WASHINGTON, D.C. -- The U.S. Navy announced a record $17.645 billion contract Monday to build 10 new SSN 774 Virginia-class nuclear-powered attack submarines.
The order assures prime contractor General Dynamics Electric Boat and chief subcontractor Huntington Ingalls Newport News Shipbuilding of submarine orders through 2018.
Workers at Newport News Shipbuilding are thrilled with the job security a new Navy contract brings.
"It's a blessing," said Ryan Hale, a Navy veteran and crane operator at the yard. "It gives a lot of job security for the shipyard workers and it's going to mean a lot of overtime," he added.
The shipyard employees about 23,000 workers, but US Senator Mark Warner says the contract will stretch beyond them and will benefit the 63,000 shipyard workers in the state.
Warner says knowing so many jobs will be maintained could spur other economic growth.
"This shows some of the uncertainty we saw with sequestration hopefully will be in the rear-view mirror," Warner said.
The fixed-price incentive multiyear contract for 10 Block IV subs provides for two ships per year over the five-year period, each yard delivering one sub per year. The two shipbuilders share equally in a teaming arrangement to build the subs, with each yard responsible for certain portions of each hull.
“The Block IV award is the largest shipbuilding contract in US Navy history in terms of total dollar value,” said Rear Adm. Dave Johnson, program executive officer for submarines at Naval Sea Systems Command (NAVSEA). It “builds upon the Virginia-class program’s successful Navy and industry relationship,” he added, calling the program “a model of acquisition excellence.”
In a joint statement, the shipbuilders chimed in.
“This is the largest number of boats ordered to date in a single contract block, which is great news — particularly in light of today’s challenging economic and political environments,” said Newport News Shipbuilding President Matt Mulherin.
“This award has great significance for the U.S. Navy, our company and the entire submarine industrial base,” Jeffrey Geiger, president of Electric Boat, said in the statement. “By continuing to produce two ships per year, the Navy and industry team retains the stability required to achieve increased efficiencies, providing the fleet with the submarines it needs to sustain the nation’s undersea dominance.”
The Block IV award covers hull numbers SSN 792 through SSN 801. None of the ships have yet been named. SSN 792 is funded in fiscal 2014. Construction of SSN 792, Electric Boat said, will begin May 1. SSN 801 is scheduled to be delivered to the fleet in 2023.
“The Navy and shipbuilders worked together to produce a contract that is both fair to the Navy and industry,” Johnson said. “This contract lowers the per-ship cost compared to Block III.”
Ten Virginia-class submarines already have been delivered and are in service, while another eight are under construction or on order. The North Dakota, first of the Block III group, is to be delivered this summer.
Electric Boat fabricates most of their submarine work at Quonset Point, R.I., and assembles the hulls at Groton, Conn. Newport News builds and assembles its submarines in Newport News, Va.
The Navy contract announcement noted that the award for $17,645,580,644 includes options for on-board repair parts for each submarine. If those options are exercised, the Navy said, the total contract value would reach $17,827,808,738.
Each submarine displaces 7,800 tons submerged, with a hull length of 377 feet and diameter of 34 feet. They are listed as “capable” of speeds greater than 25 knots with a diving depth greater than 800 feet, while carrying Mark 48 advanced capability torpedoes, Tomahawk land-attack missiles and unmanned underwater vehicles.
Nearly all Virginia-class submarines have been procured under block buy or multiyear contracts, which provide shipbuilders with greater opportunities for construction efficiencies. Each successive block buy has introduced further improvements into the design.
“Block IV submarines will incorporate modifications that reduce acquisition and lifecycle costs,” NAVSEA said in its statement. “Reducing the ships’ total lifecycle cost, an initiative called ‘3:15,’ aims to decrease the number of major shipyard availabilities from four to three, allowing for an additional deployment per hull — raising each submarine’s capability from 14 to 15 full-length deployments.”
The added deployment means, according to the Navy, that the price-per-deployment is lower for Block IV subs.
“With the decrease in cost and the increase in capability,” Johnson said, “we are essentially getting more for less.”