WASHINGTON, D.C. — After almost two years of negotiations, the Navy has awarded contracts worth up to $18.5 billion to General Dynamics and HII to build the final pair of Block V Virginia-class attack boats
Along with the detailed design and construction contract for the future Baltimore (SSN-212) and Atlanta (SSN-813), the Navy included contracts for workforce development that will raise wages for shipbuilders in both yards.
“General Dynamics Electric Boat Corp. is being awarded $12,418,145,463, and if all options are exercised the total value will be $17,152,265,971; and Huntington Ingalls Inc., Newport News Shipbuilding, is being awarded $1,293,694,000. These contracts include options which, if exercised, would bring the cumulative value of the contract change to $18,445,959,971,” reads the announcement.
The total includes $2.1 billion in long-lead material that Naval Sea Systems Command awarded to both yards last year. Congress appropriated $9.4 billion for the two boats in Fiscal Year 2024 and the stop-gap bill added an additional $1.95 billion to cover the cost of the two boats. Wednesday’s contract included the costs for the two submarines and workforce expansion money.
“Over the past two years, we successfully worked with the Navy, Congress and the administration to secure funds that enable us to increase wages for the nuclear-powered vessel workforce and allow for significant additional investments in capacity, shipyard processes and systems,” said Mark Rayha, president of General Dynamics Electric Boat in a statement. “This contract modification validates the unique and important role submarines and submarine shipbuilders play in our national defense.”
Electric Boat builds the Virginia and Columbia classes of submarines in a teaming arrangement in which each company builds a section of the same boat.
“We appreciate the teamwork that resulted in these critical national security assets being put under contract,” said Jason Ward, HII’s Newport News Shipbuilding’s vice president of submarine construction. “We understand the advantage Virginia-class submarines bring to the sailors who operate them, and our shipbuilders are working with diligence to deliver them to the fleet.”
The pair of attack boats — initially appropriated as part of the Fiscal Year 2024 budget — were underfunded due to an explosion of workforce costs that raised the price of the two submarines by almost 20 percent, USNI News previously reported.
The cost increase, due in part to issues related to the COVID-19 pandemic, led to a squabble between Congress, the Navy and the White House Office of Management and Budget over how to pay for the increase in workforce wages.
The Navy initially proposed a plan in which some contract money awarded and banked for previous submarines could be used for immediate wage increases in a proposal called Shipyard Accountability and Workforce Support, also known as SAWS.
The White House Office of Management and Budget under the Biden administration sidelined SAWS. Congress and the White House instead agreed to a stop-gap measure that put more money to raise wages for the nuclear workforce in the December continuing resolution using legislation included in the Fiscal Year 2024 NDAA from Rep. Joe Courtney (D-Conn.). that allowed the Navy to support direct wage increases to shipbuilders.
With the money secured, the OMB under the Trump administration still had reservations over the contract for the two boats that resulted in additional delays in the award to Electric Boat and HII.
USNI News understands that new Secretary of the Navy John Phelan was involved in the final touches of the contract.
“We recently re-negotiated the planned contract to deliver this critical capability, and appropriately share risk between the Navy and industry,” Phelan said in a Wednesday statement. “We will be looking at all future contracts with a similar lens to ensure the appropriate level of risk sharing and value to the American taxpayer.”
With the award of Baltimore and Atlanta, the Navy now has 15 planned new submarines to award in the near future — the planned ten-boat multi-year award for the Block VI Virginias and five Build II Columbia-class nuclear ballistic missile submarines.
