• Reached agreement to resolve Request for Equitable Adjustment (REA) on T-ATS program
• Contract value reduced from 5 to 3 vessels due to pause on T-ATS 14 and 15
• Resolution in line with previous provisions and expected REA amounts

Austal Limited (ASX: ASB) has advised shareholders that it has reached an agreement with the United States Navy to resolve Austal's Request for Equitable Adjustment (REA) in relation to the Towing, Salvage, and Rescue Ship (T-ATS) program under construction at Austal's Alabama shipyard in the USA. The T-ATS program was initially awarded in September 2021, with a fixed price incentive contract valued at US$145 million for two vessels (T-ATS 11 and 12). The contract was later expanded to a total of five vessels (T-ATS 13 to 15) with a total value of US$380 million. However, the T-ATS program experienced significant challenges, primarily due to late receipt of technical data and design discrepancies, leading Austal to treat the contract as onerous in its financial accounts. Austal lodged its REA in November 2024 to seek an equitable adjustment for the additional costs incurred. As part of the resolution process, Austal and the Navy agreed to temporarily stop work on the T-ATS 14 and T-ATS 15 ships while the REA was being discussed. The successful resolution of the REA has resulted in the pause on construction of T-ATS 14 and T-ATS 15 becoming permanent, with the construction contract now being limited to three vessels with only limited alteration on the overall original contract value. While the specific amounts agreed in respect of the REA are confidential, Austal notes that the resolution is in line with previous provisions related to the T-ATS contract as well as amounts expected to be achieved from the REA. Contingencies held at 30 June 2025 for undelivered vessels under the program were nil, and the resolution of the REA is therefore expected to have no further impact on Austal's revenue or earnings.