Navy awards Anduril up to $2.9 billion to build submarine components at new Baltimore County shipyard

By Garrett Sloane

WASHINGTON — The Navy has agreed to pay Anduril Industries up to $2.9 billion for submarine components to be built at a new shipyard in Baltimore County, Md. The government will also take a 40% minority stake in the company that will hold the yard.

The administration presents the deal as a way to ease the main bottleneck in attack-submarine production. American shipyards are delivering about 1.3 Virginia-class submarines a year, short of the Navy’s goal of two, which it does not expect to reach until around 2032, Fox News reported. An administration official told reporters that once fully running, the yard, called Arsenal-2, should add about 9 million labor hours a year to the submarine industrial base and raise Virginia-class production capacity by about 15%.

“The ultimate proof of our commitment to ensuring the shipyard’s enduring success: American taxpayers will receive a 40 percent stake in the new shipyard,” President Trump said at the Sparrows Point site on Oct. 6, according to Fox News.

Anduril will start with torpedo tubes, which a senior administration official called a current “gating component” slowing Virginia-class production. The company plans to move on later to larger modules and sections of submarines.

The money

Anduril announced on Oct. 6 that it will invest $3.7 billion of its own capital in the yard at Tradepoint Atlantic in Sparrows Point. Combined with the Navy contract, it put the total at $6.6 billion. The company describes the Navy contract as worth “up to $2.9 billion, with payments tied directly to demonstrated production outcomes.” That figure is a ceiling, not an obligation. The government has not said how much has been obligated so far, and the award did not appear in the Pentagon’s daily contract announcements for Oct. 6.

A U.S. official told Fox News Digital that the money will flow through General Dynamics Electric Boat, the lead Virginia-class builder. Electric Boat will set specifications and oversee testing, qualification and Navy certification. Anduril must first build and qualify four test components. If it meets those milestones, it will have “the opportunity, but not the entitlement, to compete for future production work,” the official said.

The government will acquire its stake under the Defense Production Act and the Pentagon’s Industrial Base Fund. The official described it as a “minority, non-control” investment in a newly formed company that holds the shipyard, not in Anduril itself. Fox reported that the Department of War had not given a dollar value for the stake. The administration has taken similar equity positions in Intel and MP Materials.

An industry official on the briefing call said Anduril is paying for the new capacity itself. “I wouldn’t say that the government’s paying us back. We feel the government [is] buying the results of what we’re able to produce,” the official said, according to Fox.

Jobs and timing

Anduril and the Maryland Department of Commerce say the facility, more than 2 million square feet, will create about 3,100 direct jobs and support more than 11,000 indirect jobs, with initial operations expected in 2030. In its release, Anduril estimated $2 billion in annual economic output and $312 million in wages. These are company and state projections, not audited figures. Some parts, including torpedo tubes, will at first be made at a 160,000-square-foot Anduril facility in Orange County, Calif., CNBC reported.

“Our goal here is to be a critical, and hopefully, over time, much larger and growing part of the supply chain for our lead shipbuilders,” Anduril President Chris Brose said at a briefing, according to CNBC.

Questions raised

The award came days after the Pentagon named Anduril co-founder Palmer Luckey to Project Meridian, a new initiative to identify capabilities for future conflicts. That timing drew questions about the influence of defense-technology firms competing for contracts, CNBC reported. Defense Department Chief Technology Officer Emil Michael dismissed conflict-of-interest concerns in an interview with CNBC. He called the group’s mix of academics, former military officers and industry leaders “exactly the right kind of mix that you want.” No official finding of impropriety has been made.

The Virginia-class program is already built by General Dynamics Electric Boat and HII’s Newport News Shipbuilding. General Dynamics won a $76.6 billion Navy submarine award this summer, according to CNBC.

Request for comment

The Washington Inquisitor sought comment from Anduril Industries, General Dynamics, HII, the Hudson Institute and the offices of Sens. Chris Van Hollen and Angela Alsobrooks of Maryland. This story will be updated with any responses.

Featured image: The submarine Virginia (SSN 774) returns to the General Dynamics Electric Boat shipyard in Groton, Conn., after sea trials, July 30, 2004. U.S. Navy photo by General Dynamics Electric Boat, public domain, via Wikimedia Commons.