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U.S. Submarines Are Dying -- Will These 2 Companies Build Our New Nuclear Attack Subs?

Virginia-class attack submarine. Photo credit:

Wikimedia Commons.

According to the CRS report, the options the Navy considered for mitigating the projected SSN shortfall include: lengthening the service lives of 16 existing SSNs, lengthening sub deployments from six months to seven months, reducing Virginia-class construction time from 72 to 60 months (something the Navy is already trying to do), and procuring an additional four SSNs beyond what is planned.

However, of all the options considered (or combinations of options), the only one that allows the Navy to meet its 35-boat figure during a war is the additional procurement of SSNs. That's possibly great news for General Dynamics and Huntington Ingalls Industries, as the CRS report states that each Virginia-class sub has a current estimated procurement cost of $2.8 billion. Considering that each company is responsible for building different components of these vessels, the result is a roughly even split of Virginia-class-sub profits.

What to watch

So far, the Navy hasn't increased its procurement of Virginia-class subs. However, considering the Congressional Research Service's report was only released on June 25, that's understandable. Of course, what the Navy ultimately decides to do will have to be approved through Congress, and taking into account that defense spending is still constrained, increasing Virginia-class procurement by four subs might be an uphill battle. Still, stranger things have happened. Consequently, this is something to watch.

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The article U.S. Submarines Are Dying -- Will These 2 Companies Build Our New Nuclear Attack Subs? originally appeared on Fool.com.

Katie Spence has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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