The Secretary of the Navy Tuesday said the government should consider having the two submarine shipbuilders compete on the next version of the Virginia-class attack submarine (SSN).
“I think in the next Virginia class, we have to really consider having HII [Huntington Ingalls Industries] build and EB build versus the two of them, co-building. I think we need to introduce some competition back into the system,” John Phelan told lawmakers during a Senate Armed Services Committee hearing about the fiscal year 2026 budget request.
Currently all SSNs are co-produced by HII’s Newport News Shipbuilding (NNS) and General Dynamics’ Electric Boat (EB). Generally, NNS builds the bow and stern sections while EB makes the midsection including the reactor compartments, and they typically take turns on final assembly.
Electric Boat is the prime contractor for the submarines even while it shares production with HII. It also built all 18 Ohio-class ballistic missile submarines (SSBNs) and is the prime for its replacement class, Columbia.
Phelan was responding to questioning from Sen. Tim Kaine (D-Va.), home to HII’s submarine and aircraft carrier shipyard.
He added that one issue is the various Virginia-class flights have enough differences that many work out to be a kind of new first of class vessel, which usually entails more delays and figuring out ideal ways to produce and incorporate new systems.
Phelan also argued the Navy needs to look at further altering the manufacturing process for where vendors are located and how close to the shipyard they need to be. “I think we have to really look at the manufacturing process of the modules and what we’re doing.”
The Navy and the major submarine builders have started ramping up outsourcing some submarine module production and parts to other shipbuilders to improve production timelines.
Whereas the Navy wants two SSNs per year and ultimately 2.33 per year to make up for selling multiple boats to Australia in the 2030s under the AUKUS agreement.
Acting Chief of Naval Operations Adm. James Kilby told the committee that “we’re not where we want to be and we’re not satisfied with it. We’re at 1.1 and we need to be at a 2.0 pace for us and 2.33 for the ultimate goal here with the AUKUS program.”
The outsourcing partners include Leonardo DRS , General Atomics and Austal USA with its expanding steel production line in Mobile, Ala.
In an interview with Defense Daily, Leonardo DRS CEO Bill Lynn said the two companies have been sharing production rather than competing since the 1990s because the government was not ordering enough to support competition.
“You need a certain threshold of production to have competition…you can only have competition when you have enough production to allow it. When we’re at one per year or even one and a half per year, that’s probably not enough to compete because if you lose two or three in a row you’re out of business.”
Lynn served as deputy secretary of Defense from 2009 and 2011 and previously served in several DoD roles from 1993 to 2001.
“Competition’s almost never a bad idea. It’s more – do you have the business base to support it,” he continued.
Lynn said if the government goes to higher levels of submarine buys, including compensating for the three to five SSNs planned to be sold to Australia in the 2030s, “maybe you could look at that.”
However, he warned competition versus co-production also depends on how the shipyards have invested and their capabilities to shift production.
“We’ve been doing 20 years of that co-production, that shared production, has that changed the way they’ve laid out their facilities, and would that require a major investment to change it? I don’t know.”
Relatedly, Phelan said while leaders at private and public shipyards “bragged about their training,” workers offered contrasting views during his visits to shipyards in the past two months.
“When I sat down with all the workers, the one thing they said they didn’t have really good was training. And so I think there are better ways to train them and get them in there, and get them up to speed faster. And these are things we’re all looking at.”
