In January, government officials testified to Congressional lawmakers, warning that rebuilding the United States Navy won’t come cheap or quick. Congressional Budget Office’s Eric Labs told the House Armed Services Subcommittee on Seapower and Projection Forces that it could cost tens of billions annually over the next three decades.
“The Navy’s 2025 shipbuilding program is the most expensive one to date,” Labs said in his testimony. “CBO estimates it would cost an average of $40 billion per year—every year—between now and 2054 to buy the 364 new ships in the Navy’s plan.”
How money may be just part of the issues the sea service needs to overcome.
According to a February 2025 report from the Government Accountability Office, private companies remain the key components of the U.S. Navy’s ship industrial base, and augment the repair work conducted at the Navy’s public shipyards. Yet, the shipbuilding industrial base has failed to meet the service’s goals in recent years.
The Shipbuilding and Repair: Navy Needs a Strategic Approach for Private Sector Industrial Base Investments report found that vessels are being delivered much later than expected and at a much higher cost. Moreover, the Navy has failed to meet ship repair goals, and the situation hasn’t improved since 2019.
“DOD has invested billions to support the shipbuilding industrial base—with plans for investments in ship repair. A strategy and coordinated leadership around its industrial base efforts could ensure the Navy is getting what it needs from these investments,” the watchdog stated.
The GAO called for the Navy to make a “strategic approach” for its investments.
U.S. military officials have warned that China is now on pace to surpass 400 ships in its fleet, while the U.S. Navy has just 296 ships in service, the lowest number since before the First World War more than a century ago.
Last year, the U.S. Navy saw six new ships commissioned, with 15 ships decommissioned, resulting in a net loss of nine. The fiscal year 2025 (FY25) budget plan calls for six new ships this year, while decommissioning 19, for a net loss of another 13.
Key Infrastructure and Workforce Challenges Remain
Several factors are impacting both shipbuilding and ship repair. In the case of the former, aging infrastructure remains an issue as does a lack of “physical space” within the shipyards. That has resulted in a lack of capacity for any unplanned maintenance work, including emergent repairs.
Likewise, there are now an insufficient number of workers to meet the demand for shipbuilding, coupled with a lack of recruitment and retention problems in place. That has resulted in an inexperienced staff. That also impacts the abilities to repair the U.S. Navy’s ships as the repair workload could exceed workforce capability, notably in “certain fleet concentration areas,” and that has required some work to be shifted to other locations.
“The Department of Defense (DoD)—specifically the Navy and Office of the Secretary of Defense (OSD)—spent billions to support the shipbuilding industrial base. This included funding for infrastructure and workforce improvements for shipbuilders and their suppliers,” the GAO added. “But it has yet to fully determine the effectiveness of that support (i.e., its return on investment), though it has taken steps to do so. More specifically, DOD spent over $5.8 billion on the shipbuilding industrial base from fiscal years 2014 through 2023.”
The Pentagon now has plans to spend an additional $12.6 billion through fiscal year 2028 (FY28).
Better Coordination Needed
The government watchdog further suggested that the U.S. Navy and OSD have failed to fully coordinate shipbuilding investments to prevent duplication or overlap in spending. Already, the U.S. Navy and OSD have come up short in coordinating investment efforts such as what is being spent on submarines vs. surface ships, even as both “make related investments in workforce and infrastructure for these ship categories.”
The service has also not fully established the necessary performance metrics, including any measurable targets that could be linked to the agency’s goals, which could allow for better evaluation of the effectiveness of these investments.
“Without better visibility across investments and established performance metrics, the Navy and OSD cannot ensure their investments in the shipbuilding industrial base are an effective use of federal funds to help build a larger fleet,” the GAO suggested.
Better Strategy Needed for Managing Ship Industrial Base
The GAO report found that there currently lacks any overall strategy that could guide management of the ship industrial base, and that has hindered the service’s efforts to address multiple challenges. That has included the changing plans for future work, as the U.S. Navy continues to struggle to provide industry with a “stable workload projection,” as plans for building and repairing ships now vary year to year. That continues to hinder efforts to encourage the industry to invest in needed infrastructure.
There are also competing priorities, even as the service seeks to increase opportunities for competition in shipbuilding and repair while “simultaneously seeking to protect existing companies.” The GAO warned that these priorities are at odds, and while a more competitive environment could help expand the industrial base, some companies may struggle to remain viable if they fail to win contracts.
“Developing a ship industrial base strategy would help the Navy better address these challenges to improve the likelihood of achieving its shipbuilding and ship repair goals,” the GAO further emphasized.
GAO Recommendations
The government watchdog offered six recommendations, with five directed to the Department of the Navy and one to the DoD.
To the Secretary of Defense, the GAO said the Pentagon should “ensure that the Office of the Under Secretary of Defense for Acquisition and Sustainment and the Secretary of the Navy regularly coordinate on industrial base support investments, to include collecting and sharing relevant data.”
To the Secretary of the Navy, the watchdog called for the sea service to require the Commander of Naval Sea Systems Command (NAVSEA) to update and implement its policies to require the Contracts Directorate to centrally collect data for shipyard investment incentives from the contracting officers and its Program Management Office’s contracting officer’s representatives to track and monitor incentive efforts on an ongoing basis. In addition, new performance metrics should be developed to assess the programmatic and aggregate effort on the ship industrial base and its investments.
The Secretary of the Navy should further ensure that grant funding or other support efforts that are provided to the ship repair industrial base are informed by analysis that identifies the required infrastructure capacity needed for surface ship repair. The GAO called for the secretary to develop a ship industrial base strategy that would align with the National Defense Industrial Strategy, while adhering to the “desirable characteristics of a national strategy.”
Finally, the Department of the Navy was called to evaluate how to ensure ASN (RD&A) has as the line of authority it needs to carry out its responsibilities for acquisition and sustainment, including repair. GAO cited NAVSEA’s Director for Surface Ship Maintenance, Modernization and Sustainment to fall under PEO Ships’ authority as an example.
The Department of Defense did not provide formal comments on the GAO’s report, while the Navy noted in draft comments that it generally concurred with the substance of the recommendations and suggested one of the six recommendations should include additional parties within the Navy. GAO agreed and adjusted the recommendation accordingly.
