Navy is open to MYP contract with options for more than 10 submarines

By Justin Katz / March 21, 2018 at 11:54 AM

While testifying before Congress yesterday, two top Navy officials signaled they are open to structuring the upcoming Virginia-class block V submarine multiyear procurement contract to allow for options that would increase the total buy above the expected 10 submarines.

Rep. Joe Courtney (D-CT), whose home state houses General Dynamics Electric Boat, the prime contractor for the Virginia- and Columbia-class submarines, told Navy Secretary Richard Spencer the service was sending "mixed signals" to Congress.

On one hand, the service's 30-year shipbuilding plan indicates a capacity for building three submarines per year in future fiscal years. However, the Navy's fiscal year 2019 budget request shows the Navy pursuing only two submarines per year from FY-19 to FY-23, Courtney noted.

Spencer acknowledged the option is available and the Navy is discussing it with industry, but said the possibility hinges on money.

The option is available if "the resources are there. It is the managing of the resources. If in fact through reformation I can find another $2 billion within the Navy and I can reapply those funds internally to that program, or any other of the programs, [then the option is] totally available," Spencer said.

Spencer was testifying to the House Armed Services Committee alongside his Army and Air Force counterparts about the fiscal year 2019 budget request.

Courtney also pressed Navy acquisition executive Hondo Geurts on the same subject later that day during a seapower and projection forces subcommittee hearing about the submarine industrial base.

Geurts reiterated the Navy's position that there is capacity for three submarines in the future and that the service received Electric Boat's proposal for the contract last week.

"As we negotiate this upcoming multiyear, we will look at putting the options in for submarines," he said.

During both hearings, Courtney cited the Navy's $17.6 billion contract in 2014 that effectively purchased 10 vessels for the price of nine as proof an options-based contract should be considered.