Navy Awards $22B Contract to Electric Boat, Newport News Shipbuilding for 9 Block V Virginia Subs

December 2, 2019 5:13 PM
Sailors aboard to Pre-Commissioning Unit (PCU) Delaware (SSN-791) on Nov. 5, 2019. US Navy Photo

THE PENTAGON – The Navy signed its largest shipbuilding contract ever, awarding a $22.2-billion contract to General Dynamics Electric Boat and Huntington Ingalls Industries’ Newport News Shipbuilding for nine Virginia-class Block V attack submarines.

The contract award comes amid a flurry of activity in nuclear shipbuilding, with common suppliers trying to balance the start of the Columbia-class ballistic missile submarine program, a two-ship buy in the Ford-class aircraft carrier program and the transition of the Virginia program from the Block IV design to Block V, which adds in acoustic superiority enhancements and 28 Tomahawk missile tubes. The Navy has long said the Columbia SSBN program is its top priority in the coming years, but the fleet desperately needs more attack submarines as well.

“Our whole philosophy going into this is, get Virginia as a stable foundation which then we can build Columbia on top of,” James Geurts, the assistant secretary of the Navy for research, development and acquisition, told reporters today.
“We really wanted to make sure we had, from both sides, a balanced, stable foundation; showed our commitment to the industrial base; showed our commitment to our suppliers; showed our commitment to the workforce – from that, then we can add Columbia on top.”

Though the Navy, industry and lawmakers had previously expressed interest in expanding this Block V contract beyond the previously planned 10 submarines – with talk of options for as many as 13 boats at one point – the contract covers nine boats with an option for a 10th. All would include the acoustic superiority upgrades, and all but the first boat – SSN-802, which is already under construction – would include the Virginia Payload Module that adds the 28 missile tubes. If the option for the 10th sub were exercised, the total contract value would come to more than $24 billion.

Geurts told reporters the negotiations were so lengthy – wrapping up last month, after an expected April contract award – “so we both could get into a place where we’re comfortable. So getting into a two-per-year cadence in a way that we could also execute that during Columbia. I think it was a lot of hard work on both sides to get to a place where we had shared risk, shared reward, and that’s kind of ultimately why we’ve put one of the boats as an option price, so that we could, if performance warrants as we see it, we can add a 10th boat in there; if not, we can back off a little to make sure Columbia is successful.”

Geurts said the upcoming Fiscal Year 2021 budget request would show more of the planned submarine acquisition and delivery schedule within Block V, but he said the option was written so that it could be executed in any year the Navy chooses, if the service can secure funding for the boat.

Though the fate of the 10th sub is unclear at the moment, the suppliers in the Virginia-class program will still be paid to deliver 10 ship sets of goods under the contract, to keep their workloads stable as they move towards a massive increase in work as the Columbia program comes online. The Columbia SSBN relies on many of the same suppliers – prime contractors Electric Boat and Newport News Shipbuilding, major suppliers like Lockheed Martin and L3, and thousands of small businesses scattered across the country – as the Virginia-class SSNs, and ensuring a smooth ramp-up of workload for those suppliers is key.

Rear Adm. David Goggins, the program executive officer for submarines, told reporters during the media roundtable today that the contract includes $455 million for material for the possible 10th boat.

“From a vendor base perspective, they’re seeing 10 ships,” which allows them to stay on their planned workload ramp-up without disruption.

“Our whole idea on the supply base was, order 10 ship sets so we didn’t have to renegotiate supplier agreements. That’s what they were planning to build to with Columbia, so from the supply base, we’ve tried to really minimize the impact to them,” Geurts added.
“They’re such a vital part of our ability to deliver these submarines. It’s all about a stable foundation – so in our best interest, that was providing a stable foundation, and we’ll always have a use for that equipment on a follow-on Block VI” submarine, if the Navy doesn’t end up awarding the option for a 10th Block V boat and using the material then.

Though the contract for nine or 10 submarines takes care of industrial base concerns and balancing risk between the Virginia and Columbia submarine programs, it doesn’t directly address fleet concerns: chiefly, that the combatant commanders need more attack submarines than they have access to. The Navy is facing a decrease in submarine inventory in coming years before the numbers eventually rise again and reach the requirement – 66 attack subs – in 2048, according to inventory predictions in the FY 2020 shipbuilding plan.

Goggins said he’s pleased with the balance struck between operator needs and builders’ bandwidth.

“To me, it was the overall balance between Virginia, Columbia and the Ford programs. The considerations were the technical risk, the industrial base capability and capacity, and the fleet requirements. So this is really the right balanced approach from a fleet perspective,” the rear admiral said.

Though the contract won’t cover as many new boats as previously hoped, the Navy is making a concerted effort to get its new submarines into the hands of operators faster. Goggins said the time from start of construction to the boat being turned over to the fleet – including construction, subsequent testing and then the post-shakedown availability – has decreased by three and a half years over the life of the Virginia program. He added the ships are being built to a much higher quality and receiving much better scores during sea trials – the last boat, the future Delaware (SSN-791), scored a “pretty phenomenal” .96 in its late October trials – which means less work to be done after commissioning, and therefore a faster turnaround time before the crew can get onboard and start taking on missions.

“The crews are ready” upon ship delivery, Goggins, said, and “we’ve had a couple submarines, shortly after delivery they’ve gone on tasking as directed by the fleet commander.”

Guerts said that, in addition to the faster turnaround time, “now we’re adding lethality” through the acoustic superiority upgrades and the Virginia Payload Module, “to ensure not only are they getting the ship they need, they’re getting it with more fire power, with a more competitive comparative advantage.”

Megan Eckstein

Megan Eckstein

Megan Eckstein is the former deputy editor for USNI News.

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