Pentagon awards $276m AUKUS contract funded by Australia

The Pentagon has awarded the first major submarine contract to deliver on the AUKUS security deal.

The $US197 million ($276 million) contract will be covered by the Australian government’s payment of $US3 billion, made to the US under AUKUS.

The contract is for engineering and design work to support the transfer of nuclear-powered submarine capabilities from the US to Australia. 

The announcement came shortly after the ABC reported a critical construction contract for the submarines had been delayed despite an urgent need to fast-track their construction.

Australia intends to buy several second-hand Virginia-class submarines from the US in the 2030s.

But the deal stipulates the US will only sell the submarines, likely second-hand, if it has built enough boats to replenish the American fleet.

The US Navy is aiming to almost double the pace of construction, to 2.33 boats per year, to achieve that.

But research presented to Congress this week said the pace of production had slowed to 1.1 boats per year. Construction delays increased slightly in the past year “despite substantial investments to reduce them”.

The newly announced contract, which is unrelated to the unsigned construction contract, has been awarded to General Dynamics Electric Boat, a major navy contractor that builds submarines at shipyards in Connecticut.

The company aims to employ 4,600 additional workers at its Groton, Connecticut shipyard this year to tackle production backlogs as the US increases investment in shipbuilding.

The contract includes options that could take its cumulative value to $US930 million ($1.3 billion), the US Defense Department said.

The AUKUS pact has been discussed at several congressional hearings in Washington this week.

The US Navy’s Indo-Pacific commander, Admiral Samuel Paparo, told one hearing that Australia was equipped to start hosting Virginia-class submarines immediately thanks to successful upgrade work at HMAS Stirling near Perth.

“From the capability that they have … we could move submarines to Stirling today,” he said.

The US is due to start rotating American submarines through the base next year.

Under AUKUS, Australia eventually plans to build five submarines in South Australia, using US technology and parts made in Britain. The first of those are due for delivery to the Australian navy in the early 2040s.

Democratic congressman Joe Courtney, who represents Connecticut and has long been involved in the AUKUS pactsaid the program was “tangibly moving forward”.

“These funds … are proof that AUKUS is not just a plan on whiteboards,” he said.