WASHINGTON — Eastern Shipbuilding Group filed a protest with the Government Accountability Office over the U.S. Coast Guard’s decision to award Austal USA the next phase of the Offshore Patrol Cutter program.
In its filing, the company claims the Coast Guard did not prevent Eastern’s pricing data from leaking to Austal, which Austal then used when crafting its bid, and that the Coast Guard’s own criteria in the competition should have favored Eastern given its real-world cost and schedule data from the first few ships in the program.
GAO confirmed to Defense News the protest was filed July 15 and that the office faced an Oct. 24 deadline to decide on the matter.
Eastern won the design and construction contract for the Offshore Patrol Cutter in 2016; however, in 2019 the Coast Guard decided to recompete the program after Eastern’s Panama City, Fla., yard was leveled in Hurricane Michael. Eastern Shipbuilding continued its work on the first four hulls even as it rebuilt the shipyard.
The so-called Stage II contract covers ships five through 15 in the planned 25-ship program. The Coast Guard announced June 30 Austal won that Stage II contract, but did not discuss why it selected the company.
Joey D’Isernia, the president of Eastern Shipbuilding Group, said in a statement July 21 the company’s “decision to protest does not come lightly.”
“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,” he said. “It begs the question, why?”
D’Isernia told Defense News in a visit to the yard last fall the company’s bid was centered around its proven performance: Eastern could deliver the program at lower cost and schedule risk, he said, because it had a hot production line and fully understood the cost of the labor and material.
In a redacted copy of the protest, obtained by Defense News, Eastern Shipbuilding suggests Austal won because it offered a lower price, even though the Coast Guard laid out a best-value strategy in its request for proposals.
“ESG was higher rated and provided lower risk with strong, relevant past performance,” the filing reads. “Austal’s purported lower price is overwhelmed by the substantial risks associated with an award to Austal, a new entrant to the steel shipbuilding industry with a record of well publicized cost overruns and performance issues.”
Austal has in the past focused on aluminum ship programs, including the Independence-variant Littoral Combat Ship and the Spearhead-class Expeditionary Fast Transport. OPC would be the first major contract for the yard’s steel shipbuilding line, after winning contracts for one floating dry dock and two towing and salvage ships in the last year.
The protest also notes an Austal contracting manager is a retired Coast Guard acquisition officer who would have, during his time in uniform through spring 2019, “had access to ESG non-public competitively useful material” including cost reports, master schedules and build strategies.
An Austal USA spokesperson told Defense News 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.”
HII’s Ingalls Shipbuilding also bid on the Offshore Patrol Cutter program. Asked if the company planned to protest the award as well, Ingalls Shipbuilding spokesperson Kimberly Aguillard told Defense News, “we are disappointed in the OPC decision, however Ingalls remains focused on and committed to serving the Coast Guard on the National Security Cutters we are currently building.”
Megan Eckstein is the naval warfare reporter at Defense News. She has covered military news since 2009, with a focus on U.S. Navy and Marine Corps operations, acquisition programs and budgets. She has reported from four geographic fleets and is happiest when she’s filing stories from a ship. Megan is a University of Maryland alumna.
