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ELECTRIC BOAT TEAM WINS VIRGINIA-CLASS CONTRACT

December 23, 2008 by

ELECTRIC BOAT TEAM WINS $14 BILLION VIRGINIA-CLASS CONTRACT

22 Dec 08. The U.S. Navy today reaffirmed the strategic need for a robust, adaptable submarine force by awarding General Dynamics Electric Boat a contract valued at $14 billion for the construction of eight Virginia-class submarines.
Electric Boat is a wholly owned subsidiary of General Dynamics (NYSE: GD).

The multi-year contract allows Electric Boat and its teammate, Northrop
Grumman Shipbuilding, to proceed with the construction of one ship per year
in 2009 and 2010, and two ships per year from 2011 through 2013. The eighth
ship to be procured under this contract is scheduled for delivery in 2019.

The Virginia-class submarine is the first U.S. Navy warship designed from
the keel up for the full range of mission requirements in the post-Cold War
era, including anti-submarine and surface ship warfare; delivering special
operation forces; strike; intelligence, surveillance and reconnaissance;
irregular warfare; and mine warfare.

The contract immediately provides $2.4 billion to fund construction of SSN-
784, which has been named the “North Dakota”; advanced procurement for SSN-
785; funding to purchase materials, parts and components for multiple ships
at one time (SSN-785 through SSN-791, as yet unnamed), achieving significant
economies of scale; and funding for additional cost-reduction design changes
(known as Design For Affordability).

“This award is significant for our country, the U.S. Navy, our company and
the entire submarine industrial base,” said Electric Boat President John P.
Casey. “As we attain the production rate of two submarines per year, we will
have the stability required to further increase production efficiencies.
This will benefit the U.S. taxpayer, while providing the Navy a class of
nuclear submarines with the capabilities required to retain our nation’s
undersea superiority well into the 21st century.”

“In addition, at a time when the country has a challenging economic outlook,
this contract will provide good jobs not just in Connecticut, Rhode Island
and Virginia, but in thousands of communities across the country as our
vendors gear up for increased production on the Virginia class,” Casey said.

“Today’s contract award is an exciting moment for the entire team,” said
Matt Mulherin, sector vice president and general manager of Northrop Grumman
Shipbuilding’s Newport News, Va. shipyard. “It brings stability to the
submarine program, to our work force and to the shipbuilding supplier
industrial base for the next decade. This achievement is also a result of
our shipbuilders’, suppliers’ and Navy partners’ successful efforts to
reduce cost, accelerate schedules and improve construction processes of the
previous Virginia-class boats.”

Electric Boat and Northrop Grumman Shipbuilding already have delivered five
Virginia-class submarines to the Navy: USS Virginia (SSN-774), USS Texas
(SSN-775), USS Hawaii (SSN-776), USS North Carolina (SSN-777) and USS New Hampshire (SSN-778). Five additional submarines are under construction.

The contract comes on the heels of the shipbuilding team’s delivery of USS New Hampshire in August eight months ahead of schedule and more than $60 million under target cost, performance that demonstrates the commitment to reduce the cost and shrink construction schedules during the term of the contract.

Virginia-class submarines displace 7,800 tons, with a hull length of 377 feet and a diameter of 34 feet. They are capable of speeds in excess of 25 knots and can dive to a depth greater than 800 feet, while carrying Mark 48 advanced capability torpedoes, Tomahawk land attack missiles and unmanned underwater vehicles.

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