On Wednesday, April 30, the U.S. Navy announced the awarding of new contracts for the construction of the final two Virginia-class Block V nuclear-powered submarines, a variant that will comprise a total of 12 units including the two just confirmed. According to the official statement, the contract is worth over $18.5 billion for both submarines, with local companies General Dynamics Electric Boat Corp. and Huntington Ingalls Industries (HII) in charge of manufacturing.
Expanding on certain details of the new contracts, it was noted that a total of $17,152,265,971 (if all options are exercised) would go to GDEB, while $1,293,694,000 would be allocated to HII. It’s also important to highlight that the high contract value not only aims to cover the construction of the future USS Baltimore (SSN-812) and USS Atlanta (SSN-813), but also seeks to bolster wages for the workforce involved in the program.
Speaking on the matter, General Dynamics Electric Boat President Mark Rayha stated:
“Over the past two years, we have successfully partnered with the Navy, Congress, and the Administration to secure funding to increase wages for the nuclear shipbuilding workforce and make significant additional investments in shipyard capacity, processes, and systems. This contract modification confirms the unique and important role that submarines and their shipyards play in our national defense.”
It’s worth noting that the signing of the contract for the final two Block V Virginia-class submarines was originally planned for fiscal year 2024. However, the Navy initially postponed the decision due to rising cost concerns. Specifically, U.S. defense media reported that submarine costs had increased by up to 20%, mainly attributed to higher labor costs—a key reason why the contract also aims to address wage issues. In recent years, especially since the COVID-19 pandemic, a shortage of qualified personnel has become a major challenge for the U.S. naval industrial complex.
Additionally, delays in negotiations between the Navy and the shipyards also stemmed from the need to outline a stricter oversight framework for the construction process. This is unsurprising given the various challenges the Navy has faced with recent programs—an illustrative example being the construction of the Constellation-class frigates. On this topic, new Secretary of the Navy John Phelan commented:
“We recently renegotiated the planned contract to deliver this critical capability and appropriately distribute risk between the Navy and industry. We will review all future contracts with the same lens to ensure an appropriate level of risk-sharing and value for the American taxpayer.”
Finally, despite these challenges, it is important to underscore that the Navy still intends to move forward in the near future with multi-year contracts to build up to 15 new submarines to enhance its attack capabilities. Of that number, 10 units would belong to the Virginia-class configured as Block VI, while the remaining 5 would be from the Columbia Build II class.
Images used for illustrative purposes only.
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