“DHS, Coast Guard extend limited contract relief for Offshore Patrol Cutter” –CG News Release

Below is a news release in full. It reports that “contract relief” will be granted to Eastern Shipyard for construction of the first four ships but that the Coast Guard will reopen bidding for the follow on ships. The Coast Guard always had this option although it seemed unlikely before. The statement that this relief will be granted, “in parallel with immediate recompete” probably means we will see a request for proposal in the near future. 

It seems unlikely that the follow-on ships would be of a different design. The Coast Guard now owns the detail design (correction, I am told the CG does not own all the design details yet but has the option to purchase them) and a different design would introduce additional delays and expense for design development. 

A recompete once again opens the possibility of using a block buy which could result in substantial savings. The recompete could easily provide a block buy for ten ships over five years. A block buy, rather than a contract for two with options, would tend to level the playing field between Eastern, that has the advantage of already building this class, and other shipyards. 

From a historical perspective, the 270 program was also completed by two different shipyards, the first four being built by Tacoma Boat, the other nine by Derecktor Shipyard in Rode Island. The change did result in an 18 month gap between the fourth and fifth ship. 

united states coast guard

 News Release

U.S. Coast Guard Headquarters
Contact: Coast Guard Acquisitions
(202) 475-3069/5532
Headquarters Media Relations (202) 372-4630
mediarelations@uscg.mil
Headquarters online newsroom

 

DHS, Coast Guard extend limited contract relief for Offshore Patrol Cutter

WASHINGTON – The Department of Homeland Security, in close coordination with the U.S. Coast Guard, granted extraordinary relief to the Eastern Shipbuilding Group (ESG) for the Offshore Patrol Cutter (OPC) under the authority of Public Law (P.L.) 85-804.

ESG submitted a request June 30, 2019, for extraordinary relief after their shipbuilding facilities sustained significant damages from Hurricane Michael, a Category 5 storm, in October 2018.

Acting Secretary of Homeland Security Kevin K. McAleenan made the decision to grant extraordinary contract relief limited to the first four hulls on the basis that ESG’s performance on the OPC contract is vital to the national defense. The Coast Guard will immediately transition to a follow-on competitive contract for the remaining OPC program of record.

P.L. 85-804 was enacted in 1958 and extended to DHS through Presidential Executive Order in 2003. Under this law, an existing contract may be amended or modified when such actions are necessary to facilitate the national defense.

The Coast Guard, supported by DHS and the Navy, conducted an extensive analysis of ESG’s request guided by law and Federal Acquisition Regulation. This review included an assessment of the cost, schedule, and performance impacts on the existing contract. The review was overseen by a Contract Adjustment Board chaired by the DHS Deputy Under Secretary for Management.

“Eastern Shipbuilding’s request for extraordinary relief was carefully considered,” said Coast Guard Vice Commandant, Admiral Charles W. Ray. “This review validated the essential contributions the OPC will provide to our national security and determined that limited relief, in parallel with immediate recompete, is the best option in this exceptional situation. Doing so is consistent with the law, fiscally responsible, and the most expeditious means to deliver this essential national capability.”

The Coast Guard intends to release a Request for Information to gauge industry interest in re-competing the remainder of the OPC program of record. This information will inform the acquisition strategy for the follow-on procurement.

The OPC will replace the fleet of Medium Endurance Cutters, commissioned between 1964 and 1991, providing a critical capability between the National Security Cutter and the Fast Response Cutter. OPC acquisition will expand the Coast Guard’s capability to secure the U.S. border and approaches, disrupt drug cartels and other illicit actors, prevent unlawful immigration, and enhance national preparedness. This decision will ensure critical capabilities are delivered to the fleet as expeditiously and responsibly as possible.

-USCG-

9 thoughts on ““DHS, Coast Guard extend limited contract relief for Offshore Patrol Cutter” –CG News Release

  1. I wonder how this recompete will affect the timetable for the OPC program…the 210s are 50-plus years old…time’s a-ticking. The 270s aren’t exactly spring chickens either. Like you’ve said earlier Chuck, just one more reason why CG needs to model after the Navy’s periodical fleet reviews. When you’re depending on 50-year-old ships to fulfill mission requirements, something’s not quite right.

    • I suspect that part of the “relief” may be that the delivery date on the first four may have slipped. If I remember correctly, it was supposed to be #1 in 2021, #2 in 2022, #3 and #4 in 2023.Issuing a new contract will take at least a year and then we will need congressional approval, that is unlikely before FY2022. Add at least three years for construction, that makes #5 delivery no earlier than FY2025. No this is not good.

      A possible option might be to have #5 and #6 built by Eastern just to avoid delivery gap.

      This does perhaps open up the possibility of having two yard building more than two per year.

  2. the 210’s were built by 4 different yards
    Todd Shipyards, Houston, Texas
    American Ship Building Company, Lorain, Ohio
    U.S. Coast Guard Yard, Curtis Bay, Maryland
    Christy Corporation, Sturgeon Bay, Wisconsin

    Perhaps in order to help the economy CG could get Congress to go along with a re compete now and they can accelerate the program.

  3. Seems almost certain now that hull 1 won’t be ready in FY2021 as originally planned. Hopefully this will result in the contract being split to accelerate construction after hull 4.

  4. This program may end up under a microscope after this, I hope the leadership is getting ready for that eventuality. And I hope they take the time to properly conduct this recompete, lest appropriators decide they need to start over from scratch.

    Here’s hoping someone like Vigor or Philly can sneak in and grab a slice of this action.

  5. This from CG-9, https://www.dcms.uscg.mil/Our-Organization/Assistant-Commandant-for-Acquisitions-CG-9/Newsroom/Latest-Acquisition-News/Article/1987279/department-of-homeland-security-approves-limited-extraordinary-relief-for-offsh/

    “Following a determination by the Acting Secretary of Homeland Security that extraordinary relief is necessary to maintain the national defense and is in the best interest of the government, the Coast Guard is moving forward with an adjustment to the Offshore Patrol Cutter (OPC) detail design and construction contract with Eastern Shipbuilding Group (ESG) for up to the first four hulls. The Coast Guard will work with ESG to establish new cost and schedule targets under the contract and continue OPC production at ESG’s facilities in Panama City, Florida. Additionally, the Coast Guard will release a Request for Information to gauge industry interest in re-competing the remainder of the OPC program of record. This information will inform the acquisition strategy for the follow-on procurement.

    “The Coast Guard and Department of Homeland Security, with support from the Navy and independent third party experts, completed a comprehensive evaluation of ESG’s request for extraordinary contract relief as a result of Hurricane Michael. This evaluation focused on cost, schedule, and performance factors and determined that ESG’s continued performance on the OPC contract is essential to the national defense.

    “The request was made by ESG under the authority of Public Law 85-804 after Hurricane Michael – a Category 5 storm – made landfall in Panama City on October 10, 2018. Hurricane Michael caused widespread damage to ESG facilities as well as homes and businesses in the area.

    “ESG began reconstitution efforts immediately following the storm and remains actively engaged in post‐hurricane recovery activities. However, impacts are likely to be felt across the community for the better part of the next decade. As a result of property damage incurred, a significant impact to ESG’s workforce, and overall regional impacts to infrastructure, ESG requested extraordinary cost and schedule relief from the Coast Guard to support continued performance on the OPC contract.

    “Production on the first OPC commenced in January 2019 and new post-hurricane build strategy is being implemented. Long lead-time material to support construction of the second OPC are on order.

    “The OPC is the Coast Guard’s highest acquisition priority and will provide a capability bridge between the National Security Cutter, which patrols the open ocean in the most demanding maritime environments, and the Fast Response Cutter, which serves closer to shore. The OPC will feature state-of-the-market technology and will replace the service’s 270-foot and 210-foot Medium Endurance Cutters, which are becoming increasingly expensive to maintain and operate.

    “The Coast Guard remains committed to acquiring the OPC to address the Nation’s security needs, while maintaining public trust and stewardship of the American taxpayers’ dollars.”

    • Thanks for update…sounds like Eastern was hit pretty hard by Michael.

      “Additionally, the Coast Guard will release a Request for Information to gauge industry interest in re-competing the remainder of the OPC program of record. This information will inform the acquisition strategy for the follow-on procurement.”

      It seems to me this is basically saying Eastern doesn’t have the ability to reliably finish the OPC contract. Plus, the release points out the region will be feeling the effects of Michael well into the next 10 years. So Eastern builds the first four, then perhaps another lucky winner gets the remainder of the class? I imagine Bollinger is chomping at the bit.

  6. Pingback: “Coast Guard Cutter Procurement: Background and Issues for Congress” –CRS, October 11, 2019 | Chuck Hill's CG Blog

  7. Philly is trying hard to get government contracts to survive. Marinette may need the work depending on FFG(X). Less sure about Vigor or VT Halter. I could see Bollinger take a shot at it as a former OPC competitor. It would be neat to to see ECO try as they certainly have the capacity.

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