After nearly two years of negotiations, the U.S. Navy has awarded General Dynamics and Huntington Ingalls Industries (HII) contracts for the detailed design and construction of the final two Block V Virginia-class attack submarines.
The contract includes costs associated with the future nuclear submarines Baltimore (SSN-212) and Atlanta (SSN-813) and workforce expansion funds to increase the wages of shipbuilders at the two shipyards. Workforce expansion funds to increase wages for workers at the two shipyards, with a total value of about $18.5 billion.
According to the contract award announcement of the U.S. Department of Defense, General Dynamics Electric Boat, a subsidiary of General Dynamics, received a total contract worth approximately US$12.4 billion. The contract includes options, and if effective, the cumulative value will reach approximately US$17.2 billion; HII’s Newport News Shipbuilding received a contract worth approximately US$1.29 billion.
The huge US$18.5 billion contract award includes US$2.1 billion worth of contracts for long-lead materials awarded to two shipyards in 2024 by the U.S. Naval Sea Systems Command. It is reported that the U.S. Congress has appropriated $9.4 billion for the future nuclear submarines Baltimore and Atlanta in fiscal year 2024 and an additional US$1.95 billion through a stopgap bill, for a total of $11.35 billion.
As previously reported by USNI News, the cost of the nuclear submarines Baltimore and Atlanta has risen by nearly 20 percent due to underfunding as a result of surging labor costs. In addition, the COVID-19 pandemic has contributed to their increased costs, and pandemic-related issues have led to disputes between the U.S. Congress, the Navy and the White House Office of Management and Budget over how to pay for employee wage increases.
To address these issues, the U.S. Navy initially proposed the Shipyard Accountability and Workforce Support (SAWS) plan, which was designed to use a portion of previously awarded and banked submarine contract funds for immediate wage increases. However, this proposal was shelved by the previous Biden administration. Subsequently, the U.S. Congress and the White House passed an interim measure in the December 2024 Continuing Resolution announcing the use of additional funds to increase nuclear workers’ wages, meaning that the U.S. Navy would be allowed to support a direct increase in wages for shipbuilders.
However, despite the resolution of the funding issue, the Trump administration, which took office earlier this year, still has reservations about the award of contracts for the Baltimore and Atlanta nuclear submarines, resulting in further delays in the contracts between General Dynamics and HII.
With the construction contracts for the Baltimore and Atlanta finalized, the U.S. Navy also plans to award multi-year contracts for 15 vessels in the near future, namely 10 Block VI Virginia-class nuclear submarines and 5 Build II Columbia-class nuclear submarines.