A 2011 photo of the guided-missile destroyer USS Arleigh Burke.

A 2011 photo of the guided-missile destroyer USS Arleigh Burke. U.S. Navy / Petty Officer 3rd Class Scott Pittman

Multi-year destroyer contracts will bolster shipyards, workforces: Navy

The contracts are the first to use a new provision that helps yards foster talent in their local communities.

The Navy hopes new multi-billion dollar, multi-year contracts for nine Arleigh Burke-class destroyers will help two shipyards stabilize their workforces and stay in shape for future orders.

“This contract will provide both of our major large surface combatant providers a stable industrial workload and industrial base…for their workforce and for their investments,” Frederick Stefany, acting assistant Navy secretary for research, development and acquisition, told reporters Wednesday. “Whether it's another DDG multi-year contract afterwards or DDG(X), it sets the environment for a healthy, competitive effort going forward on the DDG(X).”

DDG(X), or the Navy’s Next-Generation Guided-Missile Destroyer, is to follow the Arleigh Burke class.

On Tuesday, the Pentagon announced five-year contracts that will see HII’s Ingalls Shipbuilding build six DDG-51 Flight III destroyers and General Dynamics’ Bath Iron Works build three. 

The Navy will buy destroyers from Bath in 2023, 2024, and 2026, with the final ship to be finished by December 2033, according to the contract announcement. The Navy will buy its first ship from Ingalls Shipbuilding this year, one in 2024, two in 2025, one in 2026 and one in 2027, with the latter to be ready by June 2034.

The Navy's 2024-28 shipbuilding plan called for buying 10 destroyers at two per year, a March Congressional Research Service report said. Congress in its 2023 budget authorized the Navy to use a multi-year procurement contract to buy destroyers between 2023 and 2027.

Those decisions meant this week's contracts were no surprise, said Mark Cancian, a senior advisor for the International Security Program at the Center for Strategic and International Studies.

“Nevertheless, it is good news for the shipbuilders because they can plan on a steady stream of work. The Navy benefits from efficiencies resulting from the long-term commitment,” Cancian said via email.

He added that there is “a minor concern” about just one ship starting construction in 2027, because “That might signal a transition to DDG(X), or might be a hedge against a lower goal for large surface combatants. However, that's far in the future, and there will be many opportunities for change.”

These multi-year contracts are the first to include the “Navy shipbuilding workforce development special incentive,” created in Section 122 of the 2023 National Defense Authorization Act. Stefany said it allows the two shipbuilders to use between a quarter of a percent to one percent of the cost of the contract “to work with their local schools and other local entities to improve the pipeline of talent coming into the shipyards.”

The Section 122 money will help shipyards retain workers, which will help the industry recover from the COVID-19 pandemic, said Rear Adm. Tom Anderson, the Navy’s program executive officer for ships.

“During COVID, the shipyards had some experience leave the yard, just like every other sector of the economy. And they have— it's really important that they retain the skilled workforce that they have, and that they attract future workforce,” Anderson said. “That Section 122 funding, that's exactly what it was intended to do. So getting it on that contract, I think, will absolutely benefit them.”

Stefany said these contracts will help the companies and their suppliers become stronger and more flexible.

Anderson said the Navy’s confidence in the shipyards’ abilities to deliver the ships on time is growing as they come out of the pandemic. 

“We certainly had some challenges with workforce and throughput, but we are seeing improving trends with regards to schedule performance. There are also a number of capital investments that are being made” in both shipyards, he said.

The Navy said it would not release the total price of the contracts because they include the option for six more ships. However, Stefany said the Navy will save an estimated $830 million across the five years by using multi-year procurement contracts instead of buying each ship individually.

Each destroyer costs about $2.2 billion, according to the CRS report, but not all of that goes to the shipbuilders themselves; the Navy buys some key parts, called government furnished equipment, separately. 

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.