Military contracts help keep shipyards in operation

Shipyards that sign military contracts to build for Uncle Sam’s Navy, Coast Guard and even the Army and Air Force usually have a financial leg up over those that don’t. Many such contracts run into the millions of dollars, some into billions of dollars.

The government doesn’t just give these contracts away, however. Shipyards, building in steel or aluminum, have to learn how to deal with the military construction guidelines laid out by the government.

“If you can’t perform on a military contract by delivering a product that meets the requirements and technical specifications, in the timeframe in which it was promised, at the price that you agreed to do the work for, you won’t last long in the defense business,” said Josh Pruzek, vice president, marine sales and business development, Vigor Industrial, Portland, Ore. “Military contractors are assessed and rated in a system called the Contractor Performance Assessment Reporting System (CPARS). We pride ourselves on our performance and always work to manage our customers’ expectations and then exceed them.”

And, Pruzek added, a military contract may also require System Requirements Reviews, Production Readiness Reviews, Quarterly Program Management Reviews and Test Readiness Reviews at a minimum.”

Military building standards, along with the bidding process, can be quite different from those found in a commercial contract.

Polar Security Cutter being built at VT Halter Marine in Pascagoula, Miss. VT Halter Marine rendering

“The U.S. government is the most technically sophisticated customer we design and build for. Therefore, they have the highest standards for quality in the industry,” said VT Halter Marine’s president and CEO Ron Baczkowski. “These quality standards affect every aspect of the design and build process. US government inspectors verify the quality of every technical deliverable and every component utilized in construction. They inspect every cut, fit, weld, lift, move, abrasive blast, paint application, equipment installation, equipment or system start-up and commissioning before a vessel is ever allowed to go to sea.”

Halter has built for the Navy since World War II and is currently building two 269’x69′ APL-67-class berthing barges for the Navy, and two 273’x60′ logistics support vessels for the Army.

In April, the Navy awarded Halter a $746 million contract for the design and construction of the 460’x88′ Coast Guard polar security cutter. The PSC program is a multiple year initiative to acquire up to three multimission PSCs to recapitalize the Coast Guard’s fleet of heavy icebreakers. The contract, if all options are exercised, would total $1.9 billion. The first PSC is scheduled for delivery in 2014, the second in 2025, and the final cutter in early 2027.

“Once a vessel is put to sea the U.S. government verifies that every performance criterion is demonstrated to be in full compliance with the contract documents,” said Baczkowski. “They procure the most comprehensive vessel sustainment package (manuals, spare parts, special tools, consumables and etc.) of any vessel operator in the world.

“To fulfill their needs,” Baczkowski continued. “every technical data deliverable (every drawing, every manual, every label plate and every spare part) must be in absolute perfect agreement with all other vessel sustainment documents to enable a constantly changing team of vessel operators to maintain the vessel with the highest percentages of availability possible.”

Both commercial and military contracts are publicly advertised so that any and all boat builders can bid on them. The U.S. military contracts are typically more detailed and the bid package and deliverables are much more extensive, according to Shawn Lobree, USN (Ret.), federal contracts manager, Silver Ships Inc., Theodore, Ala.

“Military contracts require a greater level of technical analysis such as more extensive and detailed drawings and other technical reports, compared to commercial contracts,” he said. “Most commercial contracts are for a single vessel to be built and delivered in a short period of time (less than one year), while the majority of military aluminum workboat contracts are for multiple vessels to be delivered over a two to five-year period.”

LARGE BOATS

The most sought after contracts for shipyards involve the construction of multiple vessels. Some of these agreements are called ID/IQ (Indefinite Delivery/Indefinite Quantity) contracts.

Vigor is currently working on three such agreements — the 60′ combatant craft medium and the 80′ combatant craft heavy for the Navy and the 117′ maneuver support vessel light for the Army.

“IDIQ contracts are important because it can take years to get a contract vehicle in place that the government can utilize to buy products or services. IDIQ contracts provide a long-term contracting vehicle for the government to contract for work,” said Pruzek. “But an IDIQ contract is not a guarantee of work by any means. We’ve had significant IDIQ contracts that never get funded to anywhere near their contract ceiling value. What helps ensure repeat orders against an IDIQ contract is contractor performance.”

In May 2018, Gulf Island Shipyards was awarded a $63.5 million contract from the Navy for the design and construction of a 263’x59′ steel hulled towing, salvage and rescue ship (T-ATS). The towing vessels will feature an ABS-classed DP-2 system, a bollard pull of 160 metric tons and a working deck area of almost 6,000 sq. ft. The contract includes options for seven additional vessels which could bring the value of the contract to $522.7 million.

Designated as T-ATS(X) by the Naval Sea Systems Command (NAVSEA), the new class of vessels will be based on existing commercial towing offshore vessel designs and will replace the current T-ATF and T-ARS 50 class ships in service with the U.S. Military Sealift Command.

Hiring a commercial tug service to tow a military ship disabled in a war zone can be a big ask. One of these tugs’ duties is to perform that function.

“These boats have to be built to a parent craft design, meaning a boat that has been built before, something proven and in service,” Cliff Long, Gulf Island’s general manager, said in an interview with WorkBoat earlier this year. “It’s very similar to the setup of an anchor handler, so we’re very familiar with that type of construction.”

Bollinger Shipyards has delivered 35 fast response cutters to the Coast Guard with more to come. Bollinger Shipyards photo

Other military vessels currently under construction or recently delivered include:

  • Swiftships — four 134’x30′ landing craft for the Navy.
  • Fincantieri Marinette Marine — 16 (awarded so far) 387.6’x57.7′ littoral combat ship for the Navy, multiple response boat medium for the Coast Guard, design contract for Navy guided missile frigate.
  • Austal USA — 19 (awarded so far) of the aluminum, trimaran 421’6″x103.7′ Navy littoral combat ship, 14 338′ expeditionary fast transport (EPF) vessel.
  • Bollinger Shipyards — 35 (so far) 154’x25′ fast response cutter for the Coast Guard.
  • Eastern Shipbuilding Group — 360’x64′ offshore patrol cutter, first of which is scheduled for 2021, could be as many as 25 built.

SMALLER BOATS

Small shipyards don’t have the physical layout and number of employees that the bigger yards have. For example, a shipyard that has between 25 and 200 workers is a far cry from Austal USA’s 4,000. But the U.S. government needs small boats for its fleet and small boatyards to build them. Small boats are also needed for the Foreign Military Sales program.

MetalCraft began building for the Defense Department in 1999 and also builds for other countries like Bangladesh. MetalCraft photo

MetalCraft Marine has built for Homeland Security and is a member of the Department of Defense’s supply chain. “MetalCraft started building for DOD in 1999. Originally, before MetalCraft had its U.S. manufacturing facility (2007), we were the only Canadian company building small patrol boats for DOD,” said Bob Clark, the company’s contracts manager. “MetalCraft had developed new technology that made the boats easily convertible for rapid C-130 loading for overseas deployment. These boats played a major role in the Iraqi war and were also deployed to many Middle Eastern hot zones.”

Clark said military contracts require a higher level of specification and standards that are well above commercial standards. “Often military specifications push the envelope of what is an existing known design and pushes industry to go beyond known design. This is done to provide the U.S. warfighter with the best tools and equipment there is,” he said.

Meeting DOD requirements requires a lot more paper, tracking and high-level manual packages to better support the product in the field.”

MetalCraft is currently working on several IDIQ contracts. “Based on the high demands required as a DOD supplier, a company must closely monitor IDIQ contracts as they require additional resources,” Clark said.

Silver Ships’ Ambar Series RIBs are versatile in functionality and are the most common boats in use for military missions, the boatyard said. The series includes High Speed Maneuverable Surface Targets (HSMST) for Navy fleet ships and tactical aircraft live-fire ordnance training in the Atlantic and Pacific oceans. The Naval Special Warfare Surface Support Craft (NSW SSC) is another Ambar RIB used for Navy SEAL swimmer and diver training.

The navy required that the HSMST be a highly durable and reliable RIB to be used to support seaborne training for Navy surface force live-fire gunnery training, said Lobree, of Silver Ships.

In April, the boatyard was awarded an $11 million contract for the construction and delivery of up to 160 HSMSTs with options that, if exercised, would bring the total value of the contract to nearly $19.7 million. Since the early 1990s, the boatyard has delivered over 500 of the eight meter HSMSTs to the Navy for use in their Seaborne Targets program.”

Several other shipyards build for Uncle Sam, including Safe Boats International, Seattle, and Louisiana’s Metal Shark. In fact, the Navy uses more than 30 shipyards to fill its requests, according to a NAVSEA spokesperson, and more are welcome.

 

About the author

Ken Hocke

Ken Hocke has been the senior editor of WorkBoat since 1999. He was the associate editor of WorkBoat from 1997 to 1999. Prior to that, he was the editor of the Daily Shipping Guide, a transportation daily in New Orleans. He has written for other publications including The Times-Picayune. He graduated from Louisiana State University with an arts and sciences degree, with a concentration in English, in 1978.

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