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September 19, 2016

Why did the Coast Guard bypass BIW for cutter contract?

Courtesy / Bath Iron Works
Courtesy / Bath Iron Works
A rendering of the new U.S. Coast Guard cutters.

The announcement that Bath Iron Works came out on the losing end of a three-way competition for a potential $11 billion U.S. Coast Guard contract left many wondering how the Maine-based shipyard was passed by.

A $110.29 million contract was awarded Thursday to Eastern Shipbuilding Group Inc. of Panama City, Fla., for the production of the lead Offshore Patrol Cutter, with the potential for up to eight follow-on cutters for a total value of $2.38 billion for nine cutters, according to the Coast Guard announcement.

BIW was competing with Eastern Shipbuilding and Lockport, La.-based Bollinger Shipyards Lockport LLC to build the first of what could be 25 new coast guard cutters to replace the Coast Guard's aging 29-ship fleet. According to the Bangor Daily News, the 25-cutter contract is projected to be worth approximately $11 billion.

'Inside track to Bollinger'

According to the Maine Public Broadcasting Network, the Coast Guard is expected to offer more details about its decision to award the contract to Eastern Shipbuilding this week. But the decision came as a surprise to Chris Cavas, Naval warfare correspondent at Defense News, who told MPBN that Bollinger Shipyards, with a long history of working with the Coast Guard, was the favorite to win the contract.

"That Eastern won the contract I think surprised everybody — most people gave the inside track to Bollinger," Cavas told MPBN

In a release, Eastern cited its record of delivering 149 out of 150 mid-range tonnage commercial ships on time and on budget for the past 14 years as a factor in winning the contract.

This was the first government contract awarded to Eastern, according to Cavas. Although BIW has worked extensively with the Navy, it hasn't built a Coast Guard ship since the 1930s, but that didn't put BIW out of the possible running, he told MPBN. Cavas said the Bath shipyard's quality of work and ability to build larger-scale ships, like the new series of cutters, made it a contender.

Ultimately, costs likely played a large factor in awarding the contract to Eastern.

According to the BDN, BIW President Fred Harris told employees in a memo on Thursday that:

"In preparation for the bid, we invested heavily in workforce training, facilities and process improvements." Additionally, he wrote, "We worked with IAMAW Local S6 on a new [collective bargaining agreement] to become more flexible and efficient in the shipyard. Our bid included subcontracting some units to a Gulf Coast shipyard to lower our overall construction costs. Even with that innovative approach, we were still too costly."

Coast Guard Chief Warrant Officer Chad Saylor echoed a similar sentiment to the Portland Press Herald.

"Affordability was a good piece of the decision into selecting the ultimate winner," Saylor told the Press Herald.

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