 [USNI News] Eastern Shipbuilding Group halted work on the U.S. Coast Guard’s Heritage-class Offshore Patrol Cutter program, citing "significant financial strain" caused by the program’s conditions, USNI News has learned.
"Eastern Shipbuilding Group has made the difficult decision to suspend work on the Offshore Patrol Cutter program due to significant financial strain caused by the program’s structure and conditions. Despite our best efforts, continuing under the current circumstances is not sustainable," Joey D’Isernia, CEO of Eastern Shipbuilding Group, said in a statement to USNI News.
Four Heritage-class Offshore Patrol Cutters (OPC) were under construction at Eastern Shipbuilding, located in Panama City, Fla. Eastern, which also builds tug boats, commercial ships and structural units for Navy destroyers, reduced its workforce to remain financially stable, D’Isernia said.
"Our shipyards will continue to build quality American vessels and support the regional economy. We’ve overcome a major hurricane and a global pandemic, and we will overcome this challenge as well," D’Isernia said.
The announcement comes five months after Eastern reported it could not complete the OPC contract without taking an "unabsorbable loss," and as a result the service issued stop work orders on hulls three and four. This was revealed during an exchange between acting Coast Guard Commandant Adm. Kevin Lunday and Rep. Mike Ezell during a June 5 hearing before the Coast Guard and Maritime Transportation subcommittee of the House Transportation and Infrastructure Committee.
The Department of Homeland Security has issued a request for information on towing two of the hulls to a new yard to be completed, but the department hasn’t made a decision on how to go forward, USNI News understands.
The Coast Guard is working to replace its Famous-class and Reliance-class Coast Guard cutters which are more than 50 years old with a fleet of 25 Offshore Patrol Cutters. Eastern was tapped to build the first four Heritage-class hulls, having won an initial OPC contract for the Heritage-class cutters in 2016.
Eastern was slated to deliver the first ship, Argus (WMSM-915), to the Coast Guard in 2021. However, hurricane damage and an unstable ship design, have pushed the delivery to early 2026, according to a Congressional Research Service report on the program. Argus was 72 percent complete as of June, according to Lunday.
unstable ship design? Somebodies need firing
The OPC program is around $5 billion over budget, and the initial operational capability is nearly seven years late. The acquisition cost estimate increased from $12.5 billion to $17.6 billion between the program’s 2012 and 2022 life-cycle cost estimates, according to the Government Accountability Office (GAO). The program’s Initial Operational Capability date is now projected to be June 2029, a 78-month delay from the originally projected date of December 2022.
The GAO found in October 2020 that the OPC program started construction on the lead ship with an unstable design. Specifically, the Coast Guard failed to develop a plan to mature the stage 1 OPC’s critical technology — the davit, which is a crane that deploys and retrieves a cutter’s small boats — nor had the program integrated and demonstrated the davit in a realistic environment.
The Coast Guard also did not require completion of the design of distributive systems — systems that affect multiple zones of the ship — prior to construction of the lead ship, which can result in significant rework late in construction. In line with this, construction of the stage 1 lead ship progressed less than 2 percent from May 2023 to May 2024. Coast Guard officials attributed the lack of progress primarily to rework, the GAO said.
In 2022, Coast Guard moved the business to Austal USA as the "stage two" yard, to begin building the fifth hull, as part of a $208.3 million award in 2022. Eastern filed a lawsuit in federal court protesting the award. A court ruled against Eastern last year and affirmed the award to Austal. The Alabama-based shipyard is slated to build hulls five through 15.
As of July 2024, the GAO reported the stage 2 functional design, which details the size and positioning of structural components and distributive systems, was 95 percent complete. Coast Guard officials also stated that testing of the stage 2 davit was planned for February 2025.
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