General Dynamics Electric Boat is preparing for Columbia-class submarine production while a contract for Block V Virginia-class submarines is in limbo as company and Navy officials work out final details.
Work on both classes of submarines is progressing, Phebe Novakovic, chief executive of General Dynamics, said during a Wednesday conference call with analysts. General Dynamics is spending $852 million to expand the Groton, Conn.,-based Electric Boat facility to accommodate each multi-billion dollar submarine programs.
“We have completed the design of Columbia and are 54 percent complete on the production drawing, which reflects good progress,” Novakovic said of the new submarine class. Speaking about the Virginia-class, she added, “we expect the Block V contract to be awarded this year, resulting in a considerable addition to backlog.”
However, the Navy and Electric Boat have not yet inked a contract to build the Block V Virginia boats. The yard is currently operating under an undefinitized contract action until the Navy awards the actual Block V contract, she said.
“Until we get that contract executed, our progress billings are temporarily limited,” Novakovic said.
The Block V contract will cover at least 10 boats, from FY 2019 through FY 2023. The contract should have been finalized before the fiscal year ended, though, money for acquisitions programs does not have to be spent in the fiscal year its appropriated.
The Block V contract is not just a priority for Electric Boat but also the Pentagon. In August, Secretary of Defense Mark Esper and James Geurts, assistant secretary of the Navy for research, development and acquisition, met privately with Novakovic during a tour of Electric Boat’s Groton facility.
Esper and Geurts did not provide details of the meeting, but at the time, Geurts did tell members of the media negotiations with General Dynamics involved the final details of a Block V contract.
“Having the SECDEF down here today, I mean, it shows the importance and shows why for the nation we’ve got to be all in: working between the shipbuilders, between the Navy, between suppliers, and quite frankly a lot of workforce development programs to get this enterprise in the shape we need it to, to deliver for the nation,” Geurts said on the plane ride back to Washington from Connecticut.
An added pressure facing both the Navy and General Dynamics is future spending on both submarine programs could be affected by the prospect of Congress not being able to pass the Fiscal Year 2020 budget. The fiscal year started Oct. 1, but the Navy, along with the rest of the Department of Defense and the federal government, is operating under a continuing resolution, which funds the government at FY 2019 levels and limits the government’s ability to sign new contracts. There is a chance government agencies will be forced to operate under a CR for all FY 2020.