Navy Secretary Weighs Outsourcing Warship Construction to Foreign Allies

Navy Secretary John Phelan announced on Tuesday that the U.S. Navy is exploring the possibility of utilizing foreign shipyards to construct warships. Speaking at the Sea-Air-Space 2026 conference in Washington, Phelan identified a critical labor capacity shortage within the domestic maritime industrial base as the primary driver for this potential shift. While the proposal remains in the preliminary study phase, Phelan emphasized that all options are being considered to meet the service's ambitious fleet expansion goals.

The Navy has already established a precedent for international cooperation through maintenance, repair, and operations contracts with shipbuilders in South Korea and Japan. These partnerships currently support vessels operating within the 7th Fleet. To further accelerate domestic production, the Navy is also revising contracting strategies to include performance-based bonuses for companies that complete projects ahead of schedule, with incentives specifically earmarked for the workforce. These measures are intended to support the administration's "Golden Fleet" initiative, which seeks to grow the current fleet of approximately 300 ships to 381 over the next three decades. By leveraging both foreign manufacturing capacity and improved domestic labor incentives, the service aims to address the persistent logistical challenges currently hindering its shipbuilding objectives.