at this stage, pure shipbuilders. And while Huntington Ingalls has a strong portfolio of naval shipbuilding businesses, it also has a record of turning around troubled ship designs. Over the past decade, the national security cutter has gone from idiot to champion and, with the backing of powerful home state senator Roger Wicker, ranking member of the Senate Commerce, Science and Commerce Committee. and transportation, Huntington Ingalls – if they can beat the smaller yards on cost – has the combination of capability, political support and Coast Guard knowledge to help drive the Offshore Patrol Cutter forward.
But Austal USA, a mid-size shipyard in Mobile, Alabama, is the underdog that may end up surprising everyone. With the production of the Austal-built Independence-class Littoral Combat Ships and Spearhead-class Expeditionary Fast Transport draws to a close, the shipyard, as it pivots to steel construction, is highly motivated to offer extremely favorable contract terms to the Coast Guard. As a yard that has demonstrated an unrivaled ability to grow and move forward, building ships in hurricane-proof facilities, Austal may well have taken the bus and is poised to become the next major supplier. of the Coast Guard.
As of now, only Admiral Linda Fagan’s confidants and a group of Coast Guard lawyers know how this contract will play out. Unlike the Navy Constellation-class frigate competition, where the contract was clearly headed for a politically valuable swing state, the outcome of the race for the Coast Guard’s second installment of offshore patrol cutters is anyone’s guess. Austal or Bollinger are likely in the lead, but whether those shipyards win the contract later this month will depend on how hungry Eastern Shipbuilding Group is and how strongly the Coast Guard justifies its award decision.