General Dynamics Corporation ( GD ) shares are trading higher after the company announced on Wednesday that its business unit, General Dynamics Electric Boat, has been awarded a $1 billion undefinitized contract modification by the U.S. Department of Defense.

The funding will be used to purchase long lead-time materials for the Virginia-Class Block VI submarines, a component of the U.S. Navy’s submarine fleet.

The contract modification aims to ensure the necessary resources for high-rate production of these advanced submarines.

Mark Rayha, president of General Dynamics Electric Boat, emphasized the importance of consistent funding for the submarine industrial base, noting that the contract modification signals the need for investments in production capacity and materials to meet the Navy’s growing demands.

“Consistent funding for the supply base is essential to achieve the high-rate production the Navy requires of the entire submarine enterprise,” Rayha said.

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Virginia-Class submarines, designed for modern warfare and special operations, will continue to play a key role in national defense. General Dynamics Electric Boat is the lead contractor in their construction, working closely with HII’s Newport News Shipbuilding.

Additionally, earlier this month, General Dynamics Information Technology expanded its collaboration with Amazon Web Services to enhance federal agency missions.

The new agreement focuses on cybersecurity, artificial intelligence, and cloud migration, advancing the digital transformation of government operations.

Price Action: GD shares are trading higher by 0.92% to $270.00 at last check Wednesday.

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