GAO Denies Protests Over Award Of Waterways Commerce Cutter Contract

The U.S. Government Accountability Office (GAO) has denied protests filed against the awarding of a contract to Denver, Colo.-based Birdon America Inc. for the construction of a new fleet of Waterways Commerce Cutters (WCC) for the U.S. Coast Guard (USCG).

The Coast Guard awarded the contract to Birdon America, a subsidiary of Australia-based Birdon, October 4, 2022. The total contract value of $1.187 billion is for the detailed design and construction of 27 cutters in all, 16 river buoy tenders (WLRs) and 11 inland construction tenders (WLICs).

Shortly thereafter, though, two of the other companies that submitted proposals—Coden, Ala.-based Master Boat Builders (MBB) and Steiner Construction Company of Bayou La Batre, Ala.—protested Birdon’s proposal and the Coast Guard’s evaluation of their own proposals.

After reviewing the complaints, the GAO announced February 8 that it had denied MBB and Steiner Construction’s protests, meaning the program with Birdon is moving ahead.

“The Coast Guard issued a notice to proceed with detail design activities to the prime WCC contractor, Birdon America, on March 2,” said Brian Olexy, communications manager for the U.S. Coast Guard. “Due to ongoing litigation, USCG cannot comment on the two WCC variants under contract, the river buoy (WLR) and inland construction tenders (WLIC).”

According to the GAO report, MBB and Steiner both argued that Birdon’s proposal warranted rejection based on the fact that the company does not own a shipyard where the Waterways Commerce Cutters will be built. Instead, Birdon plans to subcontract the work to Louisiana- and Mississippi-based Bollinger Shipyards.

“Steiner argues the agency should have rejected Birdon’s proposal because the RFP required offerors to own their own shipyards, and Birdon failed to meet this requirement,” the GAO report explained.

Similarly, Master Boat Builders challenged the Coast Guard’s “evaluation of Birdon under the systems design and production capability factor on the basis that Birdon does not own its own shipyard and has no proven processes for building a ship of this complexity for a government or commercial project,” according to the GAO report.

In response, the Coast Guard argued that “nothing in the solicitation required offerors to own their proposed production facilities, and in addition, expressly anticipated that offerors would propose subcontractors,” according to the report.

According to the GAO, the RFP required discussion of the company’s “current production capability and proposed future plans, if any, to develop and mature production capabilities to construct and deliver both variants of the WCC. Further, if “major elements of WCC hull and structure construction are expected to be accomplished by subcontractors,” the offeror was required to supply information for each subcontractor.

In reviewing Birdon’s proposal, the Coast Guard’s Technical Evaluation Team (TET) noted that Bollinger Shipyards is currently building the Coast Guard’s Fast Response Cutter program “and proposes to use the same facilities and infrastructure to build WCCs and has demonstrated experience with government-specific processes and peculiarities of ship construction.” The TET concluded that use of Bollinger Shipyards “was a benefit to the government because construction activities could begin without major modifications or investments, mitigating the risk of schedule delay,” the GAO report stated.

Ultimately, the GAO acknowledged that MBB and Steiner disagreed with the Coast Guard’s evaluation of Birdon. That disagreement, however, was “insufficient to show that the evaluation was unreasonable,” the GAO stated.

MBB and Steiner also both protested weaknesses and significant weaknesses that the Coast Guard identified in their proposals. The GAO discussed weaknesses the Coast Guard identified with “maintenance envelope requirements” for their design. The maintenance envelope is the space provided around equipment, like engines or generators, for crew to work.

“Although we do not address all of the challenges,” the GAO said, “we have reviewed them all and conclude that none provide a basis to sustain the protest.”

MBB and Steiner also claimed unequal treatment when compared to the evaluation of Birdon’s proposal. Again, the GAO sided with the Coast Guard: “For all of the challenges raised, we conclude that USCG has provided reasonable explanations demonstrating that the differences in the evaluators’ findings were based on meaningful differences between the proposals.”

The GAO also addressed protests based on the total evaluated price. MBB’s proposal carried a price of $932.4 million, while Steiner’s proposal was just under $898 million. Regarding total cost, GAO quoted the Source Selection Authority, which stated, “Underlying Birdon America’s proposal ratings are many significant benefits such as the maturity of the design, multiple strengths demonstrating attention to supportability and maintainability including an extended warranty on each cutter built, a quality assurance certification that will reduce risk of counterfeit parts being acquired during production and a proposed schedule and staffing that appropriately considered the government review and approval effort within the design process. These features and the many others are unmatched in any of the technical evaluation factors by any of the competing proposals. The benefits within [Birdon] America’s proposal represent significant value to the Coast Guard and warrant paying the higher price.”

“Accordingly,” GAO General Counsel Edda Emmanuelli Perez wrote, “we find no basis to question the selection decision.”

According to the Coast Guard, the third variant of the WCC, the inland buoy tender (WLI), is undergoing government-led evaluation and design. The Coast Guard anticipates soliciting for the WLI detail design and construction in fiscal year 2025.