Naval Facilities Engineering Systems Command Pacific awarded a $2.8 billion task order Friday under a previously awarded contract to Honolulu-based joint venture Dragados/ Hawaiian Dredging/Orion JV to replace Dry Dock 3 at Pearl Harbor Naval Shipyard.

The planned five-year project will construct a large new dry dock to be designated Dry Dock 5. Dry Dock 3 will become functionally obsolete once the Navy retires the last of its Los Angeles-class submarines. Built in 1942, it’s unable to service the Navy’s newer Virginia-class submarines or larger surface ships.

For decades the Navy has invested in new vessels and weapons, but it is now playing catch-up in funding the construction and maintenance of the facilities it needs. The new dry dock is part of the $21 billion Shipyard Infrastructure Optimization Program, which aims to upgrade shipyards over a span of 20 years.

“Replacing Dry Dock 3 at Pearl Harbor Naval Shipyard is a critical enabler of increased naval capability,” Pete Lynch, a Navy official who oversees SIOP, said in a news release. “This project is a key investment in increasing capacity and modernizing our nation’s public shipyards through upgraded dry docks and facilities, new equipment, and improved workflow.”

A major emphasis for SIOP is infrastructure to support nuclear-powered subs and warships. The Navy established SIOP to improve operations at the four U.S. public shipyards by updating their physical layouts, modernizing their dry docks and replacing antiquated equipment.

The Pearl Harbor Naval Shipyard, a key logistics hub for the Navy in the Pacific, is the state’s top industrial employer with more than 6,000 employees.

The Pacific has been a particularly busy theater for the Navy as it conducts “freedom of navigation operations” in the South China Sea, a critical waterway that more than one-third of all international trade travels through. Beijing considers almost the entire region its sovereign territory over the objections of neighboring countries and has built bases on disputed reefs and islands to assert its claims.

The Navy’s warships and subs have been deploying nearly nonstop around the globe patrolling sea lanes and conducting other operations. But the pace of operations takes a toll on equipment. Shipyards have struggled in recent years to maintain the Navy’s vessels, and many are backlogged.

A 2021 Government Accountability Office report warned that facilities like Pearl Harbor might not be capable of repairing battle-damaged vessels in the event of an armed conflict. In that case, ships would have to travel to the mainland for extensive repairs.

Maintenance of submarines is particularly challenging. Some military reviews have reported that a significant portion of the Navy’s fast-­attack submarines are both behind schedule on maintenance and have lost critical dive certifications.

Between 2019 and 2021 as many as three Navy submarine sailors on Oahu died by suicide while their subs were in dry dock at PHNSY, including an incident in December 2019 in which a sailor guarding the Los Angeles-­class sub USS Columbia killed two civilian dockworkers and wounded another before taking his own life. Navy investigations found that crews felt overworked in the industrial environment and complained of toxic leadership.

Demand for modernization is set to grow in the Pacific region as the Pentagon increasingly sees it as its top theater amid tensions with China. But a GAO report released in May said that the Navy’s price estimates for SIOP dry-dock projects have increased by 400% since 2018.

Shortly after the report was released, U.S. Sen. Mazie Hirono, D-Hawaii, told officials during a congressional hearing that “we need to understand what steps the Navy has taken to make sure we have better cost estimates of the projects we are undertaking. … This will be important as the Navy turns to the dry-dock replacement at Pearl Harbor Naval Shipyard, which is the next dry dock to be constructed and will require significant dredging and filling.”

Current estimates project that Dry Dock 5 will cost $3 billion to $4 billion by the time of its expected completion in 2028.