Eastern Shipbuilding Loses $3 Billion Coast Guard Contract

Eastern Shipbuilding's large cranes in Panama City will loom over the waters of Watson Bayou on Monday, February 22, 2021.

Eastern Shipbuilding’s large cranes in Panama City will loom over the waters of Watson Bayou on Monday, February 22, 2021.

PANAMA CITY — In a surprising twist, Eastern Shipbuilding was not selected by the federal government to build the next 11 ships in the U.S. Coast Guard’s Offshore Patrol Cutter Program.

According to a Coast Guard press release sent to The News Herald by the office of Senator Marco Rubio, the more than $3 billion contract to build ships five through 15 in the program was awarded to Austal USA. The competing shipbuilder is headquartered in Mobile, Alabama, with service centers in San Diego and Singapore.

Eastern Shipbuilding was not selected by the federal government to build the next 11 ships in the US Coast Guard's Offshore Patrol Cutter Program.  It currently owns the rights to the first four ships, one of which is pictured.

Eastern Shipbuilding was not selected by the federal government to build the next 11 ships in the US Coast Guard’s Offshore Patrol Cutter Program. It currently owns the rights to the first four ships, one of which is pictured.

Those ships are part of a $10.5 billion project with the Coast Guard to build up to 25 Heritage Class Offshore Patrol Cutters, ships 360 feet in length and designed to navigate deep waters for up to 60 days.

Eastern Shipbuilding was commissioned to build the first four cutters in the program. The Panama City-based company also got the rights to the first 11 ships in 2016, but that contract was reduced to four after Hurricane Michael Bay devastated County and other parts of the Panhandle in October 2018.

“We are extremely disappointed with this decision and are evaluating our options,” Eastern Shipbuilding president Joey D’Isernia said Friday.

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Rubio, who lobbied for the contract to be awarded to the local company, wrote in an email Thursday evening that he finds the government’s decision not to choose Eastern “short-sighted.”

Rubio toured the Eastern branch in July 2021.

“When I visited Eastern Shipbuilding last year, I saw firsthand their commitment to building reliable, state-of-the-art ships,” he wrote. “They have proven they can do the job and do it well. This decision will cost taxpayers more money and delay the delivery of these critical vessels.”

Although Eastern has not been awarded the contract for the next wave of ships, it still has a full work schedule. According to company officials, three of the four cutters previously assigned are under construction. The first vessel is to be completed and delivered to the Coast Guard in 2023, company officials said. Work on the fourth ship has not yet begun.

The Coast Guard noted in its publication that the acquisition strategy of its Offshore Patrol Cutters program was revised in 2019 to “reduce emerging costs and scheduling risks.” It did this by creating a “new, full and open competition for OPCs five and above”.

This was called “Phase 2” of the program.

“The offshore patrol cutter is absolutely vital to the excellence of the Coast Guard’s mission as we recapitalize our old medium endurance cutters, some of which are over 50 years old,” said Admiral Linda Fagan, Coast Guard Commander, in the press release. “The OPCs are the ships our crews need to protect our national security, maritime security and economic prosperity. I look forward to the new cutters joining our fleet.”

Like D’Isernia and Rubio, Bay County Commissioner Bill Dozier, who is also a member of the Bay County Economic Development Alliance, was saddened by the government’s decision.

“This is disappointing news for Bay County (which) will have adverse effects on our economy,” Dozier wrote in a text to The News Herald. “We will, of course, support Eastern Shipbuilding in any way we can with regard to possible options for appeal or reconsideration of this decision.”

Panama City Congressman Neal Dunn, who also believes the decision was “a mistake,” said his office will work to convince the Coast Guard to reconsider its choice.

“Eastern Shipbuilding is known for quality products and the Coast Guard knows this,” Dunn said. “I am very concerned that the foreign company that was awarded the contract has no experience in building steel ships.”

However, in a Friday press release, Senator Richard Shelby said the decision highlights Austal USA’s “world-class staff and proven track record.”

“This contract speaks to the reliability and strength of Austal employees along the Gulf Coast, as well as their ability to deliver,” Shelby said. “This is excellent news for the future of our Coast Guard and Alabama shipbuilding industry. I look forward to the positive impact Austal and Mobile have on the security of our nation.”

This article originally appeared on The News Herald: Eastern Shipbuilding Loses $3 Billion Coast Guard Contract to Alabama Company

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