The Department of Defense awarded General Dynamics Corporation (NYSE:GD) a $520 million sole-source undefinitized contract action, or UCA, on Tuesday, funding the purchase of long lead-time materials that the defense contractor will require for use in constructing the Virginia-class nuclear fast attack submarines SSN 794, SSN 795, SSN 796, and SSN 797.
The DoD issues UCAs to authorize defense contractors like General Dynamics to begin work on a project, and to provide them with funds to accomplish this work, even before final agreement has been reached between the parties on all terms of a contract.
In the instant case, General Dynamics will use these UCA funds to purchase steam and electric plant components, and to pay for work on the submarines' main propulsion units and turbine generators, plus purchases of steel, and miscellaneous hull, mechanical, and electrical system components.
Work under this UCA is expected to be complete by January 2015.
Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.