The Coast Guard announced that it selected Eastern Shipbuilding in Panama City, Florida, for the next phase of the Offshore Patrol Cutter program.

The contract was so important to Bath Iron Works that workers made concessions in a new contract approved in December to make the shipyard more competitive.

Rich Nolan, president of Machinists Union Local S6, the largest union at the shipyard, said he didn’t think any layoffs were imminent but conceded the announcement was bad news.

“It used to be that we stood on our quality alone. The government was willing to pay a little extra for the quality that we delivered. In an ever-changing economy, you don’t see that so much anymore,” Noland said Thursday evening.

Bath Iron Works hasn’t built a Coast Guard ship since the 1930s but officials warned that its future hinged on landing the contract. The shipyard’s workforce was told there would be steep cuts — as many as 1,200 jobs — if the yard failed to land the contract.

The Coast Guard contract awarded Thursday is worth $110 million but could grow to $2.38 billion if the Coast Guard exercises options to build nine cutters.

Over the long term, the Coast Guard has estimated the contract could be worth $10 billion or more with construction of 25 ships over the next two decades.

Bath Iron Works said it’ll be seeking a meeting with the Coast Guard.

“We plan to meet with the Coast Guard to understand their selection decision,” Bath Iron Works President Fred Harris said in a statement.

Bath Iron Works was one of three shipyards under consideration in a design competition.

The Coast Guard says the acquisition will replace the service’s aging fleet of medium endurance cutters, some that are more than 50 years old.

Each of the new ships will feature a flight deck, along with advanced communications, computers, intelligence, surveillance and reconnaissance equipment.