Navy Awards Electric Boat $869 Million Columbia Mod And $9.5 Billion Options For First Two Subs
By: Rich Abott
June 22, 2020
The Navy on Monday awarded General Dynamics Electric Boat [GD] an $869 million modification for continued Columbia-class ballistic missile submarine (SSBN) procurement work with an added price option for the first two submarines that would increase the total contract value to $9.5 billion.
Assistant Secretary of the Navy for Research, Development and Acquisition James Geurts told reporters on Monday during a press call the modification “provides for the continued procurement and design completion engineering work and design from affordability for the Columbia-class…recalling that Columbia is our number one acquisition program, we’re continuing on the program to build, by the time we’re done, 12 ships with FY ‘28 delivery and FY ’31 first patrol. The contract also provides lead ship component development lead yard support, follow-on yard support, additional U.K. strategic weapons system kit manufacturing, and additional work with the submarine supply base.”
The contract announcement said this includes submarine industrial base development and expansion efforts as part of the integrated enterprise plan and multi program material procurement supporting Columbia SSBNs and the overall nuclear shipbuilding enterprise, additional U.K. Strategic Weapon System Support kit manufacturing, and effort to support expansion of the domestic missile tube industrial base.
Geurts explained the second part of the announcement is that the Navy is placing a price option on the contract for the first two Columbia submarines, SSBN-826 and 827, which is estimated to cost about $9.5 billion.
Geurts noted the option “is subject to appropriation and authorization, but that is the result of a lot of hard work between the shipbuilder teams and our teams to negotiate the first two ship costs, get those all the terms and conditions on track well-ahead of our anticipated award, which will be as soon as we have an appropriation and authorization in FY ’21.”
The award announcement said specific efforts under the overall modification award include design completion associated with SSBN-827 technical variance documentation, non-recurring design effort for scope changes between SSBN-826 and 827, design for affordability, lead ship component development lead yard support, follow-on ship lead yard support, and implementation of enhanced cybersecurity measures.
It also explained the industrial base work covers submarine industrial base development and expansion efforts to “improve sub-tier vendor stability and gains economic efficiencies based on production economies for major components. The nuclear shipbuilding industrial base continues to ramp up production capability to support the increased demand associated with the Navy’s Force Structure Assessment. Improved capacity at the sub-tier vendors reduces risk across nuclear shipbuilding programs.”
The announcement said the industrial base work is for the furtherance of the FY ‘20 defense authorization act and FY ’20 Consolidated Appropriations Act, “which authorized and appropriated additional funds for submarine industrial base development and expansion to ensure second and third-tier contractors are able to meet increased production requirements.”
“So, for that contract, that’s kind of business ongoing to continue all the advanced construction and keep the program on track as well as support our U.K. teammates,” Geurts said about the first portion of the award.
Geurts said the first two vessels price option is a cost-plus incentive fee contract. He added it will require approval of incremental funding from Congress, which the Navy has previously requested through formal legislative proposals.
Geurts said the Navy intends to award the option “as soon as possible, with the FY ‘21 appropriation to ensure we keep this number one priority program on track.”
However, he noted in order for the Navy to exercise the option will require a decision or support from the defense acquisition executive, Under Secretary of Defense for Acquisition and Sustainment Ellen Lord, and authorization and appropriations from Congress. Geurts said the Navy team is set to meet with Lord for her approval this summer.
If all goes according to plan, this option will allow the Navy to start full-rate construction of the first submarine, begin advanced procurement and construction of the second submarine, and start full construction of the second SSBN in FY ’24.
The modification announcement said the price option “is required to support October 2020 construction start of the SSBN-826.”
Modification work is expected to be finished by December 2031.
Geurts also said said the Navy estimates the lead Columbia-class submarine will cost $9.2 billion in then-year dollars, including Government Furnished Equipment and not including the design cost.
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