Navy Spends $5.8B on Shipbuilding, Still Lays Off 3,706 Workers

The December Separation Surge

In December 2025 the Navy cut 3,706 civilian jobs — about one‑tenth of the 38,000‑strong workforce at its four public shipyards: Norfolk Naval Shipyard in Virginia, Pearl Harbor Naval Shipyard in Hawaii, Portsmouth Naval Shipyard in Maine, and Puget Sound Naval Shipyard in Washington.

Although FY 2026 NDAA § 1108 shields the yards from involuntary reductions, hiring freezes, or hiring delays, the Navy had ordered all commands to model 10 %, 15 %, and 20 % civilian cuts by Sept 30 2026. The voluntary separations therefore proceeded under existing authorities while the service signaled a shift toward private‑sector support for maintenance and repair.

GAO Report Warns Private Base Can’t Absorb Losses

The Government Accountability Office released a 100‑page study, Shipbuilding and Repair: Navy Needs a Strategic Approach for Private Sector Industrial Base Investments, to Congress on Feb 27 2025 (published May 5 2025). The report concluded that private shipbuilders lack the workforce, facilities, and surge capacity needed to take on work shifted from the public yards.

GAO found the Department of Defense spent over $5.8 billion from FY 2023 through FY 2024 on the shipbuilding industrial base, with an additional $12.6 billion planned through FY 2028. Despite that outlay, DOD still lacks a coherent strategy and coordinated leadership to turn spending into usable capacity.

The study identified three structural gaps:

1. Workforce – private yards face the same skilled‑trade shortages as public yards, worsened by security‑clearance bottlenecks for nuclear work on Columbia‑ and Virginia‑class submarines.
2. Facilities – dry‑dock space and heavy‑lift crane capacity at private sites are insufficient for the hull diameters and weights of Ford‑class carriers and Columbia‑class subs.
3. Surge capacity – commercial margins discourage keeping idle capacity for wartime surge, a role the public yards were designed to fill.

GAO recommended a single accountable leadership structure for industrial‑base investments, a comprehensive strategy with measurable milestones, and funding tied to demonstrated capacity gains rather than planned outlays.

Congress Acts to Block Cuts

In response to the December separations, Representatives introduced the Public Shipyard Workforce Protection Act of 2025 (H.R. 6793) on Dec 17 2025. The bill bars the Department of Defense from using appropriated funds to impose a hiring freeze, reduction in force, or hiring delay without cause at any public shipyard.

Legislative records show the measure was referred to the House Armed Services and Oversight and Government Reform committees. Its timing — just days after the separation figures became public — reflects swift congressional concern.

Bipartisan backing appears in earlier efforts: senators from Maine and New Hampshire introduced related legislation in December 2025, and in August 2025 Representatives Pappas and Jen Kiggans filed the Protecting Public Naval Shipyards Act, which would exempt the four yards from workforce reductions.

Supporters argue the bill preserves continuity of critical shipyard services through FY 2026, sustains fleet readiness, and prevents further disruption to high‑priority programs such as Columbia‑class submarines, Virginia‑class attack submarines, and Ford‑class carriers.

Why Contractor Backfill Falls Short

The Navy says it will rely on private‑sector contractors to fill the civilian gaps left by the VERA/VSIP wave. Industry assessments, however, highlight several limits.

A September 2025 GAO review (GAO‑25‑107152) found officials repeatedly citing “competition with the private sector for skilled labor” as a barrier to retaining Federal Wage System workers. Wage trends show the gap between service‑sector pay and manufacturing jobs such as shipbuilding narrowing, making recruitment harder. Interviews also noted a relatively young workforce that often lacks the experience needed for complex naval construction and repair.

Facility constraints further limit a contractor‑only solution. Analysts describe a “shipbuilding crisis” in which many Navy programs run behind schedule and industry leaders call for a previously rejected workforce innovation policy to address labor and capacity shortfalls. Without expanded dry‑dock space, specialized tooling, and surge capacity, private yards cannot simply absorb the workload displaced by departing civilian employees.

The administration’s April 2025 executive order, “Restoring America’s Maritime Dominance,” directs a cross‑agency Maritime Action Plan to develop recommendations for overcoming workforce challenges. Until those recommendations become concrete investments in training, wage competitiveness, and facility upgrades, the Navy’s contractor backfill strategy remains hampered by the same skill, wage, and capacity gaps that already hinder private‑sector shipbuilding.

Yard‑by‑Yard Impact

Norfolk Naval Shipyard (Virginia) – As the oldest and largest yard, NNSY anchors East Coast submarine maintenance and carrier overhaul. It supports Virginia‑class attack submarine availabilities and provides depot‑level maintenance for the Ford‑class carrier program. Workforce losses here worsen existing delays: the Virginia‑class program averages 1.2 boats per year against a two‑per‑year target, with Block V submarines years behind schedule and billions over plan. Any reduction in nuclear‑qualified mechanics, welders, or planners directly threatens the throughput needed to recover the Virginia‑class cadence and sustain Ford‑class post‑shakedown availabilities.

Portsmouth Naval Shipyard (Maine) – PNSY specializes in nuclear‑powered attack submarine overhaul, refueling, and modernization, work that demands high concentrations of workers with active security clearances and nuclear qualifications. The confirmed firing of at least ten probationary employees at PNSY, despite reported exemptions, signals fragility in the yard’s junior talent pipeline. Portsmouth’s workload centers on Virginia‑class and Los Angeles‑class availabilities; losing entry‑level nuclear artisans degrades the yard’s ability to backfill senior retirements and maintain the multi‑shift rotations required for on‑time submarine deliveries.

Puget Sound Naval Shipyard & IMF (Washington) – PSNS&IMF is the West Coast’s sole public shipyard capable of nuclear aircraft carrier and submarine maintenance. It hosts the Shipyard Infrastructure Optimization Program recapitalization effort and supports Virginia‑class and Columbia‑class submarine work alongside carrier availabilities. Workforce reductions intersect with a $26 billion shipbuilding authorization that funds one Columbia‑class boat, one Virginia‑class attack submarine, and one additional vessel — programs that all require Puget Sound’s dry dock and industrial capacity. The yard’s dual submarine‑carrier mission means separation losses reverberate across both the strategic deterrent and power‑projection fleets.

Pearl Harbor Naval Shipyard & IMF (Hawaii) – PHNSY&IMF provides forward‑deployed submarine maintenance and surface ship repair in the Indo‑Pacific theater. Its geographic position sustains operational tempo without transiting assets to the continental United States. The yard’s workforce supports Virginia‑class submarine availabilities that feed directly into AUKUS pillar‑one commitments. Private shipyards in Hawaii are limited in number and nuclear capability; the Navy’s own 100‑page report concluded they lack the personnel and infrastructure needed to absorb those losses. At Pearl Harbor, that gap is most acute: the yard’s unique combination of nuclear‑qualified personnel, dry‑dock access, and theater proximity cannot be replicated by commercial yards in the region.

Across all four yards, the separation wave strikes the three highest‑priority acquisition programs simultaneously: Columbia‑class ballistic missile submarines (12 boats, lead hull USS Columbia SSBN‑826 targeting FY 2028 delivery and 2031 patrol), Virginia‑class attack submarines (Block V already years late), and Ford‑class carriers (post‑shakedown availabilities and follow‑on construction). The Navy’s Virginia‑class program summary notes a “hollowed‑out industrial base that can’t meet U.S. Navy and AUKUS” demand — a condition the December separations deepen at every public yard.

What This Means for Columbia, Virginia, and Ford‑Class Programs

The loss of 3,706 civilian employees erodes the skilled workforce that underpins construction and maintenance of the Columbia‑class ballistic missile submarine, the Virginia‑class attack submarine, and the Gerald R. Ford‑class aircraft carrier.

For the Columbia‑class program, GAO‑24‑107732 notes shipbuilders assess roughly 350 critical submarine suppliers each year to verify they can support the Navy’s goal of serial production of one Columbia‑class and two Virginia‑class submarines annually. The program’s own description warns the first boat may deliver more than a year late and cost hundreds of millions above plan, with design and construction challenges persisting. Reduced civilian staff at the public yards that perform integration, testing, and supplier coordination heightens the risk that supplier‑capacity constraints will translate into further schedule slips for the Columbia class.

The Virginia‑class program already suffers chronic delays tied to labor shortages. Multiple sources cite the program was intended to produce two submarines per year, yet actual output hovers around 1.2 boats yearly. One analysis calls the program 410 months behind schedule, linking the slip primarily to workforce shortages and cost overruns. Another summary notes yards deliver only 1.2‑1.3 boats per year against the two‑per‑year target, even as the Navy must arm AUKUS partners and close an attack‑sub gap. GAO and CRS reports repeatedly point to chronic shipyard workforce shortages, underfunded contracts, and a hollowed‑out industrial base as root causes. The loss of 3,706 experienced civilian workers from the yards that build and maintain Virginia‑class hulls compounds these existing shortages, making the two‑boat‑per‑year ambition even less attainable without additional schedule erosion.

For the Gerald R. Ford‑class carrier fleet, the Navy seeks to increase the number of carriers in service while sustaining one Columbia‑class and two Virginia‑class submarine builds per year (with a longer‑term goal of 2.33 Virginia‑class submarines annually). Although no specific Ford‑class schedule metrics appear in the supplied material, the same labor‑shortage dynamics that impede submarine production are expected to affect carrier construction, which likewise depends on the skilled civilian workforce at the public yards for hull assembly, outfitting, and systems integration. Consequently, the workforce reductions from the December 2025 VERA/VSIP wave threatened to delay the Navy’s plans to expand the Ford‑class fleet, adding another layer of schedule risk to the service’s top acquisition priorities.