Electric Boat, Navy agree to a minimum of nine submarines over next five years
The Navy and Electric Boat have come to an agreement on a multi-year contract for the next group of Virginia-class attack submarines the service intends to buy.
The value of the contract will not be released until it is finalized, which is expected at the end of this year, but it will include a minimum of nine submarines, yielding $1.8 billion in savings, a Pentagon official said.
Congress, during budget negotiations in 2018, authorized up to 13 submarines to be built between fiscal years 2019 and 2023, the period the contract covers. The Trump administration requested that 11 submarines be bought during that time, and the Navy and EB discussed that number during negotiations.
But the Pentagon, in notifying congressional defense committees last week of the proposed contract, indicated that budget "shortfalls" in the coming years restrict the number of submarines the Navy can commit to buying.
While overall there are "sufficient funds" to execute the program, there are "shortfalls" in fiscal years 2022 and 2023, which the Navy has committed to addressing in its next budget proposal, Ellen Lord, undersecretary of defense, said in a letter sent last week to lawmakers.
"We have been working closely with the Navy and stand ready to support their needs. The contract being contemplated allows us to maintain a stable Virginia-class build rate," spokeswoman Liz Power said by email Monday.
EB, which employs about 17,000 people, is currently operating off an "undefinitized contract action," meaning work is being performed despite the contract terms, specifications, or price not being agreed upon yet.
Negotiations on the contract have gone on longer than expected due, at least in part, to the Navy's concern about whether EB and its partner Newport News Shipbuilding and their suppliers can build more attack submarines while also building 12 new ballistic missile submarines, a top priority of the Navy and the Pentagon.
The proposed contract includes the option to buy a 10th submarine, which likely would happen in 2023. That would maintain the current rate of building two Virginia submarines per year, which has the support of Congress. The Navy buys submarines in groups known as blocks, and the previous contract included 10 submarines for $17.6 billion, the largest shipbuilding contract in Navy history.
"Today's news that the Block V contract is reaching the final backstretch with a framework that will be built around a minimum of nine subs and an option for a tenth to maintain the program of record shows real progress in terms of getting a stable workload for this critical program," U.S. Rep. Joe Courtney, D-2nd District, whose district includes EB, said in a statement Monday.
Courtney was behind the proposal to authorize up to 13 submarines to be built, saying that it would help address a dip in the size of the attack fleet expected in the late 2020s due to the older versions of attack submarines being retired at a faster rate than newer ones are being built.
He said by phone Monday that he has sent a host of questions to the Navy about adding the 10th boat and how that would work.
"At a minimum, I want to make sure the option for the extra boat is really a workable option, not just a gesture," he said.
Courtney, chairman of the congressional subcommittee that oversees Navy shipbuilding, and Rob Wittman, the ranking Republican on that subcommittee, met recently with Secretary of the Navy Richard Spencer, who indicated that the possibility of buying 11 attack submarines over the next five years is "not off the table." Previously, there was talk of funding the 11th submarine outside of the Navy's shipbuilding budget.
"We'll know more once the contract materializes," Courtney said.
Eight of the nine submarines included in the contract will feature an added 85-foot section called a Virginia Payload Module that will increase payload capacity on the submarines. Given this, the submarines are expected to cost more to build than the current Virginia submarines, which cost about $2.7 billion each.
U.S. Sen. Richard Blumenthal, in a statement issued Monday, said while the contract is "good news" and "a strong vote of confidence" in the submarine builders, "the nine boats are less than our nation needs."
"The Navy will have to budget more funding in future years, which I will fight to achieve. Our goal continues to be a total of 11 submarines, as Electric Boat is more than capable of producing, and the American people should be expecting," he said.
U.S. Sen. Chris Murphy, in his statement, said Monday's announcement is "an investment from the Navy in the future of Connecticut manufacturing, and a testament to the amazing work that the men and women of Electric Boat are doing in New London and Groton."
He said he would continue to use his seat on the Senate Appropriations Committee "to keep these wins for Connecticut coming."