A report released in late March by the nonpartisan Congressional Research Service says critical Navy supply ships built by a San Diego Bay company have skyrocketed in pricing over the past few years – even amid production delays.
The ships in question are John Lewis-class oilers produced by General Dynamics/National Steel and Shipbuilding Company (GD/NASSCO) at its shipyard across the bay from Coronado.
They build Navy auxiliaries, ships designed to support combatant vessels; sealift ships, cargo ships used for deploying military assets and for ocean transportation for all U.S. military services as well as for other government agencies; and commercial cargo vessels.
According to the Congressional Research Service (CRS), procurement costs for the oilers have jumped 54% in the last four years. In 2021, to procure one ship cost $557 million. By 2025, it was $850 million to procure one ship.
There was also a delay of around two years for the first oiler, TAO-205, to be delivered, and the report says subsequent ships in the program are expected to be delayed.
The CRS report says escalating prices and delayed production could affect the Navy’s capabilities and funding capacity.
GD/NASSCO did not respond on deadline to inquiries about costs and scheduling.
Delays were caused by several issues that the CRS report outlines, including COVID-related labor shortages and flooding at the plant, which suspended the shipbuilding process for twelve months.
In terms of cost growth, the Navy cited cybersecurity change orders that were not provided in the original shipbuilding contract, and cost growth in government-furnished equipment for the ship.
The program calls for 20 new John Lewis class oilers. So far, the Navy has received 10. The 11th and 12th ships were scheduled for completion in 2026, but the Navy did not request funding for FY2025 for additional oilers. However, they did request $227 million in cost-to-complete funding to cover the cost growth on oilers procured in prior years.
The role of these oilers is to transfer fuel so Navy surface ships at sea can extend their “operating endurance” while supporting aircraft based on carriers.
The oilers also provide other resources such as fresh water and small amounts of dry cargo.
The Navy states that the ability to rearm, refuel and re-provision our ships at sea, independent of any restrictions placed on it by a foreign country, is critical to the Navy’s ability to project war fighting power from the sea,” said the report.
Congressional Research Service report
“The Navy states that the ability to rearm, refuel and re-provision our ships at sea, independent of any restrictions placed on it by a foreign country, is critical to the Navy’s ability to project war fighting power from the sea,” said the report.
John Lewis class oilers are replacing Kaiser-class oilers that were made between 1982 and 1989. Seven of the old oilers will be retiring between 2025 and 2029.
The Navy said that fleet oilers are critical to its ability to operate in forward-deployed areas around the world on a sustained basis.
This report also comes after President Trump’s nearly two-hour address to a joint session of Congress on March 4 where he said he would “resurrect the American shipbuilding industry, including commercial shipbuilding and military shipbuilding.”
“I’m announcing tonight that we will create a new office of shipbuilding in the White House and offer special tax incentives to bring this industry home to America, where it belongs,” Trump said. “We used to make so many ships. We don’t make them anymore very much, but we’re going to make them very fast, very soon. It will have a huge impact.”
Defense Secretary Pete Hegseth announced in late February on an on-camera address that the administration wants to tackle excess spending and address the issue of fraud, waste and abuse within the Department of Defense (DOD).
There would be an 8%, or around $50 billion, cut for non-lethal programs within the DOD, but submarine programs, missile defense, drone technology and other initiatives would not experience defunding.
