Navy’s performance-linked $2.9 billion contract shifts execution risk to Anduril, not taxpayers
US defence technology firm Anduril Industries has announced a $6.6 billion investment to expand America’s submarine industrial base, including $3.7 billion for a new software-defined shipyard, with the overall project expected to create more than 3,000 direct jobs.
A new shipyard for Virginia-class submarines
President Donald Trump announced the project, called Arsenal-2, backed by $3.7 billion in private capital investment from Anduril. The facility will manufacture critical components for Virginia-class submarines, adding capacity to the US submarine industrial base as the Navy pushes to increase attack submarine production. Virginia-class submarines are currently built by General Dynamics Electric Boat and Huntington Ingalls Industries’ Newport News Shipbuilding.
Arsenal-2 will be located at Tradepoint Atlantic in Baltimore County, Maryland. According to Anduril, the project is expected to create 3,100 direct jobs and support more than 11,000 indirect jobs, while driving $2 billion in annual economic output, including an estimated $312 million in wages each year.
A performance-linked Navy contract
Alongside the shipyard investment, the US Navy awarded Anduril a contract worth up to $2.9 billion, with payments tied directly to demonstrated production outcomes. Anduril said this structure ensures the company, rather than taxpayers, bears the majority of execution risk, aligning incentives toward on-time, high-quality submarine production. Combined with the $3.7 billion shipyard investment, the total package amounts to $6.6 billion directed toward America’s submarine industrial base.
How the facility fits into the broader programme
Arsenal-2 will manufacture complex components and large-scale assemblies for Virginia-class submarines, supplying them to Electric Boat and Newport News Shipbuilding for final assembly. Anduril said the additional production source will allow more submarine construction to proceed simultaneously across the industrial base, boosting overall capacity for the Virginia-class programme.
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