$269M first hull: TOTE picks Hanwha's Philadelphia yard to build a Navy Medium Landing Ship

The money

Two contracts sit on top of each other. The Navy’s piece is contract N0002426C2421, signed July 13 by Naval Sea Systems Command headquarters ^[3]. Federal award data list it as a firm-fixed-price definitive contract for commercial services, competed under full and open competition, with one offer received and $2.206 billion obligated at signing ^[3]. Its period of performance runs to Sept. 30, 2031 ^[3]. TOTE describes the same award as $2.2 billion “for Vessel Construction Management services for the new construction of up to eight (8) Medium Landing Ships” ^[2].

The Hanwha award is the second layer: one ship at $269 million, chosen through a request for proposals TOTE sent to qualified U.S. yards in July ^[1]. TOTE said Hanwha won “based on its competitive pricing and acceptance of TOTE Services’ subcontract terms and conditions” ^[1]. Neither TOTE nor the Navy has published the price of the three option ships or the subcontract’s pricing type.

Where does Medium Landing Ship money come from?

The largest LSM appropriation on the public record is in the 2025 reconciliation law. Section 20002 of Public Law 119-21 provided $1,803,941,000 “for procurement of Landing Ship Medium” and $160 million for LSM advance procurement, both available until Sept. 30, 2029 ^[5]. The same section paid for a second Virginia-class submarine in fiscal 2026 and two additional DDG-51 destroyers ^[5]. Topline Report covered the section’s unmanned surface vessel money in its MUSV brief.

The annual bills carry nothing for the ship this year. Neither the House-passed H.R. 8800 nor the Senate committee’s S. 4784 includes a Medium Landing Ship line in its fiscal 2027 Shipbuilding and Conversion, Navy table; the amphibious lines in both are the LPD Flight II and LHA Replacement ^[6, 7]. No public document ties the TOTE contract to a particular appropriation.

The programs

The LSM is meant to carry Marines, vehicles and supplies between islands and along coasts, chiefly in the Indo-Pacific, according to gCaptain ^[8]. The services plan a 35-ship fleet ^[1].

Three yards are in the picture. Hanwha is the first selected ^[1]. TOTE says it “continues productive contract discussions with Bollinger Shipyards and Fincantieri Marinette Marine, both directed shipyards under the VCM contract,” and expects both to build part of the fleet ^[1]. The Inquirer described the Louisiana and Wisconsin yards as already among those building the ships ^[9]; TOTE’s release does not announce subcontracts for either.

TOTE’s July release named its own subcontractors on the technical side: Leidos Gibbs & Cox, The McHenry Management Group, MAD Security and Damen ^[2].

What changes for LSM equipment suppliers?

Suppliers should expect to deal with TOTE as well as the yards. The firm says its job includes standardizing configuration across the fleet and using block buys to secure favorable pricing across three domestic builders ^[1]. In July it said it would handle supplier engagement alongside shipyard selection and construction planning ^[2].

What the award means for Hanwha Philly Shipyard

For the Philadelphia yard, this is the first Navy hull. The Inquirer reported it will be the first Navy vessel built in Philadelphia since the Philadelphia Naval Shipyard closed in 1995 ^[9]. Hanwha bought the yard in December 2024 ^[8], and gCaptain reported that HDUSA announced the same week that it is taking a controlling stake in the shipyard ^[8].

The yard already works under TOTE. It built the National Security Multi-Mission Vessels, training ships TOTE manages as VCM for the Maritime Administration; four of five have been delivered and the fifth, Golden State, is expected in 2027 ^[1, 8]. Hanwha told the Inquirer it has spent $350 million on the yard since 2024 and plans another $400 million for a dry dock, a training center and more production sites ^[9]. The yard employs about 2,300 people and Hanwha says it wants 4,000 or more ^[9].

“Since early this year, HDUSA personnel have been in Philadelphia working to ensure the shipyard is ready for naval work,” said Tim Glinatsis, HDUSA’s senior vice president of program management ^[1].

The politics: how the VCM model got into law

Congress wrote the arrangement into statute. Section 129 of the fiscal 2026 NDAA, Public Law 119-60, directs the Navy secretary, after the award of the LSM lead ship, to “seek to enter into an agreement with an appropriate vessel construction manager” to contract for “not more than 8 additional landing ships” ^[4]. Those ships must be nondevelopmental and use the lead ship’s design or one derived from it ^[4]. The same section points the Navy at VCMs for light replenishment oilers (TAO-L) and allows them for auxiliary and support vessels ^[4]. TOTE’s release does not say how the Hanwha hull relates to the lead ship the statute describes.

A separate provision, Section 127, lets the Navy contract for up to 15 Medium Landing Ships if the secretary certifies 30 days ahead that the deal saves money against annual contracts and that the design is stable ^[4]. That authority ends Sept. 30, 2029 ^[4].

The fiscal 2027 bills would push the model further:

• Senate Section 1013 would change “not more than” to “not fewer than” in the eight-ship VCM clause, turning a ceiling into a floor, and would extend the optional VCM authority to unmanned vessels and other ships outside the battle force ^[6].
• Senate Section 123 would require the Navy, if it buys cable laying and repair ships, to seek a VCM agreement and use commercial designs ^[6].
• House Section 3665 would order an assessment of commercial shipbuilding practices, naming “the vessel construction manager model used to construct the National Security Multi Mission Vessel Program” as one to evaluate ^[7].

None of the three is law. All depend on a House-Senate conference on H.R. 8800 and S. 4784.

TOTE frames the award as proof of speed. “This award shows the speed at which the VCM model can move from RFP to contract,” said Jeff Dixon, TOTE’s president ^[1]. He credited the Navy’s Portfolio Acquisition Executive for Maritime (PAE Maritime) for “removing longstanding barriers to execution” ^[1]. The Inquirer reported that the TOTE system is designed to hold off all but the most necessary changes once building begins, an answer to change orders that Navy officials have blamed for delays and overruns ^[9].

Next milestone: when do the other LSM yards get contracts?

TOTE has not given a date for awards to Bollinger or Fincantieri Marinette ^[1]. The firm dates on the record are the ones it set itself: a construction start in the fourth quarter of 2027 at Philadelphia and a first delivery in 2030 ^[1]. The Section 127 contract authority and the reconciliation money both run out on Sept. 30, 2029 ^[4, 5]. Whether the three Hanwha options are exercised, and at what price, has not been disclosed.