Navy Could Award 2-Carrier Contract by End of January, With Expected $4B in Savings

By: Megan Eckstein

A 2013 artist’s concept of the future carrier Enterprise (CVN-80). DoD Image

This post has been updated to include a statement from Huntington Ingalls Industries.

The clock is now counting down for the Navy to award Newport News Shipbuilding a two-aircraft carrier contract, after the Pentagon formally notified Congress on Dec. 31 that it wanted to pursue the first dual-carrier contract since the late 1980s.

The Navy has been actively pursuing the contracting strategy for the past nine months, saying it had the potential to save as much as $2.5 billion in the deal and more recently stating the deal would save even more than that. Newport News Shipbuilding too said it wanted the deal, but the Pentagon didn’t sign off on it until the Dec. 31 letter to lawmakers.

On Monday the Pentagon sent a certification letter to Congress that outlines the contracting strategy and how much time and money it would allow the Navy to save on hulls CVN-80 and CVN-81. A congressional staffer told USNI News that the combined contracting could save the Navy about $4 billion, well above the original estimates.

With that letter sent, the Navy could award the contract by the end of January.

A Navy spokesman told USNI News that “the Navy has reached a price agreement with Huntington Ingalls Industries’ Newport News Shipbuilding for a two-carrier buy of CVN-80 and 81. Further information will be available upon contract award.”

Under the National Defense Authorization Act of Fiscal Year 2019, lawmakers agreed the Navy may enter into a two-carrier contract for CVNs 80 and 81 as long as the secretary of defense certifies at least 30 days ahead of the award of the contract that “the use of such a contract will result in significant savings compared to the total anticipated costs of carrying out the program through annual contracts,” that funding will be available in the budget to allow for both hulls’ purchase, that the design is stable and there is no excessive technical risk, and that the contract will be a fixed-price contract.

Inside the Navy first reported on Dec. 31 that the letter had been sent from the Pentagon to Congress.

Huntington Ingalls Industries spokeswoman Beci Brenton told USNI News, “We are pleased to have come to an agreement with the Navy regarding a two-ship acquisition approach for CVN 80 and 81, a significant step toward building these ships more affordably. Although there is more work to be done, it is important to note that the multi-ship purchase of aircraft carriers helps stabilize the Newport News Shipbuilding workforce, enables the purchase of material in quantity, and permits a fragile supplier base of more than 2000 in 46 states to phase work more efficiently.”

Sen. Tim Kaine (D-Va.), a Senate Armed Services Committee member and a proponent of the two-carrier buy from the Virginia-based Newport News Shipbuilding yard, said in a Dec. 31 statement that “I’m thrilled the Navy has decided to pursue a block buy for aircraft carriers, something I’ve been advocating to save billions in taxpayer dollars and offer more certainty to the Hampton Roads defense community. This smart move will save taxpayer dollars and help ensure the shipyards can maintain a skilled workforce to get the job done. Newport News builds the finest carriers in the world, and I know they are ready to handle this increase in work as we make progress toward the Navy’s goal of a 355-ship fleet.”

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