USS Oregon (SSN-788) pierside at General Dynamics Electric Boat on Feb. 28, 2022. USNI News Photo
This post has been updated with a statement from Electric Boat.
General Dynamics Electric Boat was awarded an advanced procurement contract for two new Virginia-class attack submarines after a year-long insurance dispute with the Navy.
The $1.07 billion award will pay for long-lead items for the Block V attack boats SSN-812 and SSN-813 and will allow EB and partner HII’s Newport News to assemble the components for the submarines ahead of the start of construction.
“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,” EB president Kevin Graney said in a statement.
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.
Until 2018, the Navy had assumed the liability from General Dynamics in the event of a Tomahawk accident aboard a submarine under construction, an unusually high-risk provision due to its higher energy propellant.
The impasse between the Navy and General Dynamics delayed the acquisition of parts for the two submarines by almost a year, USNI News has previously reported.
Secretary of the Navy Carlos Del Toro led the Navy’s drive to secure better terms for the service.
“The American taxpayers have the right that when a company does something that is willful and wrong … and it results in a catastrophic event, that they not be the ones to be held accountable, that industry be held accountable for that. That’s my responsibility to the American taxpayer, as a U.S. government official,” Del Toro told reporters during a press roundtable at the Surface Navy Association symposium.
The advanced procurement award is the clearest sign the indemnification issue has been settled.
While the two boats are now moving ahead, industry leaders have said the lack of a predictable schedule has hurt the supplier base.
“The suppliers clearly could have and would have started, a year or more ago if the funding had been there,” Newport News Shipbuilding president Jennifer Boykin told USNI News earlier this month without directly addressing the insurance issue.
“The worst thing we can do as an enterprise is starve the beginning. That’s part of what we’re really working with the Navy on to get advanced funding to those suppliers who are already struggling with workforce.”
The two Block V boats will feature the Virginia Payload Module, an additional section in the middle of the hull that will allow the submarines to field more Tomahawks and eventually the Common Hypersonic Missile (CPS). The Navy settled a separate insurance issue with Lockheed Martin over the risk posed to Virginia-class boats from the hypersonic weapons.
“By delivering this funding, the Navy is sending a strong signal to the industrial base to increase capacity while also ensuring we make good on the AUKUS security agreement and sustain our required force structure,” said Rep. Joe Courtney (D-Conn.) in a statement.
One of the two attack boats, both fitted with the Virginia Payload Module, will be heavily modified for special operations missions and seabed warfare, according to the Navy’s Fiscal Year 2024 budget documents.
The estimated $5.2 billion boat will likely succeed the modified Seawolf-class submarine USS Jimmy Carter (SSN-23), according to the Congressional Research Service.
Sam LaGrone is the editor of USNI News. He has covered legislation, acquisition and operations for the Sea Services since 2009 and spent time underway with the U.S. Navy, U.S. Marine Corps and the Canadian Navy.