Dateline: June 7, 2021
Austal USA, Mobile, Alabama, is awarded a $44,000,000 fixed-price [contract] for the detail design, procurement, production implementation, and demonstration of autonomous capability in Expeditionary Fast Transport (EPF) 13.
I admit that when I saw this contract announcement from the Department of Defense last week, I had to read it twice.
Then three times.
Unless my eyes had deceived me, the Pentagon had just revealed — alongside rote recitations of the day’s contract awards for activities such as “paving” work at an air base, “design-bid-build construction services,” and logistics support for a helicopter — that it is turning one of its most advanced ship-types into a drone.
Austal Spearhead-class EPF at sea. Image source: Austal.
What the heck is an Expeditionary Fast Transport?
For those not familiar with the term, an “Expeditionary Fast Transport” (curiously abbreviated “EPF”) is the Navy’s catamaran-like non-combatant transport ship formerly dubbed the Joint High Speed Vessel. Displacing only 1,500 tons, the renamed EPF — also known as the “Spearhead class” — comprises an aluminum deck section with 20,000 square feet of cargo space elevated above and supported by two long hulls that make contact with the water. That’s enough room to carry an entire Marine Corps company, along with all its armored vehicles.
Driven by four powerful diesel engines, an EPF can reach speeds as great as 43 knots. For comparison, your average commercial transport carrying freight containers chugs along at speeds less than half as fast — so you can see why the EPF’s old name included the descriptor “high speed.”
It’s also an extremely economical vessel. Although the contract awarded last week was only a “modification” adding funds to a previously awarded contract, according to government reports, the total program cost for building the first 10 Spearhead-class EPFs was approximately $1.7 billion — roughly $170 million per ship. (Compare that to the cost of an Arleigh Burke-class destroyer … at $2 billion each!)
Austal (OTC:AUTLY) is the prime contractor on the EPF program, and American defense contracting giant General Dynamics (NYSE:GD) is a key subcontractor, responsible for integrating the ship’s computing infrastructure and mission systems.
Rethinking the EPF
Ordinarily, in addition to its passengers, an EPF carries a crew of 26 — but EPF 13 will apparently be different. As confirmed by USNI News a few days ago, when Austal builds the USNS Apalachicola (EPF 13) it will be designed to operate either with a crew or without.
According to Austal, USNS Apalachicola “will include installation of a perception and autonomy control suite, as well as several automation enhancements … reducing the amount of personnel required for operations and maintenance at sea” — or even permitting the ship to be operated entirely remotely.
What comes next
And here’s where the story gets really interesting. According to USNI, Austal has “put forward the EPF platform as an option for the Navy’s Large Unmanned Surface Vessel (LUSV) in the past,” offering to add “vertical launch cells” so as to convert the basic transport design into essentially a robotic guided-missile cruiser.
On top of all that, the flat-topped EPF is designed to support helicopter operations. It wouldn’t be too great a stretch to imagine it sailing autonomously, carrying missiles autonomously, and even being equipped with a Northrop Grumman MQ-8B Fire Scout drone helicopter or three, to permit autonomous flight operations.
Even if adding autonomy raises the cost of an EPF to $214 million ($170 million plus $44 million), and even with the additional cost of integrating weapons systems onto the base design, that could make for a powerful and economical alternative to many of the Navy’s pricier crewed warships.
Granted, Austal isn’t the only company competing to design an LUSV for the Navy — Huntington Ingalls (NYSE:HII), Lockheed Martin (NYSE:LMT), Italian defense contractor Fincantieri Marinette, engineering firm Gibbs & Cox, and even privately owned American shipyard Bollinger are all also interested in this work. But while these other companies all share in a single $42 million contract, awarded last year, for developing the concept, Austal has now won a contract to actually build a ship that could prove its autonomous bona fides, and support future bids to win LUSV contracts down the road.
Indeed, that may be the most significant part of last week’s contract win for Austal — the chance that it will lead to even more contract wins in the future.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Austal Limited. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.