The Coast Guard is “encouraged” with the responses it received from industry following a Request for Information in October to gauge vendor interest in a recompetition of its Offshore Patrol Cutter (OPC) after the service decided to reopen the program after the original winner, Eastern Shipbuilding Group (ESG), sought contract relief in the wake of a hurricane that devastated the company’s facilities last year, Commandant Adm. Karl Schultz said on Tuesday.
A Request for Proposals (RFP) of industry studies is expected before the end of this month and a final RFP leading to design and construction of the OPC under the follow-on contract is expected within 12 to 15 months, Schultz said at a Navy League breakfast in Arlington, Va. A notional schedule included with a RFI in October says the follow-on contract would be awarded in late fiscal year 2022.
Shultz was asked how the Coast Guard can ensure a level playing field in the follow-on competition given that ESG will build up to four OPCs under terms of the contract relief it was granted by the Coast Guard, giving the shipbuilder an opportunity to solidify its incumbent status and provide an advantage if it bids again.
The path the Coast Guard may take in the new competition appears to be wide open.
“I do not dispute your point,” Schultz answered. “This can go a lot of different ways, so I don’t want to get ahead of it,” he also said.
James McKnight, deputy assistant commandant for Acquisition and Director of Acquisition Services for the Coast Guard, acknowledge challenges in creating a level playing field for the follow-on OPC production.
“We are committed to have a real competition,” McKnight said after being asked by Schultz to speak to the issue. He added that the incumbent typically does have an “advantage” in recompetes.
“We can make some assumptions ourselves, but the big push with the industry studies is for us to hear from industry to find out what we need to do to make this a true competition to kind of level that playing field,” McKnight said. Industry feedback will help the Coast Guard understand “what the general consensus is for where the flexibility needs to be so that it can be a competition,” he said.
The Coast Guard in early December released a draft RFP alerting industry to its plan for industry studies. It also is hosting an Industry Day on Wednesday in Baltimore to discuss plans for the OPC and receive feedback.
The industry day will be an opportunity for the Coast Guard to discuss its needs “from a sustainment and training aspect,” he said, adding that, “We are certainly looking for some degree of standardization. Now that doesn’t mean it has to be an identical product. Maybe we’ll want the same engines. I don’t care how they’re piped in.”
Eastern Shipbuilding won the contract to build the first nine OPCs, with options for two more. The Coast Guard’s program of record is 25 ships and it planned to recompete construction after ESG’s contract was up.
After Hurricane Michael slammed the Gulf Coast in October 2018 and damaged ESG’s facilities, the company sought relief in its OPC contract. The Department of Homeland Security this fall granted relief, allowing a one-year delay in delivery of the first ship until 2022 but also allowed the Coast Guard to pursue a new competition for OPC construction.
Highlighting some of the ways the OPC recompetition could unfold, Schultz said it’s possible that ESG could win, or that the company could continue building one ship a year and another vendor is also brought in.
Under the original contract, ESG was supposed to build one ship a year for the first three years before transitioning to two vessels annually.
Schultz said that ESG will have to “demonstrate to us” that they have the workforce in place.
“Eastern’s got to show us how they build the first and second ship. They’ve got to be able to retain workers and this gave them a chance to be successful given circumstances outside their control and it protects the Coast Guard from putting all our eggs in one basket if they can’t be successful,” he said of the contract modification and plan to hold a new competition. “I need those ships.”
Cost was a priority in the original competition and will be in the recompete, Schultz said.
ESG beat offers from Bollinger Shipyards, General Dynamics [GD], Huntington Ingalls Industries [HII], and ST Engineering’s VT Halter Marine for the OPC.