Coast Guard Commandant Adm. Karl Schultz said that the contracting path forward on needed offshore patrol cutters reflects “a national compelling urgency on fielding” the vessels.
The Department of Homeland Security announced last Friday its approval of Eastern Shipbuilding Group’s request for limited extraordinary contract relief due to damage sustained to shipbuilding facilities in 2018’s Hurricane Michael. DHS said the Coast Guard “will immediately transition to a follow-on competitive contract for the remaining OPC program of record,” as the OPC program “remains one of the Department’s highest acquisition priorities.”
Speaking Tuesday at the Center for Strategic and International Studies in Washington, Schultz said the extraordinary relief determination has “got to go cure on Capitol Hill for about 60 days here a little bit, but there’s a way forward here where I think Eastern Shipbuilding Group can remain viable.”
“It also allows us to put a re-compete on the street here in the not-too-distant future … it’s sort of a federal acquisitions reg pathway under extraordinary circumstances,” he added.
“Assuming this 85-804 process moves forward as proposed and signed off by the secretary, I think we cut that delay down on the first NSC to about 10 months — 10, 12 months. You know, had we gone with the full re-compete you are talking three-plus years, so this gives us the chance to give the shipbuilder a chance to be successful. It also gives other vendors a chance to come back to the table.”
Schultz noted that “we sort of spread the risk around” in the quest to “get cutters sooner.”
“Then if that doesn’t go quite so well because of challenges, whatever, we have got another pathway to getting ships,” he said.
Asked whether Eastern Shipbuilding was “on board with this abrupt change in the program,” Schultz said the Coast Guard’s chief acquisition executive “flew down and met with the Eastern shipbuilding leadership last week; you know, when the secretary signed us out, so they have had a direct conversation.”
“We certainly will get a chance to go back, and you know what we offered them was a course forward to build up to four ships and each year subsequent appropriations, so they will have to figure out where they stand on that, but there is a lot of room get to plow ahead here,” the commandant continued. “But it is an opportunity for Eastern to continue to build ships for the Coast Guard and it gives us flexibility, so we are not completely wedded to just Eastern Shipbuilding. It’s a great yard that is doing good work, but this is their first defense article that they have built. They are only a couple of percentages into building that for our ship, so we have got to balance risk for the organization to continue to build the cutters we need to do the nation’s bidding and give Eastern a way forward here, I think, to still be successful.”
Eastern “doesn’t own” the hurricane, he added, which “is an unfortunate circumstance.”
“So I think the secretary has signed out a very viable way forward, and it has got my full support, and now we are about executing it. But Eastern gets a chance to weigh in on that.”
Pressed on how the continuing resolution extending government funding through Nov. 21 could affect the future of this and other Coast Guard programs, Schultz said he didn’t see “any immediate contracting activities, contract awards here that are going to be in jeopardy between now and November 21.”
“But as you get later in the year, you’ve constantly got to revisit those types of acquisitions, so I am not in a position to speak, you know, looking in,” he said. “I am going to be guardedly optimistic that the Congress is going to go about the business of getting some appropriations across the 12 appropriation committees into our hands here. I am optimistic on that front.”