Anduril is committing $3.7 billion of its own capital to build a Baltimore County shipyard for Virginia-class submarine components, and the Navy is attaching a $2.9 billion production contract that pays only when parts leave the facility, a combined $6.6 billion arrangement that shifts execution risk onto the startup while giving the service a new source of hull sections and modules by the end of the decade.
The capital structure
The company calls the plant Arsenal-2 and says it will create 3,100 direct jobs alongside more than 11,000 indirect positions. Anduril’s chief strategy officer Christian Brose described the contract as “the government buying the results of what we’re able to produce from the facility that we’ve invested in,” making clear that the Navy’s obligation is tied to output, not to the cost of construction. The source does not disclose a break fee, a termination clause, or whether the $2.9 billion ceiling includes any fixed-fee component.
The production risk
Anduril is already manufacturing torpedo tubes for the Virginia class at a California facility, addressing what Brose called urgent capacity shortfalls in the industrial base. The Baltimore yard is intended to graduate from those components to larger modules and hull sections, a step up in complexity that the prime contractors, General Dynamics Electric Boat and Huntington Ingalls Industries, have struggled to deliver on schedule. The Navy’s willingness to let a non-traditional shipbuilder assume that risk reflects how acute the bottleneck has become.
The industrial context
Virginia-class boats, nuclear-powered attack submarines capable of more than 25 knots, are the backbone of the undersea fleet. The program has been hampered by supplier gaps and workforce constraints that predate the current rearmament push. Anduril’s entry follows its $1 billion Arsenal-1 drone factory in Ohio, which began production this year, and mirrors a broader pattern of defense tech firms moving into hardware-heavy domains where the incumbents have failed to scale.
What to watch
The yard’s end-of-decade target is aggressive for a greenfield shipyard of this scope. If Arsenal-2 slips, the Navy absorbs no construction cost but loses the capacity it counted on. If it delivers, the service gains a second source for major submarine structures without having funded the build-out. The next milestone is whether Anduril can translate its California throughput into the larger, more demanding work packages the Baltimore facility is designed for.