Multi-Year Contract Conversion of Virginia Class Submarine Saves Navy Money
(Source: US Naval Sea Systems Command; issued Jan. 30, 2004)
WASHINGTON, DC --- NAVSEA executed the option for the Virginia Class Multi-Year contract on January 29, 2004 with Electric Boat Corporation. The Multiyear procurement will bring significant savings to the Navy and stability to the defense contractors building our nation’s submarines. The multi-year contract purchases one submarine a year for the next five years (FY04 - FY08) and is expected to save $400 million over the Block Buy.

In a block-buy contract, the Navy agrees to purchase multiple ships over multiple years contingent upon annual appropriations over the life of the contract, but is not bound to the quantities. The government is not contractually obligated to purchase all ships in a block-buy. The first four ships of the Virginia Class were procured using block-buy.

In the multiyear contract, the Navy guarantees to purchase five ships over the period of FY04-08. The government is contractually obligated to purchase all ships in a multiyear contract.

Further, the multiyear contract includes funds for Economic Order Quantity (EOQ) purchases, allowing the Navy to realize the savings of buying in bulk. Industry can thereby save costs by increased purchasing power within the vendor base.

In 1999, the Joint Staff determined that 68 attack submarines were needed through 2015 and that less than 55 attack submarines would leave the combatant commanders with insufficient capability to respond to contingencies. The 2001 Quadrennial Defense Review determined that an attack submarine force of at least 55 submarines was needed. There are currently 54 subs in the Navy inventory. By building one submarine a year, the number of U.S. attack submarines will continue to decline as submarines are decommissioned faster than they are commissioned. The current Navy’s Future Years Defense Plan increases the build rate of Virginia Class submarines to 2 per year beginning in fiscal year 2009.

The Virginia Class submarine is the first U.S. submarine designed for battle space dominance across a broad spectrum of regional and littoral missions as well as open-ocean, “blue water” missions. The sub has the ability to sustain high-tempo operations for months on end without the need for forward-based logistic support.

Additionally, the sub’s greater integrated acoustic and non-acoustic stealth ensures the U.S. can gain and sustain access to contested and otherwise politically denied areas. The Virginia Class multi-mission land, sea, and undersea firepower, advanced sensors, and other special features will enable it to execute numerous tasks simultaneously in support of America’s security objectives.

Sophisticated surveillance capabilities and special warfare enhancements - Advanced SEAL Delivery System (ASDS) and nine-man lockout trunk, plus advanced state-of-the-art submarine communication and Electronic Support Measures (ESM) systems with “Plug and Fight” electronics continue to build toward Sea Power 21.

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