General Dynamics Awarded Potential $24.1B Contract Modification for Block V Virginia-Class Submarines

General Dynamics™ (NYSE: GD) Electric Boat subsidiary has received a potential $24.1B contract modification to build nine Block V Virginia-class submarines.

Electric Boat will work with Huntington Ingalls Industries‘ (NYSE: HII) Newport News Shipbuilding division to build the submarines under the multiyear contract, which includes an option for one additional vessel with the Virginia Payload Module, General Dynamics said Monday.

The Department of Defense said the modification has a base amount of $22.2B and includes design support, spare material, testing and other services. Eight of the nine Block V vessels will be equipped with VPM, an 84-foot component designed to provide the service with undersea strike capability and capacity to accommodate various payloads.

Work will occur in Virginia, Rhode Island, Connecticut, California, Pennsylvania, Maryland and other areas within and outside the U.S. through August 2029 and could extend to February 2030 should the service exercise the option.

Construction work on the submarines will kick off in 2019 with deliveries scheduled between 2025 and 2029. HII said Newport News will be the delivery yard for five of the nine vessels.

Electric Boat and Newport News Shipbuilding have developed and delivered 18 Virginia-class submarines to the Navy. Ten Block IV vessels are in the construction phase.

Naval Sea Systems Command will obligate $3.1B in shipbuilding and conversion funds for fiscal years 2017 and 2019 at the time of award.

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