Virginia-Class Submarine: Anduril’s $2.9B Push to Build Faster
Anduril won a Navy deal worth up to $2.9 billion to build Virginia-class submarine parts as production stalls at about 1.1 to 1.2 boats a year.
The U.S. Navy has turned to a newcomer to help unclog its attack submarine program. On 6 October, Anduril Industries won a Navy contract worth up to $2.9 billion to build parts for Virginia-class submarines, and said it would put $3.7 billion of its own money into a shipyard at Sparrows Point, Maryland, USNI News reported. The work starts with torpedo tubes, which a senior administration official told reporters are a “gating component” holding up boats already under construction.
The award follows a much larger order. On 29 July the Navy announced contracts with a combined value of $76.6 billion for five Columbia-class ballistic missile submarines and nine Virginia-class boats covering fiscal 2025 through 2029, built by General Dynamics Electric Boat and HII’s Newport News Shipbuilding. The Navy said it operates 26 Virginia-class submarines, with 23 more slated to be built, according to its press release.
The production problem
The Navy has ordered Virginia-class boats at two a year since fiscal 2011, but the shipyards have never delivered at that pace, according to the Congressional Research Service (CRS report RL32418, updated January 2026). Since 2022, output has been limited to about 1.1 to 1.2 boats a year by workforce and supply-chain problems, leaving a growing backlog of submarines that are paid for but not yet built.
In April 2025 testimony quoted by CRS, the Navy said production had fallen to a rate of 1.13 boats a year by the end of 2024, citing “workforce challenges, first time quality, material and supplier delays” and problems with the first boats carrying the Virginia Payload Module. The Navy and industry aim for two boats a year, then 2.33, the rate the Navy says it needs to replace the three to five submarines the United States plans to sell to Australia under the AUKUS pact and to work off the backlog. CRS put programmed submarine construction industrial-base funding at about $9.8 billion through fiscal 2028 and noted that roughly 70% of critical submarine suppliers are sole-source firms.
What Anduril says it will build
Anduril will not build whole submarines. An industry official told reporters the “very aspirational goal” is to make “full ship sections, you know, bows, sterns, etc,” for Electric Boat and Newport News, which keep final assembly, USNI News reported. The Navy contract is contingent on “demonstrated production outcomes,” according to the Anduril release quoted by USNI, which said the structure puts “the majority of the execution risk” on the company.
The Maryland site, called Arsenal-2, is planned at about 2 million square feet with a 1,200-foot graving dock and rail access, with initial operations expected in 2030. Production is to begin about two years earlier at a facility in Costa Mesa, California, which an Anduril spokesperson said is SUBSAFE certified, the Navy’s quality program for submarine parts. The senior official said Arsenal-2 could add about 9 million labor hours a year, roughly a 15% increase in Virginia-class capacity. The Maryland Department of Commerce said the project is expected to create more than 3,100 permanent jobs and that the state and Baltimore County would match up to 13% of the investment, subject to approval by the Maryland General Assembly and the County Council.
| Item | Virginia-class detail |
|---|---|
| Builders | General Dynamics Electric Boat (prime) and HII Newport News Shipbuilding |
| Length and displacement | 377 ft and about 7,800 tons submerged; 461 ft and about 10,200 tons with the Virginia Payload Module |
| Beam | 34 ft |
| Weapons | Four 21-inch torpedo tubes (about 25 torpedoes); 12 vertical tubes for Tomahawk missiles |
| Virginia Payload Module | Four large tubes for 28 more Tomahawks or other payloads |
| Unit cost | About $5.0 billion each at two boats a year (Navy FY2026 budget) |
| Actual build rate | About 1.1 to 1.2 boats a year since 2022 |
| Goal | 2.0 boats a year, then 2.33 |
Specifications from CRS report RL32418; fleet figures from the Navy.
Open questions
Outside analysts note limits. “The supply chains are very tight, so it’s not like Anduril’s going to be able to run out and get a commercial alternative for some of these SUBSAFE or nuclear parts,” Bryan Clark of the Hudson Institute, a former submariner, told USNI News. Newport News Shipbuilding president Kari Wilkinson said in a statement that the yard welcomes Anduril “as a future subcomponent partner.”
The timing has drawn scrutiny. CNBC reported that the contract came days after Anduril co-founder Palmer Luckey was named to the Pentagon’s Project Meridian, a group assessing future warfare. Pentagon Chief Technology Officer Emil Michael dismissed conflict-of-interest concerns, telling CNBC, “There’s really nothing to see here.”
Why it matters
Peter’s World analysis, based on the sources cited in this article.
Attack submarines are among the few U.S. platforms that CRS says defense officials see as able to evade China’s extensive anti-access forces, which makes production speed a strategic question. CRS also notes the Navy’s earlier 30-year plan projected the attack submarine force would dip to 47 boats around fiscal 2030, before any AUKUS sales begin in fiscal 2032.
In our view, the deal is a bet on capacity rather than a quick fix. The Maryland yard would open after the 2028 date the Navy has set for reaching two boats a year, so the near-term test is whether California-built torpedo tubes reach the shipyards on time and pass inspection. The same yards are also building the Columbia-class missile submarine, and Virginia-class boats are the planned carriers of the SLCM-N nuclear cruise missile, so any gain in submarine throughput affects several programs at once. It also fits a wider Navy push to bring new entrants into shipbuilding, as with the MUSV drone ship orders.
What to watch: first torpedo tube deliveries from Costa Mesa; Maryland and Baltimore County votes on the incentive package; permits for the Sparrows Point site; and whether the Navy reports a rise in the Virginia-class build rate in its next congressional testimony.
Sources
- USNI News, Anduril to Build New Submarine Component Facility, 6 October 2026.
- CNBC, Anduril lands $2.9 billion Navy submarine shipyard contract, 6 October 2026.
- U.S. Navy, Department of War Awards Historic Shipbuilding Contract to Cement Undersea Dominance, 29 July 2026.
- Congressional Research Service, Navy Virginia-Class Submarine Program and AUKUS Submarine (Pillar 1) Project, RL32418, updated 26 January 2026.
- Maryland Department of Commerce, Anduril Industries to Invest $3.7B, Create Over 3,100 Jobs with New Shipbuilding Facility, 6 October 2026.
