The decision to reopen the competition for the Coast Guard’s new medium-endurance cutter after the current shipbuilder builds up to four of the ships will result in fewer Offshore Patrol Cutters (OPCs) being acquired in the initial years of the program than planned, Coast Guard Commandant Adm. Karl Schultz indicated on Tuesday.
Under the new plan, the Coast Guard intends for Eastern Shipbuilding Group (ESG) to build up to four OPCs rather than the minimum of nine contracted for a year ago, with the first ship now delayed 10 to 12 months and the three subsequent ships about nine to 10 months each from that point, Shultz said at an event hosted by the Center for Strategic and International Studies. Delivery of the first OPC, which began construction in January, has been pushed back to 2022.
The OPC program is the Coast Guard’s top modernization priority.
Following the hurricane, ESG sought relief in its contract through the first nine OPCs but DHS, on the recommendation of the Coast Guard, decided to grant relief but only for up to four ships.
“We think there’s a national compelling urgency on fielding Offshore Patrol Cutters,” Schultz told the audience as the reason to shift course on the current track for acquiring the ships. The OPCs will make up between 70 and 75 percent of the Coast Guard’s major cutter offshore fleet, projecting presence, performing counter drug operations, and other missions, he said.
“There is not a protest opportunity,” Schultz told reporters immediately after the event. “This is the offer on the table and you can sign up to be part of this or you can basically say Eastern Shipbuilding Group doesn’t want to do business with the Coast Guard.”
Schultz said that the Coast Guard has notified the relevant congressional committees of the service’s plans. A Coast Guard spokesman told Defense Daily later that the “government may not make a contract adjustment until Congress has been notified and 60 days of continuous session of Congress have expired.” Congress was notified on Oct. 11.
This is a “little bit of uncharted ground,” Schultz said.
The Coast Guard is finalizing a Request for Information to seek industry feedback and potential industry studies leading to a recompetition for the OPC, which could result in ESG winning again.
If DHS decided to reopen the competition immediately, that would probably mean a three-year delay before a new vendor delivers the first OPC, Schultz said.
“Eastern is still the quickest path to fielding the OPC,” he said.
If another vendor is selected through a recompetition, it’s unlikely the new shipbuilder would be tasked with building multiple ships per year immediately, Schultz said.
Given about three years for a new competition and delivery of the first OPC from a new vendor, it would appear the Coast Guard is hoping that they can slot in delivery of a fifth ship within a year after ESG delivers the fourth OPC. But, for now, the service doesn’t have an exact handle on the timing.
“There’s a lot of discussion between here and there,” Schultz said, noting that the recompete is in the “not too distant future.”
The Coast Guard’s program of record is for 25 OPCs to replace its aging 210-foot and 270-foot medium-endurance cutters. ESG’s contract for nine ships also included options for up to two more before the program was going to be recompeted.
ESG beat out offers from Bollinger Shipyards, which makes the Coast Guard’s Fast Response Cutter (FRC), and General Dynamics [GD]. Huntington Ingalls Industries [HII], which builds the Coast Guard’s high-endurance National Security Cutter, and ST Engineering’s VT Halter Marine, which won a contract earlier this year for the Coast Guard’s new heavy icebreaker, were eliminated earlier in the OPC competition.
The federal government is currently operating under a continuing resolution in fiscal year 2020, which began on Oct. 1. This means departments and agencies are spending at FY ’19 levels and no new programs can be started.
Schultz said he doesn’t see an immediate impact to the Coast Guard’s contracting activities and no contract awards are in “jeopardy,” but if the continuing resolution lasts beyond the current Nov. 21 end date, these expectations will have to be revisited.