A new $14 billion contract with General Dynamics Corp.'s Electric Boat unit and Northrop Grumman Corp. will double submarine production to two annually and save and create thousands of jobs amid the recession, officials said Tuesday.

Representatives of the U.S. Navy and the two companies, along with labor union leaders and members of Connecticut and Rhode Island's congressional delegations, hailed the contract at Electric Boat's shipyard in Groton. They called it critical to the region's economy and for national security as China and other countries build submarines..

"As the largest submarine award in our nation's history, this award is historic," Electric Boat President John Casey said.

The contract is for eight more Virginia class submarines. The Virginia class is the first U.S. Navy warship designed in the post-Cold War era..

Connecticut Rep. Joe Courtney says it means that submarine production will double to two ships a year beginning in 2011 at EB and Northrop Grumman's shipyard in Newport News, Va..

China is building more than three submarines per year "and they are of increasing quality," said Independent Sen. Joe Lieberman of Connecticut..

The new contract builds on an existing partnership between Electric Boat and Newport News, which currently builds one submarine a year for the Navy..

The nation's two submarine makers had warned of potential job cuts earlier this month amid the economic downturn unless the Navy placed additional ship orders..

In addition to stabilizing the work force, the contract will lead to at least 1,000 new jobs over several years at Electric Boat, company officials said. Another 500 to 750 jobs would be created by 2011 at Northrop Grumman, they said..

"It's really one of the first pieces of good news economically we've had in a long time," said Sen. Christopher Dodd, D-Conn..

Electric Boat employs more than 10,000 workers in Groton and North Kingstown, R.I., while Northrop Grumman has nearly 3,000 workers in Newport News..

The Navy is facing pricier ships, as contractors pass through higher material costs caused by the recent commodities boom..

The Navy has spent about $12.6 billion for the first 10 submarines and is seeking to lower the cost of each submarine by $200 million by building two per year instead of one..

That effort also serves to strengthen the Navy's industrial base by allowing shipbuilders and their vendors to plan years ahead and maintain jobs.