Eastern Shipbuilding Granted Limited Extraordinary Relief for USCG Offshore Patrol Cutter Contract After Hurricane Damages

The U.S. Department of Homeland Security (DHS), in close coordination with the U.S. Coast Guard (USCG), granted extraordinary relief to the Eastern Shipbuilding Group (ESG) for the Offshore Patrol Cutter (OPC) contract after their shipbuilding facilities sustained significant damages from Hurricane Michael.

ESG submitted a relief request on June 30, 2019, under the authority of Public Law (P.L.) 85-804, after Hurricane Michael – a Category 5 storm – made landfall at its facility in Panama City, Florida on October 10, 2018. Hurricane Michael caused widespread damage to ESG facilities as well as homes and businesses in the area.

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 and the DHS, with support from the U.S. Navy and independent third party experts, 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 and determined that ESG’s continued performance on the OPC contract is essential to the national defense. 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.”

Production on the first OPC, the future USCGC Argus (WMSM-915), commenced in January 2019 and the vessel was initially scheduled to be delivered by 2021. The Coast Guard has also ordered long lead-time materials for the second OPC, the future USCGC Chase (WMSM-916).

The Coast Guard will now work with ESG to establish new cost and schedule targets under the contract and continue OPC production at ESG’s facilities in Panama City. Additionally, the Coast Guard will release a Request for Information  (RFI) 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 OPCs, also called Heritage-class cutters, are the Coast Guard’s highest acquisition priority and will provide a capability bridge between the Legend-class National Security Cutters (NSC), which patrols the open ocean in the most demanding maritime environments, and the Sentinel-class Fast Response Cutters, which serves closer to shore.

The vessels will feature state-of-the-market technology and will replace the service’s 270-foot and 210-foot Medium Endurance Cutters, commissioned between 1964 and 1991, which are becoming increasingly expensive to maintain and operate.

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.

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