A Category 5 hurricane that battered Florida’s panhandle region last fall, including shipbuilder Eastern Shipbuilding Group, will impact the new medium-endurance cutter ship the company is building for the Coast Guard but at the moment it’s unclear what the effects will be on cost and schedule, Coast Guard Commandant Adm. Karl Schultz said on Tuesday.
Eastern Shipbuilding’s analysis of Hurricane Michael’s impact on the Offshore Patrol Cutter (OPC) is due to the Coast Guard by May 31, and from there the service expects to have an understanding on the way forward with the program before the end of June, Schultz said in response to questions from Rep. Garret Graves (R-La.), during a hearing hosted by the House Transportation and Infrastructure Coast Guard and Maritime Transportation Subcommittee. He said Eastern Shipbuilding will provide “perspectives” on the cost and schedule and any other impacts.
“It’s safe to say that we understand the impacts of a Category 5 hurricane on Eastern Shipbuilding Group will have an impact on the OPC program,” Shultz said. He expects there to be some “puts and takes” after Eastern Shipbuilding submits its analysis.
Rep. Peter DeFazio (D-Ore.), citing a press report earlier in the hearing, said that Sen. Marco Rubio (R-Fla.) has inserted language in a draft disaster assistance bill allowing the Coast Guard and Eastern Shipbuilding to renegotiate the firm fixed-price contract the shipbuilder is working under for the OPC to account for damage to shore side facilities from Hurricane Michael and increased labor costs.
DeFazio said he is skeptical of the company’s claim, noting, “I’m pretty sure they had insurance,” and adding that “I question whether or not this has something to do with their original bid, which some thought was low.” He also said he has concerns that a former Coast Guard Commandant that works for Eastern Shipbuilding has said he’ll have authority to negotiate with his former service.
Retired Adm. Robert Papp, the 24th commandant of the Coast Guard, runs Eastern Shipbuilding’s Washington, D.C., operations.
Eastern Shipbuilding did not respond to a query from Defense Daily about impacts to the OPC program from Hurricane Michael and any relief it may need from the current contract.
Schultz said that the OPC contract can’t be renegotiated without legislative authorities from Congress. He said the Coast Guard, in response to an “ask” from Congress, provided language to help with drafting the proposed legislation related to the OPC in the disaster bill.
Schultz also said that the Coast Guard is not involved in Eastern Shipbuilding’s lobbying efforts with Congress.
The OPC program is the Coast Guard’s top acquisition priority. Eastern Shipbuilding last Nov. 1 said that all of its personnel working on the OPC had returned to work. The hurricane hit the Florida panhandle on Oct. 10.
In January, Eastern Shipbuilding began cutting steel on the first OPC, the ARGUS, which is slated to be delivered to the Coast Guard in 2021. The Coast Guard’s plan is to buy 25 OPCs, which are 360-feet long, and will replace its fleet of 14 210-foot medium-endurance cutters, which were built in the 1960s and early 1970s, and its 13 270-foot medium-endurance cutters, which were constructed in the 1980s and 1990s.
The Coast Guard is requesting funds in fiscal year 2020 for a service life extension program for the 270-foot ships.
Graves said the committee has “very strong concerns about the recapitalization” effort, particularly if the retiring of legacy assets outpaces bringing on new ones like the OPC, which will “potentially create significant problems” if there is a gap.
If the OPC remains on track or close to it, “we will have capacity to continue to do the work of the Coast Guard,” Schultz said. “We’re just going to have to keep some older ships potentially a little bit longer.”