Electric Boat awarded $1.07 billion Virginia-class contract mod

Virginia-class nuclear attack submarine. [Photo: GD Electric Boat]

General Dynamics [NYSE:GD] reports that its Groton, Conn., based GD Electric Boat division has been awarded a $1,075,896,000 contract modification from the U.S. Navy to provide long-lead-time material and advanced construction for Virginia-class fast-attack nuclear submarines.

Electric Boat is presently under contract for construction of submarines in Block V of the class. The advanced procurement funds from this contract modification will enable Electric Boat to purchase materials and major components for hulls 812 and 813.

“This contract modification sends a crucial demand signal to the submarine industrial base, enabling our suppliers to invest in the capacity and materials needed to increase production volume,” said Kevin Graney, president of General Dynamics Electric Boat.

According to a post on USNI News, “awarding the contract comes after a year of negotiation between the Navy and General Dynamics over the liability in the event of an explosion of a Tomahawk Land Attack Missile aboard the submarine.” It adds that “the advanced procurement award is the clearest sign the indemnification issue has been settled,” but notes that “industry leaders have said the lack of a predictable schedule has hurt the supplier base.”

Increasing nuclear submarine production and the robustness of the supplier base are questions that have been getting a lot of attention lately in light of the AUKUS agreement. This will see Australia will take delivery of three U.S. Virginia-class nuclear-powered submarines as it builds its own nuclear submarine construction capability.

A just released Congressional Research Service report on the Virginia-class program cites the Navy as saying that it “anticipates building additional Virginia class SSNs in the 2030s as replacements for submarines sold to Australia.”

The CRS report includes a lengthy discussion of all the issues this raises for Congress.

The Virginia-class boats are built by Electric Boat in a teaming agreement with Huntington Ingalls Industries [NYSE: HII] Newport News Shipbuilding under a multi-year procurement strategy.

Today, HII reported that Newport News Shipbuilding has received a $305.2 million contract modification from Electric Boat to procure long-lead-time material for two additional Block V Virginia-class submarines.