Navy Can Now Build Ships Overseas If It Saves Taxpayers Money, But US Shipyards Take a Hit

The aptly named Ensuring Naval Readiness Act is making a big change to where the U.S. Navy buys its ships. For decades, the rule has been pretty simple: naval vessels, especially the big ones, have to be built in the U.S. This bill creates a major exception, allowing the Navy to build entire ships or "major parts" like the hull or superstructure in certain foreign shipyards. The catch? It has to save money, and it has to be done through a trusted ally.

The 'Cheaper Overseas' Clause

This isn't a free-for-all for global procurement. The bill sets two strict requirements before the Navy can send construction overseas (SEC. 2). First, the foreign shipyard must be located in a country that is either a NATO member or a defense treaty partner in the Indo-Pacific region. This keeps the work within our core alliance network. Second, and this is the part that hits the wallet, the cost of building the ship or component overseas must be less than what it would cost to build it domestically. For the busy taxpayer, this is designed to get more bang for the defense buck, potentially lowering the massive price tag on new destroyers or frigates. If the Navy can save money while still using a reliable ally, they can pull the trigger.

The China Firewall

Before any steel gets cut abroad, the Secretary of the Navy has to send a certification to Congress (SEC. 2). This certification is a hard stop: it must confirm that the foreign shipyard is not owned or operated by any company based in China or any multinational company with its home base in the People’s Republic of China. This provision acts as a clear security measure, ensuring that even when we outsource construction for cost savings, we aren't inadvertently handing sensitive naval technology or industrial control to a strategic competitor. It’s the U.S. government essentially saying, 'We'll shop around, but we're checking the ownership papers first.'

What This Means for the US Industrial Base

While the Navy gets increased flexibility and the potential for cost savings, this bill directly impacts the American shipbuilding industry. Historically, the ban on foreign construction was a protectionist measure designed to maintain the specialized skills and infrastructure needed to build and repair our fleet domestically. By removing this general prohibition, the Act creates a scenario where U.S. workers and companies could lose out on contracts if an allied shipyard can underbid them. If you work in a shipyard or a related manufacturing plant, this is the part that matters most: the work that was guaranteed to stay home is now subject to global competition, even if it's only among allies. The potential benefit of cost savings for taxpayers is balanced against the risk of gradually chipping away at the domestic industrial base that is critical for national security.