Eastern Shipbuilding Group (ESG), which is currently building the first four offshore patrol cutters (OPCs) for the Coast Guard, is protesting the service’s recent award for the next tranche of the medium-endurance cutters to Austal USA
, claiming the decision was flawed on a number of counts.
The protest of the OPC Stage 2 award was filed with the Government Accounting Office on July 15, starting a 100-day clock for the auditing agency to make a decision by Oct. 24.
Even though the contract was awarded on June 30, the Coast Guard hasn’t authorized Austal USA to begin work on the program. A spokesman for service told Defense Daily on Thursday that the Coast Guard is aware of a protest of the Stage 2 contract “and will support any related investigative action.”
Bollinger Shipyards, which builds the Coast Guard’s fast response cutters (FRCs), and HII [HII], which builds the service’s high-endurance national security cutters (NSCs), also bid on the OPC Stage 2 contract.
The award to Alabama-based Austal USA in late June is valued at up to $3.3 billion for up to 11 360-foot OPCs. ESG in 2016 won the original OPC contract for up to 11 ships but a severe storm in 2018 damaged the shipyard, fording the company to seek cost and schedule relive. The Department of Homeland Security granted the relief in 2019 but also decided to reopen the program to competition beginning with the fifth vessel.
The program of record for the OPC is 25 vessels.
The first OPC being built by ESG will be delivered in 2023.
“Our decision to protest does not come lightly,” Joey D’Isernia, president of ESG, said in a statement on Thursday. “Our community is left reeling from the decision to abandon our workforce and move the Coast Guard’s largest acquisition program from our successful production line to a high-risk situation. It begs the question, why? While this process plays out, we remain committed tour USCG partners and delivering shipbuilding excellence on the first four hulls.”
D’Isernia stated his company “found several grounds for protests,” which are contained in partially redacted 56-page filing with the GAO.
In one complaint, ESG says that a retired Coast Guard Commander, Phillip Crigler, who is now a senior business development official with Austal USA, was in “numerous meetings” and program reviews prior to April 2019 when he was still with the Coast Guard where ESG’s proprietary work on the OPC program was discussed “involving potential programmatic concerns, vendor list and pricing, staffing, design, schedule, and finances.” ESG says that Crigler “worked directly on the Austal proposal” for OPC Stage 2.
ESG says existing law is in its favor in that even if its business sensitive information wasn’t used by Austal, that company is still presumed to have an “unfair competitive advantage.”
ESG also says that based on the Coast Guard’s request for proposals and objectives for the Stage 2 effort, its bid “provided lower risk with strong, relevant past performance” despite Austal’s lower price offering.
Of six factors weighed by the Coast Guard in its trade-off analysis to find best value in its source selection, price was rated least important. Production approach, design approach, schedule, program management and past performance exceeded price in descending order of importance.
ESG said that Austal is new to building ships with steel and has a “record of well publicized cost overruns and performance issues.” The company provides aluminum hulls for the Independence variant of the Navy’s littoral combat ship (LCS) and is also building the expeditionary fast transport (EPF) vessel, also built of aluminum, for the service.
The OPC award is Austal USA’s largest steel shipbuilding contract although the company is under contract to the Navy to design and build two Navajo-class towing, salvage and rescue ships, which are made from steel. The company won that contract in fall 2021. The OPC is Austal’s first Coast Guard contract.
Just ahead of the OPC award, Austal USA also won a contract to build the Navy Auxiliary Floating Dry Dock Medium. While the dry-dock includes steel construction, it isn’t a ship.
“Austal relies on a new and unproven facility for steel shipbuilding,” ESG’s says in its filing with the GAO. “At the time of the proposal submissions in June of 2021, Austal’s steel facility had not opened. There are significant differences between steel and aluminum shipbuilding that pose serious risks for new entrants.”
ESG said that Austal’s experience in aluminum building and the efficiencies it has gained cannot be easily transferred to building ships of steel, creating program risk.
“The USCG evaluation ignored these critical differences and lack of relevant experience that impact Austal’s schedule, performance, design, production and cost risk,” the protest says.
Regarding Navy LCS and EPF programs, ESG says Austal’s performance on these programs demonstrates risk, citing cost overruns and production problems on the LCS program.
An Austal USA spokesperson on Thursday issued a statement that “We are confident in the integrity of the solicitation process and that the United States Coast Guard’s selection of Austal USA as the Stage II OPC shipbuilder will be upheld. We will remain focused on delivering world-class ships to our customers.”