Austal has announced that the US Department of Defense (DoD) has signed a US$43.36 million ($62.7 million) contract with the company’s US division.
The Title III Agreement – made out under the Defense Production Act (DPA) – looks to maintain, protect, and expand US domestic production of steel shipbuilding capability and capacity through capital projects that will be executed over the next 24 months, beginning this month.
The DoD has entered into the agreement with Austal USA as part of the national response to COVID-19, which has seen Washington emphasise the importance of domestic supply chains.
It is likely that Austal will match the DPA agreement funding, which would take the total investment to circa US$100 million. These investments will also have long-term benefits for US Navy shipbuilding while accelerating pandemic recovery efforts in the Gulf Coast region.
Using funds authorised and appropriated under US coronavirus stimulus package – the CARES Act – Austal said that this investment "will protect jobs and bolster the local economy in a region hit hard by the COVID-19 pandemic and ensure critical capabilities are retained in support of US Navy operational readiness".
Austal USA is based in Mobile, Alabama, which is the principal place of performance. Earlier this year, the division delivered its 11th littoral combat ship (LCS), the future USS Kansas City (LCS 22), to the US Navy.
The scope of this agreement is still to be clearly defined but subject to agreement with the DoD, Austal intends to use the funds to commence investment in the development of additional capacity for steel naval vessel construction at the Mobile shipyard. Further details about the purpose and specific use of these funds will be released as they are agreed between Austal and the DoD in the following months.