Posted on July 14, 2025
Department of Homeland Security Secretary Kristi Noem announced yesterday the partial termination of a contract with Eastern Shipbuilding Group (ESG) for two Offshore Patrol Cutters (OPCs), citing significant delays and cost concerns.
“This Administration is unwavering in its commitment to the American taxpayer and to a strong, ready Coast Guard,” said a Senior Homeland Security official. “We cannot allow critical shipbuilding projects to languish over budget and behind schedule. Our Coast Guard needs modern, capable vessels to safeguard our national and economic security.”
The decision affects OPCs 3 and 4 under ESG’s contract. According to DHS, ESG’s delivery of OPC 1 was initially scheduled for June 2023 but has been delayed until at least late 2026. The company also missed its April 2024 delivery date for OPC 2.
The Coast Guard stopped work on OPCs 3 and 4 after ESG reportedly notified the service earlier this year that they could not fulfill their contractual obligations without incurring “unabsorbable loss.”
This action follows a similar decision last month when Secretary Noem canceled a delayed Legend-class National Security Cutter contract with Huntington Ingalls Industries (HII), which reportedly saved taxpayers $260 million.
“This is about fulfilling President Trump’s commitment to the American taxpayer,” Secretary Noem stated regarding the June cancellation. “Huntington Ingalls owed us this cutter over a year ago.”
Despite these contract terminations, the Coast Guard maintains its goal of procuring a total of 25 OPCs as part of its fleet modernization strategy. The service describes the OPC program as “essential” to the nation’s layered maritime security approach, particularly for counter-drug and migrant interdiction missions along the southeast border.
Eastern Shipbuilding was awarded the contract to design and construct the first four OPCs in 2016, originally planned as part of a larger nine-vessel procurement. However, the contract was modified after Hurricane Michael severely damaged ESG’s Panama City facilities in 2018, dividing the program into two stages.
In 2022, Austal USA secured the contract for the first OPC in stage 2, with options for up to 10 additional vessels potentially worth $3.3 billion.
The Coast Guard initially planned to invest over $12 billion to acquire the fleet of 25 OPCs. However, according to a 2023 U.S. Government Accountability report, the acquisition cost estimate rose from $12.5 billion to $17.6 billion due to several factors, including contract restructuring following disruptions caused by Hurricane Michael and higher infrastructure costs.
The Trump administration has pledged nearly $25 billion to the Coast Guard through the passage of what officials are calling the “One Big Beautiful Bill” and “Force Design 2028” – described as Homeland’s plan to transform the Coast Guard into a more agile and capable force.