As the U.S. Navy continues to tweak its redesigned Block III Virginia-class submarines, the service is pushing ahead with its Block IV Virginia plans, awarding a $17.6 billion contract this month to General Dynamics’ Electric Boat Corp for 10 subs between fiscal 2014 and 2018.

“The Block IV award is the largest shipbuilding contract in U.S. Navy history in terms of total dollar value and builds upon the Virginia-class program’s successful Navy and industry relationship,” says Rear Adm. David Johnson, program executive officer for submarines.

Under the deal, Electric Boat will still subcontract part of the work to its submarine-building partner Newport News Shipbuilding, a unit of Huntington Ingalls Industries. The fixed-price incentive, multi-year contract calls for about 24% of the work to be done at Newport News.

The Navy confirmed April 16 that it is postponing the commissioning of the Block III Virginia-class attack submarine SSN-784 North Dakota to an undetermined future date because of “the need for additional design and certification work required on the submarine’s redesigned bow and material issues with vendor-assembled and delivered components.” The North Dakota was christened in November and was scheduled to be commissioned on May 31.

The Virginia-class submarines – considered by most inside and outside the Pentagon to be a model acquisition and shipbuilding program – rank as the third-costliest Pentagon program, with a total acquisition cost of about $84.4 billion, the U.S. Government Accountability Office reported recently.

The proposed fiscal 2015 Navy budget includes about $5.9 billion for two more Virginia-class subs and continues to procure two Virginia-class SSNs per year through the five-year-defense plan, resulting in an inventory of 21 Virginia-class subs – of 48 total subs – by 2020.

“Entering into a multi-year procurement construction contract saved more than $2 billion across government- and contractor-furnished equipment, effectively getting 10 ships for the price of nine as opposed to building the same ships under a more traditional annual procurement arrangement,” says Virginia-class Program Manager Capt. David Goggins.

“This award has great significance for the U.S. Navy, our company and the entire submarine industrial base,” says Jeffrey Geiger, president of Electric Boat. “By continuing to produce two ships per year, the Navy and industry team retains the stability required to achieve increased efficiencies.”

Newport News Shipbuilding President Matt Mulherin says, “This is the largest number of boats ordered to date in a single contract block, which is great news – particularly in light of today’s challenging economic and political environments.”