“The T-AGOS contract is a clear acknowledgment of Austal’s capabilities in steel naval shipbuilding,” Mr Gregg said.
Austal’s shares jumped 27 per cent in early trading on Friday, rising 43¢ to trade at $2.03 per share, their highest prices since January.
Austal was one of two bidders for the contract, which includes an option to build up to six more ships. If all the options are exercised, Austal will be building the ships until June 2034.
The US Navy wants the new ships to replace five existing T-AGOS ships to respond to “the submarine modernisation efforts of countries such as China and Russia,” according to the Congressional Research Service, a non-partisan organisation that provides information to congress members.
The new T-AGOS ships would be larger and faster than the existing ships.
Austal’s North American business is building dozens of different kinds of ships for the US Navy and Coast Guard, including combat and salvage ships.
The company is already working on parts of the nuclear-powered Virginia class submarines that Australia will purchase under the AUKUS agreement. It secured the submarine work in the months leading up to confirmation that HMAS Stirling, located on Garden Island just south of Perth, would become a home port for nuclear submarines.
Garden Island is close to Austral’s shipyards at Henderson where it is working on retro-fitting autonomous technology to a decommissioned Armidale-class patrol boat as a first step towards Australia having robot warships.
The US Navy has said it intends to procure the second T-AGOS-25 vessel in 2025 and intends to use a single shipbuilder, now identified as Austal, to build seven vessels in total. In a budget submission, the US Navy has estimated the procurement cost of the first vessel at $US789.6 million.
A senior Austal executive accused of manipulating financial information to create the impression the shipbuilder was meeting its targets left the company in early April after regulators filed charges in a US court.
The Securities and Exchanges Commission alleges three former employees artificially reduced cost estimates required to complete certain shipbuilding projects for the US Navy by tens of millions of dollars to meet Austal USA’s revenue budget and revenue projections. It also alleged that the Australia-based parent company prematurely recognised revenue and as a result met or exceeded analyst estimates for earnings.
Mr Gregg has said that the company is cooperating fully with the ongoing investigation.
Fortescue Metals founder Andrew Forrest owns 19 per cent of Austal, which is also working on parts of the nuclear-powered Virginia class submarines that Australia will purchase under the new AUKUS agreement.