Austal (ASX:ASB) has reached an agreement with the US Navy to resolve its request for equitable adjustment (REA) in relation to the Towing, Salvage, and Rescue Ship (T-ATS) program under construction at its Alabama shipyard in the US, according to a Wednesday Australian bourse filing.

The company said that the T-ATS program, awarded in September 2021, was Austal's first US Navy steel vessel contract, which was initially valued at $145 million for two ships. It expanded to five ships worth $380 million. The program faced major delays from late technical data and design issues, and has been deemed onerous in Austal's financial accounts.

Austal said it has been in discussions with the US Navy to seek an equitable adjustment for the additional costs incurred in the program and lodged its REA in November 2024. As a part of this process, Austal and the Navy agreed to temporarily stop work on the T-ATS 14 and T-ATS 15 ship construction while the REA was being discussed.

The company added that the Navy's resolution of the T-ATS REA makes the pause on T-ATS 14 and 15 permanent, reducing the contract to three vessels with minimal change to its overall value, and while the details remain confidential, the outcome aligns with prior provisions and expectations.

With no contingencies held as of June 30, the REA resolution is not expected to affect Austal's revenue or earnings, the filing added.

The company's shares rose 2% in recent Wednesday trade.