PANAMA CITY—  A local shipbuilder has lodged a federal protest after it was not awarded a massive U.S. Coast Guard contract. 

In an email Thursday, Eastern Shipbuilding officials announced they filed a formal appeal with the U.S. Government Accountability Office on July 18 to challenge the Coast Guard's recent decision to not select the company for a $3 billion contract to build up to 11 ships. 

The contract, which includes the rights to ships five through 15 in the Coast Guard's 25-ship Offshore Patrol Cutter Program, was instead given to Austal USA, a foreign-owned shipbuilding company based in Alabama. 

"Our decision to protest does not come lightly," Joey D'Isernia, Eastern president, wrote in an email. "Our community is left reeling from the decision to abandon our workforce and move the Coast Guard's largest acquisition program from our successful production line to a high-risk situation.

"... While this process plays out, we remain committed to our USCG partners and delivering shipbuilding excellence on the first four hulls."

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The Coast Guard's decision to not select Eastern ignited controversy because the local company was commissioned to build the first four ships in the OPC Program, three of which currently are under construction. Eastern also was given the rights to the first 11 cutters in 2016, but that contract was reduced to four after Hurricane Michael hit in October 2018. 

Austal USA has been investigated by the U.S. Department of Justice and the Securities and Exchange Commission, as well as Australian security regulators, for its financial and procurement practices, according to an Associated Press article from February 2021. 

Eastern officials, who have said they believe Austal USA's bid for the latest Coast Guard contract was unrealistic, also have noted the company does not have experience building steel hull ships. 

Austal USA instead is known for building aluminum ships for the U.S. Navy, some of which recently have developed issues that cut their shelf lives. 

"Given Austal's new entry into the steel shipbuilding industry and its lack of relevant past performance, it is highly likely that Austal's price was incomplete and unbalanced for critical items, especially where there are significant differences between steel and aluminum shipbuilding," the Thursday email from Eastern to the News Herald reads. 

The email states Eastern officials believe there is no doubt the local shipbuilder should have been selected for the contract if the Coast Guard "reasonably evaluated" its proposals. 

It alleges the Coast Guard "failed to adequately consider" in its selection a variety of factors, including risk, cost and performance. 

The email also notes the Coast Guard "failed to avoid" an "unfair competitive advantage" that Austal had in the bidding process. A former Coast Guard employee with access to "competitively useful" and "non-public information" allegedly was part of the company's proposal-writing team. 

Eastern Shipbuilding has requested that Gene Dodaro, U.S. comptroller general, not only recommend the OPC contract to Austal USA be terminated, but that it should be awarded to the Panama City shipbuilder. 

"(Eastern Shipbuilding) was higher rated and provided lower risk with strong, relevant past performances," the email reads. "Austal's purported lower price is overwhelmed by the substantial risks associated with an award to Austal, a new entrant to the steel shipbuilding industry with a record of well publicized coast overruns and performance issues.

"The (Coast Guard's) flawed evaluation risks depriving the United States of a significant shipbuilding capability ... at a time of rising near-peer capabilities by hostile nations."