Coast Guard officials announced plans Friday to reopen competitive bidding to build a new class of cutters, potentially creating another opportunity for Bath Iron Works three years after the shipyard lost the multibillion-dollar contract.
It was unclear Friday whether BIW would still be interested, as the company aims to hire an additional 1,000 workers next year in Maine’s tight labor market.
In September 2016, the Coast Guard chose Florida’s Eastern Shipbuilding Group over Bath Iron Works and one other competitor for an estimated $10.5 billion contract to build as many as 25 offshore patrol cutters. The contract loss struck a blow to BIW’s efforts to diversify beyond the Navy destroyers that account for the vast majority of the shipyard’s work.
But Eastern Shipbuilding’s facilities were seriously damaged by Hurricane Michael, a Category 5 storm that struck in October 2018. The storm damaged or destroyed the company’s infrastructure, disrupted the workforce and led to significant cost increases, prompting it to seek a contract modification.
On Friday, the Coast Guard and U.S. Department of Homeland Security announced that Eastern Shipbuilding’s contract will be modified – or granted “extraordinary relief” – but only on the first four of the 25 next-generation cutters.
Meanwhile, officials announced plans to “gauge industry interest” in reopening the contract to build the remaining ships, which the Coast Guard regards as the military branch’s “top acquisition priority” and critical to future operations.
A Coast Guard spokesman said the move to “re-compete” the contract for 21 of the 25 cutters was prompted by uncertainty over whether the Florida shipyard – which builds both military and commercial ships – could ramp up its workforce and production levels enough to produce two cutters per year.
“Eastern Shipbuilding’s request for extraordinary relief was carefully considered,” Coast Guard Vice Commandant Admiral Charles Ray said in a statement. “This review validated the essential contributions the OPC will provide to our national security and determined that limited relief, in parallel with immediate recompete, is the best option in this exceptional situation. Doing so is consistent with the law, fiscally responsible, and the most expeditious means to deliver this essential national capability.”
BIW officials declined to comment on the Coast Guard announcement. The shipyard, one of Maine’s largest employers, with roughly 6,400 workers, is owned by the defense contracting giant General Dynamics.
However, Sen. Susan Collins of Maine, a Republican who serves on the Senate Appropriations Committee, said she long has had misgivings about Eastern Shipbuilding’s ability to deliver on the contract.
“I have long believed that Eastern Shipbuilding Group likely underbid the contract for these Coast Guard cutters, and I have said I would carefully scrutinize any requests for supplemental funding,” Collins said in a statement emailed Friday night. “Although it is a positive development that the Coast Guard has decided to rebid a portion of the existing contract to give other shipyards the opportunity to compete to build these ships, a full re-competition would have been more appropriate.
“I continue to believe that Bath Iron Works, with its outstanding shipbuilding record, would have delivered the highest-quality cutters to the Coast Guard. I remain committed to highlighting BIW’s extensive capabilities and will continue to advocate for the shipyard through my senior position on the Senate Appropriations Committee.”
It was unclear Friday how the process will play out if the Coast Guard reopens the cutter contract. Among the many questions that BIW and other potential bidders will likely want answered is whether competing shipyards would be required to use Eastern Shipbuilding’s design for the cutter or could offer their own designs.
The 25 offshore patrol cutters are intended replace the Coast Guard’s fleet of 210-foot and 270-foot medium endurance cutters – some of which have been in service for more than 50 years – and bridge the gap between the larger “national security” cutters and “fast-response” cutters.
BIW was one of three finalists for the contract alongside Eastern Shipbuilding and Bollinger Shipyards in Louisiana. Leading up to the award announcement, BIW officials warned that loss of the contract could cost as many as 1,000 jobs as scheduled Navy work slowed down.
The landscape has changed since then, however.
The Trump administration has proposed significantly increasing the size of the Navy fleet over the coming decades. BIW has contracts to build 11 new Arleigh Burke-class destroyers over the next eight years which – combined with a wave of anticipated retirements – has putting the company on a hiring spree.
BIW also is partnering with another shipyard to win a contract to build the next class of Navy frigates.
The Coast Guard plans to query potentially interested shipyards in the coming weeks.
“The Coast Guard will use response to the request for information to gain fresh insight into the current state of the shipbuilding industrial base and inform the Coast Guard’s re-compete strategy,” spokesman Brian Olexy said in an email.
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