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$746M Contract Awarded for Icebreaker

Monday, April 29, 2019

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On Tuesday (April 23) the U.S. Navy’s Naval Sea Systems Command (NAVSEA) awarded a $746 million contract to VT Halter Marine Inc. (Pascagoula, Mississippi) for the design and build of a next-generation heavy icebreaker.

The first-in-class Polar Security Cutter will be the service’s first heavy icebreaker in more than 40 years.

The Award Process

The multi-year PSC program was invested by the Department of Homeland Security Level 1 and involved a major system acquisition by the U.S. Coast Guard as part of a plan to build up to three multi-mission PSCs.

The award follows a March 2018 request for proposals, released from the Coast Guard and U.S. Navy. The Coast Guard had previously received a $655 million spending package for the first hall of PSCs in Fiscal Year 2019 and an additional $20 million to purchase long-lead-time materials for a second heavy icebreaker.

The service also requested $35 million in the budget for 2020 for program management costs in order to keep the line going between the new ships.

Halter’s bid was chosen over two other finalists, Bollinger Shipyards (Lockport, Louisiana) and a partnership between Philly Shipyard (Philadelphia, Pennsylvania) and Fincantieri Marinette Marine (Marinette, Wisconsin).

Celebrating late Tuesday evening when the award was announced, the StarTribune says that Halter CEO Ronald Baczkowski was excited at the news.

According to Halter Senior Vice President Robert Socha, because of the award, the shipyard will now be able to hire up to 450 more employees, on top of the 400 it’s already hired for the U.S. Navy’s four barrack barges. The total new hires push Halter’s total employment above 1,300.

"Winning the contract to build the polar security cutter is a great achievement for the talented shipbuilders at VT Halter," said U.S. Sen. Roger Wicker, a Mississippi Republican who oversees the Coast Guard as chairman of the Senate Commerce Committee.

In NAVSEA’s statement, James Geurts, Assistant Secretary of the Navy for Research, Development and Acquisition, also added, “This contract award reflects the great benefit achieved by integrating the incredible talents of USCG and Navy acquisition and shipbuilding professionals to deliver best value at speed.

“Working with our industry partners, the team identified approximately $300 million in cost avoidances and accelerated the schedule for delivery of this capability to the nation by almost three years. This reflects the urgency in which we are operating to ensure we deliver capabilities necessary to support the U.S. Coast Guard and the nation’s missions in the polar regions.”

Icebreaker History

Since 2005, the USCG has been pleading with Congress for one or more heavy icebreakers. Around that time, its two icebreakers, USCGC Polar Star (commissioned in 1976) and USCGC Healy (commissioned in 1999), were nearing the end of their 30-year life expectancies. The 399-foot Polar Star was even marked with “caretaker status” to preserve its future uses.

In 2010, the Polar Sea, Star’s sister ship, was placed marked inactive after it suffered a catastrophic engine failure that was deemed too costly to repair.

In 2013, the USCG received enough funding that the Polar Star could be repaired and returned to service. However, in February of this year, the Polar Star suffered a major fire within its incinerator room after supporting a supply run to the U.S. Antarctic Program’s McMurdo Station in Antarctica.

These three icebreakers are the only ones owned by the U.S. government. In a 2017 report, the Government Accountability Office stated that the USCG had only been able to complete 78% of its assigned icebreaking missions between 2011 and 2016.

In February 2017, the USCG announced the five shipyards that would be receiving contracts for industry studies for the heavy icebreaker program. Bollinger Shipyards, Fincantieri Marine Group LLC (Washington, D.C.), General Dynamics/National Steel and Shipbuilding Company (San Diego), Huntington Ingalls (Pascagoula, Mississippi) and VT Halter Marine were those chosen for the study.

What’s Happening Now

Awarded through an Integrated Program Office, the initial award is valued at $745.9 million and will support the non-recurring engineering and design of the PSC, as well as materials and construction of the first ship.

The contract includes options for the construction of two additional PSCs, which could bring the total value of the work to $1.9 billion.

“With the strong support of both the Trump Administration and the United States Congress, this contract award marks an important step towards building the nation's full complement of six polar icebreakers to meet the unique mission demands that have emerged from increased commerce, tourism, research and international activities in the Arctic and Antarctic,” said Admiral Karl L. Schultz, Commandant of the Coast Guard.

Slated to receive the new heavy icebreaker by 2023, the USCG is already looking at a potential costly life extension program for the Polar Star in order to avoid a gap expected to begin in 2020, when the U.S. government would have zero working PSCs.

The Navy claims that there are already monetary incentives with Halter for possible early delivery. However, any gap raises the concern for possibly violent competition for territory in the region between the United States and competitors, Russia and China.

According to The Drive, Russia has built 14 icebreakers since 2013, and has dozens of additional icebreakers still in service as well. China has also been building icebreakers and is currently developing a 30,000-ton displacement nuclear-powered design.

"For too long, we've been outpaced by Russia and China as they've expanded their icebreaker fleets and encroached on the High North,” stated Coast Guard and Maritime Transportation Subcommittee Chairman Rep. Sean Patrick Maloney, D-New York.

“It's up to Washington to ensure the Coast Guard has the resources it needs to protect our national security and sovereignty in the Arctic.”

   

Tagged categories: Bidding; Contract awards; Contracts; Government; Government contracts; NA; North America; Program/Project Management; Ships and vessels; U.S. Navy

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