Congressman goes after Austal USA for former China ties; $3.3b contract hangs in balance

WASHINGTON: A Florida congressman is accusing a trusted Navy contractor of having shady connections with China and is calling on the homeland security secretary to investigate, as the war over a top US Coast Guard shipbuilding program escalates.

The contractor in question is Austal USA, the US-based arm of the eponymous Australia-based company, and the contract is the Offshore Patrol Cutter, a $3.3 billion shipbuilding program to build one of the service’s top acquisition priorities.

At issue is a 2016 deal Austal made with the China-based Jianglong Shipbuilding, which specializes in tourist, leisure and law enforcement boats, according to a letter Rep. Neal Dunn, R-Fla., sent to Homeland Security Secretary Alejandro Mayorkas. Dunn’s office provided a copy of the Aug. 2 letter to Breaking Defense.

Dunn’s letter acknowledges the deal was effectively ended in 2021 when Austal sold its stake in the joint venture the companies created. Still though, Dunn says, the threat to national security was legitimate.

“I believe the threat that proprietary U.S. national security information may have been acquired by the Chinese through this partnership is high,” Dunn writes, without elaborating further on what may have been stolen. However, it is worth noting that the US Navy, which relies heavily on Austal USA, has continued doing work with the company despite that deal, indicating the potential risk was likely low.

The Florida congressman goes on to accuse the Coast Guard of being “reckless” in its decision to award “its largest and most vital maritime shipbuilding contract to a foreign company with clear ties to the People’s Republic of China.”

Notably, Dunn’s letter containing the accusations was released the same week that Speaker of the House Nancy Pelosi, D-Calif., made international headlines for visiting Taiwan amid a series of sharply worded threats from Beijing in which it accused the top House democrat of infringing on Chinese sovereignty by traveling to Taiwan against China’s wishes.

An Austal USA spokeswoman declined to comment on the congressman’s letter when contacted by Breaking Defense.

Like everything else in the world of politics and shipbuilding, Dunn’s accusations require context.

The first issue to note is Dunn represents Panama City, Fla., the home of Eastern Shipbuilding Group, the losing incumbent bidder on the contract in question. In other words, he has a vested interest in the Coast Guard’s decision.

The second issue at play is that a formal legal dispute is already underway between the Coast Guard and Eastern Shipbuilding Group via a bid protest with the Government Accountability Office, which was first reported by Breaking Defense. That dispute is over a myriad of other issues that Eastern alleges were flawed in Coast Guard’s selection process, but ultimately unrelated to Dunn’s allegations.

When it comes to GAO bid protests, the government often prevails, so it’s unlikely Mayorkas or the Coast Guard will act before the third party watchdog gives its opinion. GAO anticipates a resolution being announced in October.

Lastly, Dunn’s characterization of Austal as a “foreign company” is true, but also misleading in the context of the USCG contract. Austal is located in Henderson, Australia, but its subsidiary Austal USA — the arm of the company that won the USCG contract — has been building US Navy ships for more than 20 years in Mobile, Ala, most notably the Independence-class variant of the Littoral Combat Ship.

As foreign as the Australians may be, their US-based counterparts have built up their rapport and reputation state side — look no further than the Alabama congressional delegation for evidence of that.