Austal USA receives $5 billion contract from US Navy amid ongoing fraud debacle

Battling fraud allegations in its US division and initiating layoffs in Australia, ship building company Austal (ASX: ASB) is trying to batten down the hatches. And in that spirit, the Company’s USA arm has locked in a $4.8 billion contract for up to seven T-AGOS 25 class ships—or surveillance ships—for the US Navy.

Austal USA has received a $171 million fixed-price incentive from the United States Navy for the detail design of the Auxiliary General Ocean Surveillance Ship T-AGOS 25 Class. The contract also includes options for the construction of up to seven T-AGOS 25 class ships, potentially increasing the overall value of the contract to an impressive $4.8 billion.

These T-AGOS ships, operated by the United States Military Sealift Command (MSC), play a vital role in supporting the commanders of the Atlantic and Pacific Fleets in their antisubmarine warfare (ASW) mission. Equipped with advanced capabilities for passive and active anti-submarine acoustic surveillance, these 110-meter steel vessels with a unique ‘small waterplane area twin hull’ (SWATH) design contribute to the Navy’s Integrated Undersea Surveillance System (IUSS) by collecting crucial underwater acoustical data through the Surveillance Towed-Array Sensor System (SURTASS) equipment.

Austal Limited Chief Executive Officer, Paddy Gregg, commented, “The T-AGOS contract is a clear acknowledgment of Austal’s capabilities in steel naval shipbuilding, that includes the Navy’s Towing, Salvage and Rescue (T-ATS) ships, an Auxiliary Floating Drydock Medium (AFDM), and the US Coast Guards’ Offshore Patrol Cutters.”

Gregg added, “Austal USA is honoured to be selected to deliver this critical capability for the Navy, utilising our advanced manufacturing processes, state-of-the-art steel shipbuilding facilities and our growing team of shipbuilders.”

Austal USA has joined forces with a fleet of industry leaders, including L3Harris Technologies, Noise Control Engineering, TAI Engineering, and Thoma-Sea Marine Constructors, for the TAGOS-25 program. It is also using state-of-the-art manufacturing techniques, like modular construction and moving assembly lines, to create top-notch ships. 

Currently, Austal is busy delivering a lineup of projects, including combat ships, fast transports, towing and rescue ships, offshore patrol cutters, and even floating docks. The Company is also lending a hand in building elevators for a massive aircraft carrier and creating command modules for submarines.