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January 30 2004

$8.4 billion contract for Electric Boat

The U.S. Navy has entered into an $8.4 billion multiyear contract with General Dynamics Electric Boat for the procurement of five Virginia-class attack submarines from FY 04 through FY 08.

The contract also includes the construction of a sixth Virginia-class submarine, which was authorized in FY 03. Because work on this ship is already under way, it is not part of the multiyear agreement. Altogether, Electric Boat and its teammate, Northrop Grumman Newport News, now have contracts to build 10 Virginia-class submarines.

The multiyear contract, which supercedes the six-ship block-buy contract announced on August 14, 2003, enables Electric Boat to purchase materials, parts and components for multiple ships at one time, achieving significant savings over the life of the contract. Under previous contracting approaches, the company could buy only what it needed to build one ship at a time.

"We're grateful to the congressional delegations from Connecticut, Rhode Island and Virginia for their support," said Electric Boat President John Casey. "Our goal remains attaining a build rate of two submarines per year, which will provide the additional production stability needed to achieve even more significant efficiencies and cost savings for the Department of Defense, the Navy and the U.S. taxpayer.

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