Eastern Shipbuilding Group has suspended construction of two U.S. Coast Guard offshore patrol vessels, citing heavy financial pressure linked to the project’s contractual structure. CEO Joey D’Isernia said the program placed unmanageable cost burdens on the company, leading to a reduction in workforce and a halt in production to maintain financial stability.
The pause comes after years of changes within the Coast Guard’s offshore patrol vessel program. The initial nine-vessel concept awarded in 2016 to Oriental Shipbuilding Group was reconfigured following severe damage caused by Hurricane Michael in 2018 at the company’s Panama City facilities. The contract was split into two phases, yet schedule recovery proved challenging: the lead vessel, initially planned for June 2023, was pushed to late 2026, and the second vessel slipped past its April 2024 deadline.
Further adjustments followed these delays. In July 2025, the Department of Homeland Security canceled contracts for two vessels previously assigned to Oriental Shipbuilding, reducing the overall scope. Around the same time, Eastern Shipbuilding notified federal authorities that completing all four vessels under the existing terms would result in severe financial losses, prompting Homeland Security Secretary Kristi Noem to terminate the third and fourth contracts. A senior department official said critical shipbuilding projects could not continue under conditions marked by cost overruns and schedule slippage.
Eastern Shipbuilding stated that, despite the setback, it expects to maintain a steady role in the domestic shipbuilding sector. The company noted its ability to sustain operations through both natural disasters and the pandemic. It also highlighted new commercial activity: in August, Washington State Ferry awarded a $714.5 million contract for two 160-vehicle hybrid-electric ferries, with an option for a third. The award marked the state’s first publicly tendered ferry construction program in 25 years.
Oversight of the Coast Guard’s offshore patrol vessel program now rests with Austal USA, which signed a $3.3 billion agreement in June 2022 for the detailed design and potential construction of up to 11 vessels. In September, the Coast Guard approved a $314 million option for long-lead procurement for three additional ships. Construction of the USS Pickering (WMSMS 919) is progressing toward a December keel-laying, while work on the USS Icarus (WMSMS 920) began in August.
The vessel class measures 109.7 m, offers a 10,200-nautical-mile range at 14 knots, and supports 60 days of endurance. Designed for deployment beyond 12 nautical miles, the ships provide capability for law enforcement, immigration interdiction, counter-narcotics missions, environmental protection, and search-and-rescue operations—all aligned with U.S. national security requirements.
These developments occur amid the most significant funding commitment in the Coast Guard’s history. Under the One Big Beautiful Bill Act, the service received nearly $25 billion, including $4.3 billion dedicated to offshore patrol vessel procurement.
