As part of the national response to COVID-19, the Department of Defense (DoD) has entered into a $50 million Defense Production Act Title III agreement with shipbuilder Austal USA, Mobile. Ala. The agreement is intended to maintain, protect, and expand critical domestic shipbuilding and maintenance capacity.
Using funds authorized and appropriated under the CARES Act, says DoD, “this DPA Title III investment will protect jobs and bolster the local economy in a region hit hard by the COVID-19 pandemic and ensure critical capabilities are retained in support of U.S. Navy operational readiness.”
STEEL SHIPBUILDING CAPACITY
According to a filing by parent Austal Limited (ASX:ASB) “the DPA Agreement will maintain, protect, and expand U.S. Domestic Production of steel shipbuilding capability and capacity through capital projects that will be executed over the next 24 months, beginning in June 2020.”
“The scope of this agreement is still to be definitized,” says Austal, “but subject to agreement with the DoD, Austal intends to use the funds to commence investment in the development of additional capacity for steel naval vessel construction at the Mobile shipyard.”
“It is likely that Austal will match the DPA Agreement funding which would take the total investment to circa US$100 million,” says the filing, noting that “further details about the purpose and specific use of these funds will be released as they are agreed between Austal and the DoD in the following months.”