GAO: Navy’s $21M Shipyard Modernization Plan Grows Beyond $200M

The expansion reflects more than inflation in construction costs. Moldafsky says the original estimate left out major items like utilities and roads and didn’t adequately account for cost sensitivity or escalation. He says no one factor drove the increase: Projects became larger, new work was identified and construction costs rose, including pandemic-era volatility in fuel, lumber, concrete and steel.

“It was the maturation of the scope and cost of the projects, including construction and engineering requirements, while keeping the shipyards running, that drove the longer schedule and growth in cost estimates,” says Moldafsky.

In May, Navy officials told the House Armed Services Committee that SIOP had completed 54 projects totaling more than $1.4 billion, with another 43 worth $6.3 billion under contract. The FY 2027 budget allocates $1.8 billion to the program.

SIOP is now planned to run in three overlapping blocks spanning decades. Short-term work is focused on projects with the most mature areas, including drydocks and docks, while later construction extends into the 2070s. The last projects currently planned are not scheduled to be completed until after 2080, although officials told GAO that the timelines remain rough estimates.

Escalation of dry dock costs

Three new dry dock projects at Portsmouth Naval Shipyard in Maine, Pearl Harbor Naval Shipyard and Intermediate Maintenance Facility in Hawaii and Puget Sound Naval Shipyard and Intermediate Maintenance Facility in Washington are the Navy’s largest infrastructure projects, according to GAO, with a combined estimated cost of $21.7 billion.

In Portsmouth, a project under construction since 2021 to expand Dry Dock 1 for Virginia-class submarines now has $2.46 billion in permit applications and is expected to be completed by May 2029. The constrained island site requires massive concrete floor monoliths to be built about 200 miles away and driven into the shipyard.

Construction is progressing on the Dry Dock 5 project at Joint Base Pearl Harbor-Hickam in Hawaii by 2025. The SIOP project will expand the Navy’s ability to overhaul, repair and modernize submarines.

Photo: US Navy/Courtesy DHO Joint Venture

In a June 2025 Senate hearing, Acting Chief of Naval Operations Adm. James Kilby, said the Portsmouth project was on track. He compared rebuilding a working shipyard to “ripping out bays one and three” at a Jiffy Lube while continuing to work on bay two.

According to GAO, the costs of the Portsmouth and Pearl Harbor dry dock projects combined have increased by more than $2.5 billion over the originally requested amounts. These increases contributed to major project reviews and broader shipyard plans.

Lessons from Portsmouth and Pearl Harbor led the Navy to bring contractors into subsequent projects sooner, Moldafsky says. The Puget Sound multi-mission dry dock is on a scale the Navy says has not been built in the United States in 60 years, making industry input in logistics, engineering and assembly especially important.

Feedback from contractors about site preparation and staging led planners to decide to demolish one of the shipyard’s largest buildings, work that wasn’t originally planned, Moldafsky added.

Puget Sound is the largest of the three projects. Plans include a new dry dock capable of supporting Virginia-class submarines and Ford-class aircraft carriers, along with the demolition and relocation of an existing dry dock, piers and critical facilities. Site preparation demolition is scheduled for 2027 and drydock construction is scheduled for 2030, with completion scheduled for 2038. The project carries $14.76 billion in requested authorization in the fiscal year 2027 budget.

ENR reported in June that the dry dock was estimated to cost between $7 billion and $10 billion as part of a broader $14.8 billion Puget Sound modernization. NAVFAC was also preparing a multiple-award construction contract with a ceiling of up to $30 billion for the dry dock and other shoreside work at the SIOP.

Beyond those three dry docks, 140 construction projects are already completed, underway or advanced enough in design to enter budget requests over the next two to three fiscal years, according to GAO. They total about $33.45 billion, with Puget Sound representing 50 projects and about $19.56 billion. The broader projection of $200 billion includes work expected over the course of the five-decade program.

The planning and development of the project ultimately took more than eight years. GAO attributes the longer schedule in part to the Navy not fully accounting for the complexity and uncertainty of planning numerous large projects at four operating shipyards.

Congress seeks cost and schedule details

Congress had already requested additional information. In April, Rep. Ed Case (D-Hawaii) secured language from the House Appropriations Committee ordering the Navy to provide long-term cost and schedule information for planned offshore production facilities at each public shipyard and identify steps that could speed construction.

However, lawmakers still do not receive consolidated and standardized information showing SIOP’s full program costs, spending to date, remaining funding requirements, baselines and schedule risks, GAO found.

The watchdog recommended that Congress consider requiring standardized annual reports. It also made three recommendations to the Navy to periodically reassess the SIOP, review whether resources remain sufficient, and improve records management responsibilities. The Navy agreed with all three.

Moldafsky says the Navy is in the final stages of approving a cost and schedule baseline for the full SIOP program. GAO found, however, that the Navy has not established how it will periodically reassess the program’s goals and resources as construction extends into the 2080s and beyond.