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'Extremely concerning': Rep. Dunn writes Homeland Security about Austal's ties to China

Nathan Cobb
The News Herald
Congressman Neal Dunn, shown in middle with black hat, wrote in a letter to the U.S. Department of Homeland Security that he worries Austal Limited's ties to China might threaten U.S. national security.

PANAMA CITY — Congressman Neal Dunn is following through on a promise to do everything in his power to challenge the U.S. Coast Guard's decision to award a massive shipbuilding contract to Austal USA. 

In his second letter to the United States Department of Homeland Security in about a month, Dunn on Tuesday wrote that he worries a partnership between Austal Limited and a Chinese shipbuilding company poses a threat to U.S. national security. Dunn's letter was sent to The News Herald by members of his staff.

Australian-based Austal Limited is the parent company of Austal USA, an Alabama shipbuilder that was selected over Eastern Shipbuilding in June for a more than $3 billion contract with the Coast Guard to build up to 11 ships. 

"Given the United States' current tension with China, Austal's deep ties to the People's Republic of China are extremely concerning," Dunn wrote in an email to The News Herald on Wednesday. "It is unclear whether the Coast Guard was even aware of this business relationship when they conducted the bidding process. 

"However, national security should have been prioritized when they considered who would be trusted with their largest shipbuilding contract."

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The contract given to Austal USA includes the rights to ships five through 15 in the Coast Guard's 25-ship Offshore Patrol Cutter Program. Eastern was commissioned to build the first four ships in the program, three of which are under construction.

The Panama City company also was given the rights to the first 11 cutters in 2016, but that contract was reduced to four after Hurricane Michael destroyed much of Bay County in October 2018.

In Tuesday's letter, Dunn wrote that Austal Limited began discussions in 2016 with Jianglong Shipbuilding in Guangdong, China, on a "joint venture to construct ships in Jianglong's shipyard in China." The Chinese company produces tourist, leisure and law enforcement boats. 

The joint venture then registered in 2016 as Aulong Shipbuilding, of which Austal Limited owned 40% and Jianglong Shipbuilding owned 60%.

"The Aulong joint venture operated at a loss for two years before Austal started negotiations for the sale of its minority stake," Dunn wrote in his letter. "The final sale took place in December 2021 with Jianglong purchasing all of Austal's 40% interest. 

"I believe the threat that proprietary U.S. national security information may have been acquired by the Chinese government through this partnership is high, (and) I am gravely concerned as to why the U.S. Coast Guard awarded its largest and most vital maritime shipbuilding contract to a foreign company with clear ties to the People's Republic of China."

His letter to Homeland Security included the following information requests:

  • An explanation of Homeland Security's oversight and review of the award process for the Coast Guard contract as it pertains to the national security risk assessment of each bid. 
  • An explanation of whether Homeland Security believed Austal Limited's ties to China posed a risk to national security. 
  • An explanation of whether Homeland Security formally summitted concerns as to Austal Limited's ties to China posing a risk to national security. 
  • The number of attorneys, support staff and other personnel assigned to investigate and review the Coast Guard's contracting process. 
  • The number of people tasked with reviewing bids submitted to the Coast Guard for China-related ties.
  • An explanation of the Coast Guard's oversight and review of the award process for its contract as it pertains to the national security risk assessment of each bid. 
  • An explanation of whether the Coast Guard believed Austal Limited's ties to China posed a risk to national security. 
  • An explanation of whether the Coast Guard formally submitted concerns as to whether Austal Limited's ties to China posed a risk to national security.
  • An explanation whether Homeland Security believes American tax money appropriated for U.S. defense contracts with Austal USA between 2015 to 2021 were used by Austal Limited to enter any joint ventures with Chinese maritime companies.

"The threat from China is real and growing," Dunn wrote in his letter. "Jeopardizing vital national security programs by unnecessarily partnering with foreign companies exposes the United States to potential threats from China. The (Coast Guard) contract should be fulfilled by U.S. companies with proven track records of delivering for the American people."