U.S. Navy Needs to Rethink Private Sector Industrial Base Investments

The U.S. Government Accountability Office (GAO) has published a report indicating that the Navy needs a new approach to its reliance on the private sector.

The Navy relies on contracts with private companies—the "industrial base"—to build and, in many cases, repair ships. These companies are critical to the Navy's plans to increase its fleet size and improve the fleet's readiness for missions. But ships are often ready much later than expected and at a much higher cost.

The shipbuilding industrial base has not met the Navy's goals in recent history, says the GAO. The Navy's shipbuilding plans have consistently reflected a larger increase in the fleet than the industrial base has achieved. Yet, the Navy continues to base its goals on an assumption that the industrial base will perform better on cost and schedule than it has historically. The shipbuilders have infrastructure and workforce challenges that have made the Navy's goals difficult to accomplish.

The Navy has not historically met ship repair goals either, although this has improved since 2019. The industrial base has grown since then, and representatives from some companies that GAO spoke with stated they often had more capacity than the Navy used. But companies may not