WASHINGTON — The Austal USA shipyard in Alabama is ahead of schedule in revamping its facilities to build steel ships in addition to aluminum ships, but ongoing questions about U.S. Navy shipbuilding plans have left the yard uncertain about what steel work could come its way in the near term.

The company is investing about $200 million to improve and expand its shipyard and to grow its ship repair business, Larry Ryder, Austal USA’s vice president of business development and external affairs, told Defense News last month. About half of that is meant to convert half the production lines at the shipyard to work with steel rather than aluminum, which was used to build Austal’s Independence-variant littoral combat ships and its expeditionary fast transports (EPFs).

Ryder said the yard is ahead of schedule on making the modifications, ahead of a planned April 2022 kickoff of the steel shipyard capability. The challenge now: finding a steel ship contract to bid on.

“As far as the workforce, you know, we need to get some awards,” Ryder said during an interview at the Navy League’s annual Sea Air Space conference.

The company is looking at the Navy’s new light amphibious warship, next-generation logistics ship and T-AGOS ocean surveillance ship programs, as well as the U.S. Coast Guard’s offshore patrol cutter – though securing status as the Navy’s follow yard for the frigate program, building duplicates of Fincantieri’s Constellation-class frigate, would be the biggest prize for Austal.

Ryder called these a “whole series of new programs that we believe are right in our wheelhouse in terms of the size of the program, the need for serial production,” but it remains unclear when the Navy will move to select a frigate follow yard or kick off the other programs — and with work winding down on the LCS program and the duration of the EPF program unclear, Austal isn’t sure where its next contract is coming from.

“We do have some near-term challenges in our manning profile. We’re working hard to ensure we keep our workforce — we’ve got a great workforce — but, you know, if there’s no ships in the ‘22 budget, then we’ll have a downsizing. We’re trying hard to avoid that; we’ve never had to do it. ... We’re optimistic that things will work out in the in the budget process and we’ll be able to keep our folks onboard and in transition to a more stable production on the on the steel side as the Navy settles in on these programs,” he said.

Ryder said the company has looked at how many work hours each ship might represent and therefore how much work the yard would want to ideally take on in the next couple years — as well as how complex each ship program is and where the workforce’s talents could best be applied — but he said at this point Austal needs anything to keep the yard going until it can secure a more stable backlog of work.

Today the last five Independence LCSs are nearing the end of construction and delivery to the Navy, and three EPFs are on contract: hulls 13, 14 and 15. Austal has added enhanced medical capabilities into the Flight II ships, starting with EPF-14; has inserted modifications to the flight deck to make them V-22-compatible, starting with EPF-13; and is building EPF-13 with machinery control systems to allow for autonomous operations of hull, mechanical and electrical systems.

In the Navy’s fiscal 2022 budget request, the service asked for eight ships, only one of which Austal could potentially compete for: the T-AGOS ocean surveillance ship. The House Armed Services Committee added two EPFs in its recent markup of its FY22 defense authorization bill, which would be hulls 16 and 17. But it’s unclear how those adds will fare when the committee negotiates with its Senate counterparts and when the defense appropriators negotiate a final spending bill. The Senate Armed Services Committee included one EPF in its bill, while House appropriators did not add any funding in for EPFs in FY22.

When it comes to continuing aluminum ship production, Ryder said Austal hopes the EPF line will continue for some time — perhaps until the Navy transitions to a Large Unmanned Surface Vessel that could spin out of the autonomous EPF effort, or perhaps until the Navy decides to buy some small hospital ships to replace Comfort and Mercy — something Austal has designed as an aluminum catamaran even larger than its EPF.

“As far as the future, we think there’s still a growing need for EPF: it’s a flexible, relatively inexpensive platform that can fill a lot of gaps at a relatively low cost to the Navy, so that … the more expensive ships are free to do [more complex] missions. As far as the future of [EPF] 16, we saw the shipbuilding plan from December had six [hulls] across the [five-year Future Years Defense Program], and then the budget submission didn’t have any.”

Based on what House and Senate Armed Services committees have done so far, “we’re optimistic we’ll get EPF-16 in this year’s budget, we think it fills a valid need and it’s certainly there as far as performance on the contract.”

When it comes to transitioning to a medical ship, “we see the medical ship … fills a critical need for the Navy, but it’s not one the Navy’s looking at right now” in their budgets, Ryder said.

As for kicking off the steel ship production line, the frigate program would be Austal’s top choice, but last month a Navy program official declined to say when the Navy might look to select a second yard.

“There’s been a lot of discussion from the last administration into the current administration about when we’re going to go — it’s predecisional in the Navy,” frigate program manager Capt. Kevin Smith told Defense News during an Aug. 2 briefing at Sea Air Space.

“Right now we do have in our contract [with builder Fincantieri] a technical data package that we can exercise that option all the way up to the tenth ship. So our intent is that, at some point, based on the profile, we can exercise that TDP and work with candidate yards that would be interested and then start building up on a second source and then doing a competition in the future. … The timing of that is still predecisional,” he explained.

“I know it’s not easy, but if you want industry ready to be your follow yard, when is that going to be? And obviously it’s not a unilateral decision by the Navy, they’ve got Congress that has a vote, but that’s a big program for several yards, and the uncertainty of whether that’s going to happen in ‘23, ‘24, what the build profile is going to be, are all big planning inputs for industry,” Ryder said during the interview with Defense News the day after the frigate briefing.

Ryder said the Coast Guard offshore patrol cutter program or the T-AGOS would also be fine options for Austal. The light amphibious warship (LAW) and the next-generation logistics ship are less complex and wouldn’t take best advantage of the workforce’s skillset, he said, but Austal is preparing bids for them anyway.

“I think [frigate, OPC and T-AGOS] are the programs where we can really bring the greatest value in terms of building the more complex ships that need the higher level of program management and serial production. I really believe we’re the lowest-risk yard for those programs in terms of delivering on schedule and on cost. They’re the biggest, the most complex of that group. But with that said, you know, we’re ready to build LAW, we’re ready to build next-gen log ship. They’re different. They’re smaller. They’re a little less complex, but our workforce is able to build just about anything.”

The Navy wants to buy one T-AGOS surveillance ship in FY22, which would buy Austal some time if it were to win the single-ship contract. LAW is now likely to start in FY23, after a one-year delay to the program due to limited funding, and could lead to serial production of a couple dozen ships. The next-generation logistics ship also appears set to begin in FY23.

The Coast Guard had previously awarded its OPC program to Eastern Shipbuilding in 2016, but the Florida yard suffered severe damage in 2018 from Hurricane Michael and fell well behind schedule. The Coast Guard in late 2019 announced it would re-compete the cutter program, leaving just the first four of 25 hulls for Eastern. The service has said it would award a contract for the next 11 ships in early 2022.

Megan Eckstein is the naval warfare reporter at Defense News. She has covered military news since 2009, with a focus on U.S. Navy and Marine Corps operations, acquisition programs and budgets. She has reported from four geographic fleets and is happiest when she’s filing stories from a ship. Megan is a University of Maryland alumna.

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