Homeland Security Cancels Contracts for Two Offshore Patrol Cutters
The Department of Homeland Security has canceled orders for the third and fourth Offshore Patrol Cutters at Eastern Shipbuilding Group, citing delays and cost growth. The Coast Guard had already put the third and fourth hulls on hold, even though early stages of work had started on both of them.
The agency did not immediately say whether the contracts would be rebid. The OPC program plan calls for a total of at least 15 hulls valued at about $500 million each (as of 2024, inclusive of cost growth).
In a statement, DHS said that the third and fourth cutters were "not an effective use of taxpayer money." The program has been delayed for years, in part because of the effects of a Category 5 hurricane on Eastern's yard in Panama City, Florida in 2018. The contract has already been altered once: in 2019, the Coast Guard reduced Eastern's series to four hulls and rebid the remaining orders, awarding the next block of sister ships in the series to competitor Austal USA (starting with hull five).
Fierce hiring competition among Gulf Coast shipbuilders has contributed to delays and cost increases, according to government procurement officials. "It is one workforce across many states [along the Gulf Coast]," Coast Guard head of acquisitions Rear Adm. Chad Jacoby told Defense News last year. "As each shipyard says they’re going to hire people, they’re definitely competing against each other."
DHS currently projects that the first ESG-built OPC will deliver at the end of 2026, three years later than planned. The Congressional Research Service estimates that initial operating capability will be delayed until June 2029, more than six years later than the originally-planned date of December 2022. In the interim, the Coast Guard's aging Medium Endurance Cutters (WMECs) will continue to carry the bulk of the anti-smuggling mission in the Caribbean and Eastern Pacific.
“We share a common goal with the U.S. Coast Guard—to deliver the Offshore Patrol Cutters as quickly and efficiently as possible,” ESG CEO Joey D’Isernia told The Maritime Executive last month. "System light-offs on Hull 1 are currently underway, and despite the unprecedented challenges we’ve faced, we remain confident that our incredible workforce represents the most capable and reliable team to complete these vital national security assets."
DHS reports that earlier this year, Eastern gave notice that it would book an "unabsorbable loss" if it were to fulfill its full four-ship OPC contract as written. With the cost burden of that pre-COVID contract lifted, ESG now has an opportunity to refocus on a $715 million, three-hull ferry project for Washington State Ferries. ESG is a successful ferry builder with a proven track record, and it can bring experience from Staten Island Ferry's Ollis-class vessels to bear on the new hybrid-electric ferries for WSF. According to the State of Washington, ESG's bid for the new ferry program came in six percent under the state's own price estimate.
Going forward, the Coast Guard has enormous new financial resources to put towards shipbuilding thanks to the One Big Beautiful Bill Act, including $4.3 billion for the Offshore Patrol Cutter program.
Austal USA Delivers Last Independence-Variant LCS to USN
Austal USA reports the U.S. Navy officially took delivery today, July 11, of the future USS Pierre, the final ship of the Independence program. LCS 38 is the 19th Independence-variant Littoral Combat Ship (LCS) delivered by the company in a program that dates back to the early 2000s.
Delivery documents were signed on board following the successful completion of acceptance trials held the week of June 9, 2025. The trials tested the ship’s major systems and equipment to demonstrate their successful operation and mission readiness. The ships’ pre-commissioning unit will now begin preparations for fleet introduction.
Austal USA highlights the Littoral Combat Ships (LCS) as fast and agile, a platform designed for near-shore operations, supporting forward presence, maritime security, sea control, and deterrence. The trimaran hull was reputed to be fast and at 413 feet in length was just over 3,000 tons displacement with the use of aluminum.
“The delivery of the future USS Pierre will be one of our most memorable milestone achievements as it marks the conclusion of Austal USA’s Independence-variant Littoral Combat Ship program,” said Austal USA President Michelle Kruger. “Our shipbuilding team has poured years of dedication, innovation, and manufacturing excellence into this ship, and the results are evident. Though USS Pierre is the last LCS Austal USA will deliver, we remain committed to supporting the U.S. Navy with innovative maritime solutions and the highest standards of quality.”
The company highlights that it delivered 19 vessels in just 15 years. The first of the vessels, USS Independence, was commissioned in 2010, with the flow of ships building starting in 2014. In pear years, 2018 and again in 2021, the USN commissioned three ships of the class in a single year. The final order or the last two ships came in 2018, as the Navy had soured on aluminum and started to move back to steel.
Observers criticized the ships and their multiple problems. Early on, there were reports of excessive corrosion due to galvanic corrosion, the joining of two metals. Austal USA said it was able to address the issue with an "array of tested corrosion-management tools and processes."
The next challenge came in 2019 when the Navy began identifying cracks in the structure that seemed to come about when the ships operated at higher speeds in moderate or worse seas. By 2022, the Navy said it had found cracks on six of the first 13 ships, and in an unusual move, decommissioned the first two ships of the class in 2021 and 2022. The prior administration had said two additional hulls were scheduled to be decommissioned, but the new Trump administration has not confirmed the plans as it seeks to enhance naval operations.
Austal USA made the pivot to steel and conducted its first steel cutting for the Navy in 2022. Last month, USNS Billy Frank Jr. was rolled out from the construction hall as Austal USA’s first steel vessel for the USN. The company highlights that it has nine U.S. Navy vessels and one U.S. Coast Guard cutter under construction, with construction scheduled to begin on a second cutter in early August.
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