ROME – Italian state shipyard Fincantieri has signed a 1.35 billion euro ($1.63 billion) contract to build the first two of four planned U212 NFS submarines for the Italian navy.

Standing for Near Future Submarines, the NFS platforms are an upgrade on the four U212 subs Fincantieri has previously built for Italy using German technology thanks to a partnership with Thyssenkrupp Marine Systems.

The new subs will mix German technology with more Italian content than the first batch, starting with a combat management system supplied by Italy’s Leonardo – marking a first foray into the field for Leonardo.

Fincantieri’s Feb. 26 deal with the European defense-acquisition organization OCCAR follows a Dec. 23, 2020, agreement with Thyssenkrupp Marine Systems for the licensing of the submarine design, the German company said in a statement.

The U-212′s reputation for quiet propulsion and long range is based on its Air Independent Propulsion system (AIP) powered by hydrogen and oxygen fuel cells.

The NFS versions will use Italian-developed new Lithium-Ion rather than lead-acid based batteries.

Some components, including the boats’ bow sections and fuel cell units, will be produced by Thyssenkrupp Marine Systems in Kiel, Germany, the company said.

In a statement released on Friday, Leonardo said it has signed a 150 million euro contract with Fincantieri to provide combat management systems for the two submarines, as well as a simulation and training center at Italy’s Taranto naval base.

By entering the underwater CMS business, Leonardo said it was expecting synergies with its work on surface vessel systems, “with investment in innovation benefitting both product lines.”

Fincantieri CEO Giuseppe Bono said, “We are going to take a real technological leap forward compared to the submarines of the previous class, starting with the design and the combat system developed along with Leonardo, which we are in charge of integrating on-board. This will allow Italy to continue being a main actor among the limited group of countries that can build such advanced units.”

Italian planners have also introduced a new fluoropolymer coating for the hulls of the new subs, which reduces encrustation to cut down on drag, while the hydrodynamics of the vessels have been improved through adjustments to the design of the bow.

An extra antenna to provide electronic-warfare capability has been planned, while defense sources told Defense News in 2019 the new subs would be designed to be able to fire missiles from their torpedo tubes.

“The program will see major use of Italian technology and the participation of large, medium and small national firms,” the Italian Navy said in a statement.

Italy’s first batch of four U-212′s were delivered between 2006 and 2017, in parallel with Germany’s procurement of the platform.

The the next two NFS versions for Italy will be delivered between 2027 and 2029. Italy aims to buy four NFS subs in total for an overall cost of 2.68 billion euros, according to current spending plans. An option for two additional U212-type boats built under TKMS licensing in Italy is already agreed, according to the German company.

The new subs will replace its four older, Sauro-class subs which are still in service, thus maintaining Italy’s national requirement for a fleet of eight submarines.

Fincantieri announced Thursday a 245 million euro loss in 2020, prompted by a 20 percent slow down in production due to Covid, but said it expected to rebound in 2021.

Business has been boosted by the sale of two FREMM frigates to Egypt.

The two vessels sold to Egypt were originally destined for the Italian navy but diverted for a faster sale to Cairo. Fincantieri is now building two more vessels in a general-purpose format to complete Italy’s order.

Thyssenkrupp Marine Systems, meanwhile, has sold its U212 design as the centerpiece of a German-Norwegian cooperation, finalized in 2017, that’s meant to yield six new boats. The company is also in the running to sell the design to the Netherlands.

Sebastian Sprenger contributed to this report from Cologne, Germany.

Tom Kington is the Italy correspondent for Defense News.

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