WASHINGTON, D.C. – A year after Hurricane Michael hit Florida’s panhandle, labor shortages in the region are causing the Coast Guard’s $10.5-billion high-priority Offshore Patrol Cutter program to fall 12 months behind schedule and be at risk of running over budget.
The Coast Guard’s solution is to modify the original contract. Eastern Shipbuilding Group, the prime contractor, will build the first four OPCs while the Coast Guard takes the extraordinary step of seeking new bidders to build out the planned fleet of 25 OPCs, Adm. Karl Schultz, the commandant of the Coast Guard, said Tuesday while speaking at an event cohosted by the Center for Strategic and International Studies and the U.S. Naval Institute.
“This way forward allows Eastern to build up to four (OPCs). Eastern can compete in the re-competition,” Schultz said. “Eastern’s future is very much in Eastern Shipbuilding Group’s hands, and other vendors I guess probably can get a bite at the apple and come back in and compete a part of the OPC build.”
In September 2016, the Coast Guard awarded Panama City, Fla.-based Eastern Shipbuilding Group a contract to build the future USCGC Argus (WMSM-915) with options to build up to nine OPCs. Eastern beat General Dynamics Bath Iron Works and Bollinger Shipyards to land the design and construction contract, which could be worth up to $10.5 billion as the Coast Guard intends to buy up to 25 OPCs.
However, in October 2018, Hurricane Michael struck the Florida Panhandle, severely damaging vast swaths of the region around Panama City, including to Eastern Shipbuilding’s yard and nearby Tyndall Air Force Base.
As Tyndall continues to recover, the demand for skilled labor has spiked since the hurricane, causing the price of hiring new workers to dramatically increase just as Eastern was trying to bulk up its workforce, according to a statement from Sen. Marco Rubio (R-Fla.). Rubio submitted a bill that would allow the Coast Guard to rework the OPC contract.
“Hurricane Michael significantly damaged Tyndall Air Force Base, and the labor needed to rebuild the base is competing directly with the labor to fulfill the OPC contract. As a result, the Coast Guard has requested authorization from Congress to be able to potentially revisit the contract to take into account the increased labor costs associated with the category 5 hurricane,” said Rubio’s statement.
The Coast Guard is anxious to field the OPC because the cutters are due to replace the service’s aging 210-foot and 270-foot Medium Endurance Cutters. The OPC features increased range and endurance, powerful weapons, a larger flight deck, and improved command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) equipment. The OPC will accommodate aircraft and small boat operations in all weather, according to a May 2016 Congressional Research Service report on Coast Guard Procurement.
The Coast Guard’s priority is getting the first four OPCs built as quickly as possible, and it will get the program stabilized in time to start the fifth hull, Schultz said. Entirely scrapping the Eastern award and start the process over would set the program back by at least three years, he said.
“Eastern still the quickest pathway to fielding the offshore patrol cutter,” Schultz said.