PORTLAND – Bath Iron Works hasn’t built a Coast Guard ship since the 1930s, but it’s made the list of finalists vying to build a fast-response cutter, a contract that could provide stability for workers while developing new markets for the company.

The Coast Guard winnowed the number of applicants this month based on their ability to meet its demands. Because of secrecy surrounding the competitive bidding process, it’s unknown how many other competitors made the cut. The winner is to be announced in July.

The contract requires 12 cutters to be delivered by 2012, with options for up to 34 altogether, said Coast Guard spokeswoman Laura Williams.

The cutters would help fill an anticipated workload gap for the Bath shipyard while potentially opening the door to construction of other smaller ships, including the Navy’s littoral combat ship designed to operate in nearshore waters, said Jay Korman, naval analyst with the Avascent Group.

“It could open up a whole new business line for them,” Korman said.

Envisioned as the smallest Coast Guard cutters, fast-response cutters will be between 120 and 160 feet long – far smaller than Bath-built destroyers – and have a top speed of more than 30 mph. The ships will have a crew of 22 and will be equipped with a 25mm gun and .50-caliber machine guns.

The small cutters will be responsible for fishery patrols, drug interdiction and port, waterway and coastal security, among other things.

They’re part of the Coast Guard’s $24 billion Deepwater modernization program that has been plagued by cost overruns, design flaws and lax oversight.

The Coast Guard removed Lockheed Martin Corp. and Northrop Grumman Corp. as project managers last year, opening the door for Bath Iron Works and others to bid.

The only contractor besides Bath that publicly acknowledged bidding on the fast-response cutter was a consortium comprised of Raytheon, VT Halter Marine and EG&G Technical Services. A Raytheon spokeswoman could not say whether the group is still in the running.

For the Bath shipyard, the Coast Guard cutters represent an important opportunity as the Navy’s Arleigh Burke-class destroyer program winds down and the next-generation Zumwalt program ramps up. Bath is also bidding on a ship dubbed the “joint high speed vessel” for the Army and Marines.

“Our performance is allowing us to take a look at more opportunities, and it’s no secret at this point that the Navy is building fewer ships,” said shipyard spokesman Jim DeMartini.

The Navy intends to build seven Zumwalt destroyers, but contracts have been awarded for only two ships, including one in Bath, as the Arleigh Burke program draws to a close.

The Bath shipyard is lead contractor on another Navy program – the littoral combat ship – but those aluminum-hulled ships are currently being built at a partner shipyard in Alabama. Success in building cutters would help Bath make the case for building some of the littoral ships in Maine, Korman said.

Both the Zumwalt-class destroyer and the littoral combat ship programs have been subjected to cost overruns and congressional scrutiny.

There’s even talk on Capital Hill of scuttling the Zumwalt program, making it all the more important for Bath to expand its repertoire, said Loren Thompson, a defense analyst at the Lexington Institute, an Arlington, Va.-based think tank.

“The plans for modernizing Navy destroyers and cruisers are quite unsettled right now, so Bath needs to cast its net more widely,” he said.

DeMartini credited workers who’ve made the shipyard efficient enough to go out and bid on projects like the fast-response cutter and the joint high-speed vessel. The goal, he said, is to maintain the work force during the transition in Navy programs.

“The challenge for us today is to be ready to build whatever ships the Navy needs when it decides it needs them,” DeMartini said. “To do that, (A) we have to perform and (B) we need to open the aperture to things that will allow us to maintain a skilled work force.”

The last time Bath Iron Works performed any Coast Guard work was in the late 1980s, when it overhauled four cutters. The last time it built Coast Guard ships was in the 1930s, when it built seven cutters.

Typically, Coast Guard cutters are far less complicated and less expensive than the Navy warships that Bath workers are accustomed to building.

“The Coast Guard shipbuilding programs aren’t big by Navy standards, but Deepwater is the biggest modernization the Coast Guard has undertaken in two generations. So it’s a significant amount of money,” Thompson said.

AP-ES-05-24-08 1253EDT