Florida-based Eastern Shipbuilding Group (ESG) has decided to halt construction on new Heritage-class offshore patrol cutters (OPCs) for the US Coast Guard due to what it said is "significant financial strain."
Joey D’Isernia, CEO of ESG, told USNI News that, despite the company's best efforts, continuing the manufacture of the OPCs could not be sustained considering present circumstances.
D’Isernia added, however, that ESG will overcome this challenge, citing the company's resumption of operations following the devastation of Hurricane Michael in 2018 and the Covid-19 pandemic.
US Department of Homeland Security (DHS) Secretary Kristi Noem has earlier confirmed the partial termination of what has been described as a "wasteful shipbuilding contract" that had been awarded to ESG.
"We cannot allow critical shipbuilding projects to languish over budget and behind schedule," Noem said last July in reference to a contract under which ESG was to build four OPCs for the coast guard.
DHS said that the OPC contract with ESG has been slow to deliver four ships. In light of that, Noem partially cancelled ESG’s contract for two out of the four OPCs expected from its facilities in Panama City, Florida.
DHS said that ESG's delivery of the first OPC was initially due in June 2023 but will now be completed by the end of 2026 at the earliest, and that the company missed its April 2024 delivery for the second OPC.
The coast guard stopped work on OPCs number three and four after ESG notified the service earlier this year that it could not fulfil its contractual duty to deliver all four OPCs without unabsorbable loss.
DHS said the money saved will redirected to ensure it will actually be benefiting the coast guard, but the service's goal of acquiring 25 OPCs remains unchanged.