Navy
awards $8.7B contract for six Va.-class submarines
(Aug. 14, 2003)
The
U.S. Navy has awarded Electric Boat an $8.7 billion block-buy
contract for the construction of six Virginia-class submarines,
the largest submarine order in U.S. history.
The contract authorizes Electric Boat, the lead shipyard,
and its teammate, Northrop Grumman Newport News, to proceed
with the construction of one ship per year from FY 03
through FY 06, and two ships in FY 07.
“This is an extremely significant contract award,” said
Michael W. Toner, president of Electric Boat and executive
vice president of General Dynamics Marine Systems group.
“The two shipyards now will have the stable workload required
for increased production efficiencies, which will benefit
the Navy, the Department of Defense and the U.S. taxpayer.
We’ll also be providing the Navy a class of nuclear submarines
with the capabilities to guarantee our nation’s undersea
superiority well into the 21st century.”
“The positive impact to the industrial base and to our
ability to provide the Navy with the most capable and
cost efficient platform is significant,” said Tom Schievelbein,
president of Northrop Grumman Newport News. “Stability
is key to reducing costs, and this contract award will
greatly enhance the stability of the Virginia-class program.”
Electric Boat will christen the lead ship of the class,
Virginia (SSN774), Aug. 16 and deliver it to the Navy
in 2004. Three other ships are currently under construction.
The contract could transition to a multiyear agreement
for seven ships from FY 04 through FY 08 – including two
submarines in FY 08 – contingent upon congressional approval
of the multiyear approach. The FY 03 submarine would not
be included in the multiyear contract. Altogether, up
to eight submarines could be procured from FY 03 through
FY 08.
The multiyear arrangement is expected to produce savings
to the government of more than $1 billion on the submarines
to be authorized through FY 08.
A multiyear contract would enable Electric Boat to purchase
materials, parts and components for multiple ships at
one time, achieving significant economies of scale. Under
the block-buy approach, the company buys what it needs
to build one ship at a time.
Contacts:
Northrop Grumman Newport News
Jerri Fuller Dickseski, (757) 380-2341
General Dynamics Electric Boat
Neil Ruenzel
(860) 433-8556
