'Extremely disappointed': Eastern Shipbuilding loses $3 billion Coast Guard contract

The large cranes from Eastern Shipbuilding in Panama City loom over the waters of Watson Bayou Monday, February 22, 2021.

PANAMA CITY — In a surprising turn of events, Eastern Shipbuilding was not selected by the federal government to build the next 11 ships in the U.S. Coast Guard's Offshore Patrol Cutter Program.

According to a press release from the Coast Guard that was forwarded to The News Herald by Sen. Marco Rubio's office, the more than $3 billion contract to build ships five through 15 in the program was awarded to Austal USA. The competing shipbuilder is headquartered in Mobile, Alabama, with service centers in San Diego and Singapore.

Eastern Shipbuilding was not selected by the federal government to build the next 11 ships in the U.S. Coast Guard's Offshore Patrol Cutter Program. It currently has the rights to the first four ships, one of which is pictured.

Those ships are part of a $10.5 billion project with the Coast Guard to build up to 25 Heritage Class Offshore Patrol Cutters, ships that span 360 feet in length and are designed to navigate deep waters for up to 60 days.

Eastern Shipbuilding was commissioned to build the first four cutters in the program. The Panama City-based company also was given the rights for the first 11 ships in 2016, but that contract was reduced to four after Hurricane Michael devastated Bay County and other parts of the Panhandle in October 2018.

"We are extremely disappointed in this decision and are evaluating our options," Eastern Shipbuilding President Joey D'Isernia said Friday.

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Rubio, who lobbied for the contract to be awarded to the local company, wrote in an email Thursday evening that he believes the government's decision to not choose Eastern is "short-sighted."

Rubio toured Eastern's facility in July 2021.

"When I visited Eastern Shipbuilding last year, I saw firsthand their commitment to building reliable, state-of-the-art ships," he wrote. "They have proven they can do the job and do it well. This decision will cost taxpayers more money and slow down the delivery of these critical vessels."

While Eastern was not awarded the contract for the next wave of ships, it still has a full work schedule. According to company officials, three of its four previously awarded cutters are under construction. The first ship should be completed and delivered to the Coast Guard in 2023, company officials sai. Work on the fourth ship has not started.

The Coast Guard noted in its release that the acquisition strategy of its Offshore Patrol Cutters Program was revised in 2019 to "mitigate emergent cost and schedule risk." It did this by creating a "new, full and open competition for OPCs five and beyond."

This was dubbed "Stage 2" of the program.

"The offshore patrol cutter is absolutely vital to Coast Guard mission excellence as we recapitalize our legacy medium endurance cutters, some of which are more than 50 years old," Adm. Linda Fagan, commandant of the Coast Guard, said in the news release. "The OPCs are the ships our crews need to protect our national security, maritime safety and economic prosperity. I look forward to the new cutters joining our fleet."

Like D'Isernia and Rubio, Bay County Commissioner Bill Dozier, who also is a member of the Bay County Economic Development Alliance, was saddened by the government's decision.

"This is disappointing news for Bay County (that) will have detrimental impacts on our economy," Dozier wrote in a text to The News Herald. "We will of course support Eastern Shipbuilding in any way that we can regarding possible options for an appeal or reconsideration of this decision."

Congressman Neal Dunn of Panama City, saying he also believes the decision was "a mistake," said his office will work to persuade the Coast Guard to reconsider its choice.

"Eastern Shipbuilding is known for quality products and the Coast Guard knows this," Dunn said. "I am very concerned the foreign company awarded the contract lacks experience in building steel vessels."

However, in a Friday press release, Sen. Richard Shelby said the decision "highlights the world-class workforce and proven track record" of Austal USA.

"This contract speaks to the reliability and strength of Austal employees along the Gulf Coast, as well as their ability to deliver," Shelby said. "This is excellent news for the future of our Coast Guard and for shipbuilding in Alabama. I look forward to the positive impact that Austal and Mobile have on the security of our nation."

This article originally appeared on The News Herald: Eastern Shipbuilding loses $3B Coast Guard contract to Alabama company