On Friday, General Dynamics (NYSE:GD) confirmed that its Electric Boat subsidiary has been awarded three contracts from the Department of Defense, totaling $4.6 billion in value, to design a new nuclear-powered ballistic missile submarine for the Navy and also continue work on five new Virginia-class fast attack submarines.
The first contract commissions research and development work from Electric Boat into the design of a new ballistic missile submarine to replace the Ohio-class. Construction is slated to begin in 2021. In addition, Electric Boat will continue work on development of a common missile compartment to be used on the existing Ohio-class boats, and also on the British Royal Navy's Successor-class subs. The total value of this contract is $2 billion.
The second contract, for $2.5 billion, funds construction work on two Virginia-class attack subs, the USS South Dakota and USS Delaware, on whose construction Electric Boat is collaborating with Huntington Ingalls (NYSE:HII) subsidiary Newport News Shipbuilding.
The third contract announced, for $308 million, funds the purchase of "long lead-time materials" needed to be procured for the eventual construction of three additional Virginia-class subs.
General Dynamics shares sank 0.6% after the news, closing at $71.07 Friday.