Vallejo’s Mare Island Dry Docks could close after losing key Coast Guard contract

VALLEJO – The operator of Mare Island’s historic dry docks may be forced to close in the coming weeks after losing a repair and maintenance contract for the U.S. Coast Guard.  

“We are seeking other ways to work through it,” Mare Island Dry Docks CEO Stephen DiLeo said. “But it’s really not looking good to be honest.” 

The Coast Guard awarded the contract to service the ice breaker Healy, the Coast Guard’s largest vessel, to Portland, Oregon-based ship repair company Vigor Marine Group for $11.3 million, which was $1.5 million more than the Mare Island Dry Docks bid. Vigor Marine has offices and facilities in Portland, Seattle and San Diego as well as locations on the east coast. 

Mare Island Dry Docks has prior experience servicing the Healy as well as another Coast Guard icebreaker, the Polar Star, for which the Coast Guard is currently seeking applicants for a five-year maintenance contract. 

The contract for Healy was crucial for Mare Island Dry Docks because it could have kept 150 employees working for three to four months until the contract for the Polar Star begins. According to DiLeo, the company’s experience makes it a strong contender for the Polar Star contract, which would provide reliable work at the Dry Docks through 2030.  

DiLeo said that he attended a U.S. Coast Guard debrief about the contract selection process and he did not see a clear reason for the Coast Guard to choose the Vigor proposal over Mare Island’s.

“USCG chose to take Healy to a competitor for undisclosed reasons and they likely didn't understand that they were breaking the back of their premier shipyard, Mare Island Dry Dock,” DiLeo said. 

U.S. Rep. John Garamendi, who represents Vallejo and has frequently visited Mare Island with military and union leaders to promote the local industry, said in an interview that he is “outraged” about the contract going to Vigor Marine.

“We are most definitely attempting to contact the commandant and we will be sending a very strong letter to the Coast Guard, demanding information about why they chose the high bid rather than the low bid,” Garamendi said. 

Garamendi is a cosponsor of the SHIPS for America Act, which is a comprehensive package of policies designed to revitalize the U.S. shipbuilding industry.  

The bill has bipartisan support and Garamendi said he expects it to reach the president’s desk in 2026. 

President Donald Trump has signaled support for the SHIPS Act and issued his own executive order to prioritize the domestic shipbuilding industry. His One Big Beautiful Bill Act, signed into law on July 4, also earmarked significant funding for various aspects of the shipbuilding industry. 

However, Garamendi said that the Trump Administration has taken a very chaotic approach and has not established clear communication or policy as to how they intend to use the shipyards on the West Coast.

Earlier this year, DiLeo was optimistic about the recent policy efforts to support the industry. But he said that right now the benefits from the active policy changes are flowing toward larger corporations and not trickling down to medium sized operators.

When operating at its normal capacity, the Mare Island Dry Dock can employ as many as 1,000 workers, but earlier in the year they were down to less than 100 employees and now that number has dropped below 60. 

The company’s sales have declined 65% over the last three years, according to DiLeo, and this year the company has seen its lowest sales in its 11 years of operations on Mare Island.

DiLeo has been working in ship maintenance and repair for 47 years and he said it takes an optimistic outlook to keep going in an industry that has been neglected by U.S. policy makers.

One challenge that he said the company does not face is lack of a skilled work force. 

“The Solano County workforce is some of the best I’ve encountered throughout the United States,” he said. “Good people who just want a job with decent wages and benefits, which is what they have at the Mare Island Dry Docks.”