BAESY Bae Systems Plc (PK)

By Joe Hoppe

BAE Systems has been awarded 3.95 billion pounds ($4.82 billion) by the U.K. government for the next phase of its nuclear-powered attack submarine program, part of a security pact between the U.S., U.K. and Australia.

The U.K. defense-and-aerospace group said Sunday that the funding will cover development work until 2028, allowing it to move into the detailed design phase of the program and begin to procure items with long lead times.

Manufacturing will start at the end of the decade, with the first boat expected to be delivered in the late 2030s. Early design work had started in 2021.

"We're incredibly proud of our role in the delivery of this vitally important, tri-nation submarine program," Chief Executive Charles Woodburn said.

The company said the new submarine, dubbed SSN-AUKUS, will be the largest attack submarine the Royal Navy has ever operated. It will eventually replace the Astute class, which BAE builds at its site in Barrow-in-Furness, Cumbria.

BAE Systems has delivered five of seven Astute class submarines to the navy, with the remaining two boats at advanced stages of construction.

The funding will also cover significant infrastructure investment at the Barrow-in-Furness site, investment in the supply chain and recruitment of more than 5,000 people. The business plans to recruit an additional 2,700 people next year, the company said.

On Sunday, Babcock International also said it has signed a five-year contract to provide input into the detailed design of SSN-AUKUS.

"This multi-billion-pound investment in the AUKUS submarine programme will help deliver the long term hunter-killer submarine capabilities the U.K. needs to maintain our strategic advantage and secure our leading place in a contested global order," British Defence Secretary Grant Shapps said.

The AUKUS security pact was first disclosed in September 2021, and includes providing Australia with nuclear-powered submarines. Beyond that, it includes using Australia to produce armed drones, rocket motors and other equipment for the Pentagon.

China was vocal in its opposition to the plan at the time, saying it reflected a Cold War mentality and that it would encourage an arms race and undermine stability in the Asia-Pacific.

Write to Joe Hoppe at joseph.hoppe@wsj.com

(END) Dow Jones Newswires

October 02, 2023 02:00 ET (06:00 GMT)

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