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Heritage-class Offshore Patrol Cutter (OPC) Program

The Coast Guard a component of the Department of Homeland Security (DHS) is planning to spend over $12 billion to acquire a fleet of 25 Offshore Patrol Cutters (OPCs]. This is the components highest investment priority and will help ensure a variety of missions, such as drug and migrant interdiction, are carried out in offshore waters once its aging Medium Endurance Cutters are decommissioned. After Hurricane Michael a category 5 storm significantly disrupted the OPC shipbuilders ability to continue work in October 2018, DHS granted up to $659 million in extraordinary contractual relief to the shipbuilder. The Coast Guard divided the OPC program into two stages and revised its cost and schedule goals following widespread disruptions from Hurricane Michael in October 2018, which led the shipbuilder to request relief from certain requirements under contract. Under this revised plan, the current shipbuilder will build up to four OPCs in the first stage, while the acquisition of the remaining 21 OPCs will be awarded under one or more new contracts starting in fiscal year 2022 in the second stage. The Coast Guards determination to deliver the OPCs in a timely manner has driven the program through key acquisition decisions despite significant design, testing, schedule, and cost risks, which remained or were exacerbated after the hurricane. The Coast Guards Program of Record, calls for procuring a total of Twenty Five Offshore Patrol Cutters as replacements for the Twenty Nine Medium Endurance Cutters currently in service. Eight shipbuilders originally provided draft designs for the cutters. The Coast Guard down selected to five shipbuilders to refine designs. In 2014, the U.S. Coast Guard awarded firm fixed-price contracts to Three shipyards to develop preliminary and contract design proposals for the project. The Coast Guard conducted a thorough evaluation of the three proposals based on technical, management, producibility, and price factors. Eastern Shipbuildings proposal was selected for the contract award.

On October 10, 2016, the U.S. Coast Guard awarded the largest vessel procurement contract in Coast Guard history to Eastern Shipbuilding Group, Inc. Eastern was selected to finalize its design and construct the first series of nine (9) Offshore Patrol Cutters to replace the Medium Endurance Cutters currently in service. The contract is initially for nine (9) vessels with options for two (2) additional vessels. The ultimate goal of this Coast Guard program is to build twenty-five (25) Offshore Patrol Cutters, having a potential total contract value in excess of $10 billion dollars. Initially, Eastern was awarded the detail design effort with an approximate value of $110 million dollars.

Eastern Shipbuilding is a family held shipbuilding company located in Panama City, Florida. A long time employer in Bay County for over 40 years, Eastern currently provides jobs for more than 1500 employees. Since 2008, Eastern has spent more than Seventy Five Million dollars in upgrading and expanding its facilities and shipbuilding capabilities to continue growing and meeting the needs of its commercial and Government customers. At the full ramp up of the OPC contract Eastern anticipates expanding its workforce with additional craftsmen and additional engineering and administration staff to fulfill the contract requirements. Eastern will also continue to provide quality vessels for commercial customers, maintaining its success and providing numerous jobs in the competitive, cost-conscious commercial shipbuilding market.

Securing this contract was based on Easterns reputation as an industry leader in the construction of mid-range tonnage commercial ships. With a record of delivering 149 out of 150 ships on time and on budget since 2002, Easterns performance record is unmatched. Over the past 10 years, Eastern has delivered vessels, ranging from 80 feet to 433 feet in length, many with complexity comparable to the Offshore Patrol Cutter. Efficient, commercially based production processes ensure affordability in the construction of these Coast Guard vessels.

On January 6, 2017 Eastern Shipbuilding Group, Inc. announced the appointment of Admiral Robert J. Papp, Jr., U. S. Coast Guard (Retired), as President of Eastern Shipbuilding Group, Inc., Washington Operations. Admiral Papp served as an Officer in the Coast Guard for nearly 40 years, completing his career as the 24th Commandant of the U. S. Coast Guard from 2010 to 2014. This Washington Operations appointment is the first time the 41 year old shipbuilding company has established a permanent presence in the Nations Capital and it represents a significant step in the companys growth and stature in the marine industry.

Babcock International Group, as part of Team Eastern Shipbuilding Group (ESG), was awarded a contract on 21 March 2017 to provide platform engineering design for the design and construction phases of the United States Coast Guards new Offshore Patrol Cutter (OPC) class vessels. As the key provider of engineering support services on Team ESG for the last two years, Babcock had brought a wealth of experience to the development of the OPC design, the build strategy and the electrical systems. Babcock worked closely with ESG and would deliver a whole ship 3D model, selected systems and production support as part of the new design work, underpinning the programme with detailed modelling, production outputs and the detailed design of auxiliary systems, structure, outfit and electrical systems. Elements of the work were subcontracted to VARD, building on a successful design relationship with Babcock to develop Offshore Patrol Vessels (OPVs) for the Irish Naval Service.

Production of the lead Cutter was due to start in late 2018, and will be due for completion in 2021. Up to eight follow-on ships are included in this initial contract. The United States Coast Guard planned to build up to 25 OPCs.

Eastern Shipbuilding successfully completed its Initial Critical Design Review (ICDR) milestone with the United States Coast Guard on 21 July, 2017 for the Offshore Patrol Cutter (OPC) Program. ESGs accomplishment is noteworthy as it occurred on schedule and within the budget constraints set forth by USCG acquisition, and cleared the way to proceed to the next critical milestone known as Final Critical Design Review (FCDR). This accomplishment comes after a weeklong group of discussions, demonstrations, and design presentations by ESGs design team to the USCG Ship Design Team, Project Management Staff, and Department of Homeland Security. The purpose of ICDR is to verify that the OPC detail design is integrated and internally consistent with the USCG requirements.

Eastern Shipbuilding was awarded Long Lead Time Material (LLTM) contract for the first Offshore Patrol Cutter USCGC Argus (WMSM 915) on September 7, 2017 with the United States Coast Guard. The LLTM award allows Eastern to move forward on an aggressive schedule to deliver a capable and affordable platform to meet the Coast Guards mission needs. The award includes main propulsion, machinery control, electrical and mechanical equipment orders that need to be placed in advance of awarding the construction contract for USCGC Argus which is planned to occur in late summer of 2018 with a delivery in August 2021. The LLTM award included development and approval of the design specifications that are used to purchase the LLTM. This includes meeting both the USCG requirements and all of the American Bureau of Shipping Naval Vessel Rules. The OPC is the first USCG vessel ever constructed to meet these very specific vessel classification requirements.

Eastern Shipbuilding Group (ESG) successfully conducted its Final Critical Design Review (FCDR) with the United States Coast Guard on 29 June 2018 for the Offshore Patrol Cutter (OPC) Program. This accomplishment comes after a week of discussions, demonstrations, and design presentations by ESGs design team to the USCG and Department of Homeland Security (DHS). The purpose of the FCDR is to verify that the OPC detail design is integrated and internally consistent with the USCG requirements and points towards the exercise of the contract option for construction of the first hull USCGC ARGUS. Construction of the lead vessel is anticipated to start after the contract option is exercised with delivery in 2021.

Eastern Shipbuilding announced on September 28, 2018 that the U.S. Coast Guard exercised the fixed-price, incentive option on its Offshore Patrol Cutter (OPC) Contract to build the lead OPC, USCGC ARGUS (WMSM-915). In conjunction, the U.S. Coast also exercised the firm fixed price option for Long Lead Time Materials for OPC #2, USCGC CHASE (WMSM-916). These accomplishments result from two major reviews in July and August, specifically the Final Critical Design Review (FCDR) and Production Readiness Review (PRR).

Prior to the construction award for OPC 1, the OPC programs schedule has contained significant deficiencies that are contrary to what is called for in best practices for developing schedules that GAO identified. Further, the revised post-hurricane delivery dates for the first four OPCs are optimistic and do not fully incorporate schedule risks, increasing the likelihood that the OPCs will not be delivered when promised. In response to ESGs March 2019 request for schedule relief, the Coast Guard delayed the delivery dates of OPCs 1 through 4 from 8 to 12 months as an excusable delay under the contract due to the hurricane. 7ESGs detail design and construction contract includes an excusable delays clause, which generally states the contractor shall not be in default because of any failure to perform under contract terms if the failure arises from causes beyond the control and without the fault or negligence of the contractor. Examples of these causes include acts of God, fires, floods, epidemics, quarantine restrictions, strikes, and unusually severe weather. If the contracting officer determines that the contractors failure to perform is a result of one or more of these causes, the delivery schedule shall be revised. FAR 52.249-14. Coast Guard officials stated that they planned to specify delivery dates for OPCs 3 and 4 in ESGs contract by no later than June 2021 and June 2022, respectively.

Coast Guard officials stated that ESGs inexperience with federal contracts and scheduling tools contributed to the challenges with ESGs schedule. For example, after the Coast Guard raised concerns about the accuracy of ESGs schedule data submissions in the post-hurricane analysis, the contract adjustment board reported that ESG officials said they would use successful commercial practices to build OPC, making the required schedule and data submissions redundant. ESG subsequently hired individuals with government shipbuilding experience to help address the scheduling concerns.

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Page last modified: 01-07-2021 14:52:36 ZULU