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US Navy secures $22.2bn for new Virginia Class attack subs

General Dynamics gets $22.2 billion contract for US Navy’s Virginia Class submarines (Source US Navy/General Dynamics Electric Boat)

While Australia’s debate about costs for its own fleet of Attack Class submarines continues to unfold, the US Navy, despite budgetary challenges, has signed a US$22.2 billion contract for nine new ‘Block V Virginia Class fast attack submarines, which will include a range of design improvements including greater long-range strike capability, presenting a model of industry, government and navy collaboration.

While Australia’s debate about costs for its own fleet of Attack Class submarines continues to unfold, the US Navy, despite budgetary challenges, has signed a US$22.2 billion contract for nine new ‘Block V Virginia Class fast attack submarines, which will include a range of design improvements including greater long-range strike capability, presenting a model of industry, government and navy collaboration.

Despite growing concerns about the budget available to the US Navy as it seeks to rebuild itself from the post-Cold War and Obama-era sequestration periods, the Navy has acted swiftly and decisively to expand the recapitalisation of its fast attack submarine fleet in response to rapidly growing threat of Chinese and Russian submarines.  

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Recognising this, the US Navy moved recently to confirm a US$22.2 billion ($32.4 billion) contract with General Dynamics to provide the US Navy with nine 'Block V' Virginia Class submarines from 2025 to 2029, with the option for a 10th vessel potentially bringing the program cost to US$24.1 billion ($35.1 billion), setting a blistering pace for construction, launch, builders and Navy sea trials and exceptional value for money across the block acquisition. 

By contrast, Australia's own highly contentious SEA 1000 Attack Class submarine program, the largest defence acquisition in the nation's history is expected to cost between $50-80 billion, with Future Submarine Program manager Rear Admiral Greg Sammut recently explaining to a Senate estimates hearing that the 'out-turned' cost of Australia's future fleet of submarines was estimated to be around $80 billion – a figure frequently cited but subsequently rubbished by former defence minister Christopher Pyne and other Defence officials.  

Partnering to manage risk

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In contrast, the US, albeit significantly larger than Australia, seems to have identified the growing importance of timely, cost-effective delivery for such a tactically and strategically sensitive program, with acting Secretary of the Navy Thomas Modly saying, "Our submarine force is fundamental to the power and reach of our integrated naval force."

From the industrial perspective, president of General Dynamics Electric Boat Kevin Graney explained the growing importance of timely, cost-effective build rates to ensure that the US Navy isn't left with a capability gap amid rising global tensions driven largely by China and Russia.

"Increasing the cadence of our production from one per year to two, coupled with the start of full production of the Columbia Class ballistic missile submarine, represents a generational increase in submarine production for our nation," Graney added. 

The increased build time and acquisition quantity results in a unit price of approximately US$2.5 billion per boat for nine as per the original contract and US$2.41 billion for 10 boats, raising important questions about Australia's own submarine acquisition rates and program. 

A key component of getting the deal to this level was a protracted period of negotiation between General Dynamics and the US Navy to ensure that the shipbuilder was capable of sustaining the build cadence, in the lead up to the planned build of the new Columbia Class ballistic missile submarines, while also supporting follow on naval shipbuilding endeavours. 

James Geurts, the assistant secretary of the Navy for research, development and acquisition, is quoted by the US Naval Institute as saying, "Our whole philosophy going into this is, get Virginia as a stable foundation which then we can build Columbia on top of.

"We really wanted to make sure we had, from both sides, a balanced, stable foundation; showed our commitment to the industrial base; showed our commitment to our suppliers; showed our commitment to the workforce – from that, then we can add Columbia on top.

"So we both could get into a place where we’re comfortable. So getting into a two-per-year cadence in a way that we could also execute that during Columbia. I think it was a lot of hard work on both sides to get to a place where we had shared risk, shared reward, and that’s kind of ultimately why we’ve put one of the boats as an option price, so that we could, if performance warrants as we see it, we can add the 10th boat in there; if not, we can back off a little to make sure Columbia is successful."

Aussie expert opinion says go nuclear 

There has been significant conversation in recent decades about the permanent basing and development of supporting infrastructure to accommodate a US Navy carrier strike group in Fremantle, with additional debate stimulated by the likes of venerable strategic policy expert Ross Babbage regarding the Australian lease of Virginia Class fast attack submarines.

"I remain strongly of the view that the best submarines for Australia for the coming 40 years would be 10-12 leased or bought Virginia or Astute Class boats. The Virginia Class boats, in particular, are well sorted and reliable, they have low risk, they have known costs, they never need to be refuelled and they could be acquired with associated training programs and system upgrade pathways...," Babbage is quoted

"However, all other things being equal, if the US government were open to the idea, it would seem more sensible for Australia to opt for the Virginia Class. Australian boats of this class would be operating in very close co-operation with US boats in Pacific and Indian Ocean waters. There are likely to be substantial advantages flowing to both countries from joint basing, logistic support, training and many other aspects."

This last point has gained further traction within the US as the global superpower seeks to balance the rising peer or near-peer capabilities of the Chinese and Russian navies, respectively, resulting in a reduced unit cost associated with acquiring the necessary fast attack submarines and supporting greater interoperability – with Australia long believed to be a credible partner in the future acquisition and in some cases development of future nuclear-powered attack submarines. 

Further supporting the attractiveness of the nuclear option is the apparent safety record of US Navy nuclear technology and by extension that of the Royal Navy, something Babbage articulates:

"While nuclear safety is an important consideration, US nuclear-powered submarines have a perfect safety record, having travelled more than 240 million kilometres without a single reactor incident and visited Australian bases since 1960 without any problems. Moreover, submarine reactors are a fraction of the size of a nuclear power plant and much less dangerous.

"Critics cite reliance on foreign support as a reason why Australia shouldn’t operate nuclear-powered submarines. These concerns are spurious. In reality, Australia already relies heavily for the development and sustainment of its platforms on foreign defence forces and foreign defence companies, and their Australian subsidiaries."

DOD responds to concerns

In response to questions, a spokesperson from the Australian Department of Defence sought to correct the record on Australia's own Attack Class submarine program, telling Defence Connect:

"Defence has been clear and consistent in its advice that the estimated cost of acquisition of the Attack Class submarine, in 2016 dollars, is $50 billion. It is entirely misleading to claim that the costs of the Attack Class Submarine Program have swelled or there has been a ‘blow-out’ when quoting out-turned figures.

"For programs like the Attack Class submarine that run over many decades, using constant dollar costs provides a better way to compare actual costs against initial estimates by removing changes in inflation and foreign exchange.

"As set out in the 2016 Defence White Paper, there will not be a capability gap. Defence has been consistent in its advice that the first Attack Class submarine is scheduled for delivery to the Royal Australian Navy in 2032. There has been no change to this scheduled delivery date."

Maintaining the regional order and enhancing Australia's national interests 

However, the question now becomes, given the geographic area of responsibility Australia will become increasingly responsible for and dependent on, is the RAN and the recapitalisation and modernisation programs currently underway enough for Australia to maintain its qualitative and quantitative lead over regional peers?

It is clear that Australia's region is going to be increasingly congested as both great and emerging powers continue to invest heavily in their own submarine capabilities.

The growing proliferation of steadily more capable platforms across the nation's northern approaches presents significant challenges for the nation's existing Collins Class submarines in the short-to-medium term and the future submarine force of the future. 

Australia is defined by its relationship and access to the ocean, with strategic sea-lines-of-communication supporting over 90 per cent of global trade, a result of the cost effective and reliable nature of sea transport.

Indo-Pacific Asia is at the epicentre of the global maritime trade, with about US$5 trillion worth of trade flowing through the South China Sea and the strategic waterways and choke points of south-east Asia annually.

The Indian Ocean and its critical global sea-lines-of-communication are responsible for more than 80 per cent of the world's seaborne trade in critical energy supplies, namely oil and natural gas, which serve as the lifeblood of any advanced economy.

Traditionally, Australia has focused on a platform-for-platform acquisition program – focused on replacing, modernising or upgrading key capabilities on a like-for-like basis without a guiding policy, doctrine or strategy, limiting the overall effectiveness, survivability and capability of the RAN.

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US Navy secures $22.2bn for new Virginia Class attack subs
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