U.S. Coast Guard Awards Next Offshore Patrol Cutter Series to Austal

Major setback for Florida-based Eastern Shipbuilding Group

The first-in-class OPC under construction at Eastern Shipbuilding Group, the original yard for the contract (ESG)

Published Jul 5, 2022 5:49 PM by The Maritime Executive

Austal USA has been selected to build the U.S. Coast Guard's next set of 11 Offshore Patrol Cutters (OPCs). The $3 billion contract award comes as a disappointment for Eastern Shipbuilding Group, the Florida-based shipyard that worked on the design and built the first four in the series. 

In 2016, Eastern Shipbuilding Group won a contract for the first OPC hull and up to eight follow-on vessels, with potential to build up to 25 in total. The yard's bid of $420 million per unit helped it to win over higher-cost options from more established military shipbuilders, including Bath Ironworks and Bollinger.

However, in 2018 - just as ESG was set to begin construction on the first vessel in the series - the Panama City region was hit by a severe Category Five hurricane. Given the damage to its facilities and surrounding community, ESG filed for extraordinary relief to modify the contract's terms. The U.S. Coast Guard granted the request, but also said that it would shorten ESG's contract to four vessels and recompete the rest of the series. 

Over the last four years, ESG has rebuilt and expanded its yards, and it expects to christen the first-in-class OPC this year. All of the remaining three in the modified contract are under construction. In the meantime, it also geared up to compete again for the rest of the series, investing nearly $50 million to turn its Nelson Street shipyard complex into a dedicated "OPC factory." It built a new fabrication facility to complete aluminum superstructure components, and it created a C5ISR test site so that technicians could try out the ship's electronics suite before installation. 

However, the U.S. Coast Guard ultimately decided to award the next contract to Alabama-based Austal USA, the builder of the Independence-class Littoral Combat Ship (LCS). The Australian-owned yard has a long history in the construction of aluminum-hulled vessels, but it is transitioning to accommodate orders for steel-hulled ships as well. Its new steel shipbuilding facility was finance in part by a $50 million Defense Production Act (DPA) matching grant from the Pentagon.

Austal's steel production line just opened in April 2022, and its first two vessels will be a pair of Navajo-class salvage tugs recently awarded by the U.S. Navy. The OPC is a steel-hull / aluminum-superstructure ship, and it is the largest contract award for this construction method yet for Austal. 

“The Coast Guard’s decision to select Austal USA to build its second round of Offshore Patrol Cutters highlights the world-class workforce and proven track record of the Mobile shipyard,” said Senator Richard Shelby, Alabama's senior senator and vice-chairman of the Senate Appropriations committee. “This is excellent news for the future of our Coast Guard and for shipbuilding in Alabama."

If the opportunity emerges, Austal USA is also expected to compete for a "follow-yard" contract to build hulls for the U.S. Navy's Constellation-class frigate series, delivering in parallel with designer and shipbuilder Fincantieri Marinette Marine. A dual-shipyard procurement arrangement for the Constellation-class has been discussed in Navy budget planning documents, but a firm decision has not been formally announced.