US Navy Secures Submarine Suppliers with $1.28 Billion Contracts

The US Navy recently issued two hefty contract modifications, totaling approximately $1.28 billion, to General Dynamics (GD) Electric Boat, aiming to keep crucial submarine suppliers operational. In contrast, ongoing negotiations for 17 planned submarines take place.

These contracts, posted on October 8, come at a pivotal time, as the Navy faces rising costs, labor shortages, and the pressing need to ensure its submarine production stays on track.

Here’s what we know about the matter so far.

The Details of the Contracts

The Navy’s’ contract modifications cover materials for both Block V and Block VI Virginia-class nuclear-powered attack submarines.

The first contract, valued at $878 million, focuses on the future USS Baltimore (SSN-812) and SSN-813, both part of the Block V series. These submarines are known for their advanced capabilities, including the Virginia Payload Module (VPM), which enhances their missile-carrying capacity.

Through September 2033, work on the undefinitized contract action will take place in Virginia, California, Massachusetts, New York, South Carolina, New Jersey, Pennsylvania, Florida, New Hampshire, Illinois, and other locations.

Meanwhile, the second modification, worth $350 million, is for long lead materials for the upcoming Block VI Virginia-class submarines. These materials include vital components like valves, pumps, and castings—basically, the backbone of what makes these submarines function.

By securing these early-stage materials, the Navy ensures that construction can begin seamlessly once the final contracts are negotiated.

The second modification will be worked on in California, Minnesota, Pennsylvania, Illinois, Pennsylvania, Connecticut, Arizona, North Carolina, and other locations, with completion expected in September 2035.

Ongoing Negotiations and Challenges

The Navy and Electric Boat are still negotiating the contract for 17 submarines, which includes the two Block V Virginia-class submarines and a multi-year deal for ten Block VI Virginia-class subs, as well as five Build II Columbia-class ballistic missile submarines.

One of the central challenges the Navy faces in these negotiations is the rising cost of labor, which has surged by 20 percent since the onset of the COVID-19 pandemic.

These higher labor costs are putting significant strain on the shipyards, which are already dealing with a shortage of skilled workers, particularly welders and pipefitters.

To address these issues, the Navy proposed a unique funding mechanism called Shipyard Accountability and Workforce Support (SAWS).

This SAWS initiative, proposed in September, would allow the Navy to pull funding forward, enabling shipyards like Electric Boat and Huntington Ingalls Industries (HII) – Newport News Shipbuilding to increase worker wages.

Proponents, like Senator Roger Wicker (R-Miss.), believe that SAWS could address the near-term wage gap for shipyard workers and ultimately help boost production rates for critical defense programs.

“The SAWS plan would provide the workforce support necessary to increase ship production rates – all without requiring additional appropriation. While not a silver bullet, this proposal stands to improve the way the Navy does business on critical defense programs,” Senator Wicker said in a statement released last month.

But not everyone is convinced. The proposal has faced resistance, with the White House Office of Management and Budget (OMB) rejecting it, while congressional appropriators remain skeptical.

Under the proposal, payments for different types of labor would be separated, allowing shipyards more flexibility in paying workers and managing resources. However, some lawmakers worry that this change would lead to a loss of oversight over how funds are allocated, creating potential accountability issues.

The OMB already rejected the SAWS proposal for Fiscal Year 2024 boats, which led to a request for additional billion-dollar funds instead from Congress to cover labor costs for two Virginia-class submarines.

Why These Submarines Matter

See, these contract modifications aren’t just about keeping shipyards afloat—they’re about ensuring our Navy’s future readiness.

Virginia-class submarines are essential to the Navy’s operations, playing a critical role in anti-submarine warfare, intelligence gathering, and special operations missions.

The Block V variant, equipped with the VPM, significantly boosts the Navy’s strike capabilities by increasing the number of Tomahawk missiles these submarines can carry.

On the other hand, the Columbia-class ballistic missile submarines are the future backbone of the US nuclear deterrent. These submarines will replace the aging Ohio-class and are designed to operate undetected, carrying nuclear missiles that serve as a powerful deterrent against potential adversaries.

In simple terms, these submarines aren’t just metal tubes in the water—they’re crucial tools in the Navy’s ability to project power, protect national security, and maintain global stability.

The Importance of Keeping the Submarine Industry Afloat

One of the main goals of these contract modifications is to keep the submarine supply chain intact.

Many of the suppliers responsible for producing the specialized components that go into submarines are small to mid-sized companies. Without steady demand from the Navy, these suppliers could go under, making it difficult—and expensive—to restart production down the line.

By issuing these contract modifications, the Navy is sending a clear message: they’re committed to the long-term health of the industrial base.

Keeping suppliers operational and shipyard workers employed ensures that when the final contracts for these submarines are eventually signed, everything will be ready to go.

Final Thoughts

While negotiations between the Navy and GD Electric Boat continue, these recent contract modifications highlight the Navy’s proactive approach to maintaining the stability of its submarine production.

With rising costs, labor shortages, and the crucial need for advanced submarines like the Virginia and Columbia classes, the Navy is making strategic moves to keep things moving forward.

At the end of the day, these submarines aren’t just military hardware—they’re critical components of the US defense strategy, ensuring that the nation remains ready to face any future challenges.

And with the Navy taking steps to keep the supply chain intact, it looks like they’re determined to keep that mission on course.

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Disclaimer: SOFREP utilizes AI for image generation and article research. Occasionally, it’s like handing a chimpanzee the keys to your liquor cabinet. It’s not always perfect and if a mistake is made, we own up to it full stop. In a world where information comes at us in tidal waves, it is an important tool that helps us sift through the brass for live rounds.