The U.S. Navy is preparing to include nearly $2 billion in its FY2027 budget for foreign shipbuilding study and procurement efforts as it looks for ways to address delays and capacity limits in domestic naval construction.
According to USNI, the proposed budget includes about $1.85 billion for two R&D initiatives linked to the possible future construction of frigates or destroyers at overseas shipyards. The plan also covers potential joint ventures between foreign and U.S. shipbuilders.
The model follows the U.S. Coast Guard’s icebreaker acquisition program involving Finnish, Canadian, and American cooperation. Under that approach, the first vessels are built overseas before later units are constructed in the U.S. with foreign partner support and technology transfer.
The initiative is intended to bring overseas investment, shipbuilding expertise, and production know-how into U.S. naval construction programs.
The discussions come as the Navy faces schedule pressure across its newbuild programs. Recent reports said all newbuild classes are behind schedule, the Constellation-class frigate program has been canceled, and future Ford-class carrier orders are reportedly under review.
The removal of former Navy Secretary John Phelan last week was reportedly tied to concerns over slow progress in improving Navy shipbuilding performance. Defense Secretary Pete Hegseth was also reportedly dissatisfied with procurement progress.
Shortly before leaving office, Phelan said the Navy was open to overseas construction options. At Sea-Air-Space, he said all options were being considered as U.S. shipyards continue to face skilled labor shortages.
Japan and South Korea are seen as leading allied candidates for potential cooperation because of their advanced shipbuilding capabilities. Both countries have completed maintenance work for the Military Sealift Command and aim to expand that experience into future newbuild contracts.
South Korea also has experience delivering Aegis-equipped destroyers comparable to the U.S. Navy’s Arleigh Burke-class vessels. Korean shipbuilders are seeking higher-value naval work, including surface combatant contracts.
