Navy ships may now be built abroad—if it's cheaper and allied.
S. 406 — Ensuring Naval Readiness Act · Filed by Mike Lee (R-UT) · 1 cosponsor · Introduced Feb 5, 2025 · Referred to committee
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What it does
This bill creates an exception to the federal ban on building Navy ships in foreign shipyards. It allows construction abroad only if the foreign shipyard is in a NATO country or an Indo-Pacific ally with a U.S. defense treaty, the foreign cost is lower than domestic cost, and the Navy certifies the yard is not Chinese-owned or controlled. The bill benefits defense contractors and shipyards seeking cost savings and operational flexibility; it potentially harms domestic shipyard workers and the domestic naval industrial base.
Why we flagged it
The bill's operative mechanism is a narrow exception to a statutory prohibition, framed as a readiness measure but functionally a cost-reduction authorization that shifts naval construction work from domestic to allied foreign yards. It is industrial policy, not a broad readiness mandate.
What the text implies
- Certification requirement (subsection (b)(3)) creates a veto point for the Navy but does not require congressional approval before construction begins — Navy self-certifies and Congress is notified post-hoc, limiting legislative oversight.
- Cost comparison in subsection (b)(1)(B) is measured against domestic shipyard cost, not against other foreign options — creates incentive to use cheapest allied yard regardless of strategic redundancy or supply-chain resilience.
The full analysis lists 4 implications of this text.
Who stands to gain
Foreign shipyards in NATO and Indo-Pacific allied nations; Defense contractors with international supply chains; U.S. Navy (via lower construction costs)