Austal said it reached an agreement with the United States Navy to resolve its request for equitable adjustment (REA) relating to the towing, salvage, and rescue ship (T-ATS) program at the company’s Alabama shipyard.
The program, awarded in September 2021, was Austal’s first steel shipbuilding contract for the US Navy. It began as a fixed-price incentive contract worth $145 million for two vessels (T-ATS 11 and 12). Options exercised later increased the order to five ships (T-ATS 13 to 15), bringing the total contract value to $380 million.
The company did not disclose financial details of the settlement, but said the outcome aligned with provisions already made for the contract.
It added that no contingencies were held for undelivered vessels as of June 30, 2025, and the agreement was not expected to affect revenue or earnings.
The company had earlier reported delays and cost increases linked to late receipt of technical data and design discrepancies, and classified the contract as onerous in its financial accounts. Austal submitted its REA in November 2024, and construction of T-ATS 14 and 15 was temporarily paused during negotiations.
Under the agreement, the suspension of work on T-ATS 14 and 15 becomes permanent, reducing the contract to three vessels. Austal said the resolution involves only limited changes to the overall contract value.