Navy Secretary Addresses Waste and Inefficiency in Congressional Hearing

During a hearing with the House Budget Committee on Wednesday, U.S. Navy Secretary John Phelan highlighted issues related to wasteful spending within the Navy.

Phelan, along with Acting Chief of Naval Operations James Kilby, discussed the Navy’s large acquisition contract system, which employs over 56,000 individuals but averages only two contracts per employee each month. Phelan, who has a background in finance, is aiming to reduce inefficiencies and prepare the Navy for effective military operations.

He noted that in 2024, the Navy managed a total of 217,000 contracts, raising questions about its operational efficiency.

“Honestly, if you inspect the contracts closely, they are lacking,” Phelan remarked during the hearing. “We don’t have control over intellectual property. Repairs are often impossible, and the penalties for poor performance are weak. These are aspects we are determined to improve.”

Phelan has already eliminated several Navy programs in April as part of a cost-saving initiative. According to reports, he has expressed interest in reducing overall workforce numbers but wants to keep essential positions.

He also committed to a financial audit of the Navy, even as the Pentagon has struggled with similar audits in the past. The Department of Defense budget is projected to exceed $1 trillion in 2026 as various military branches compete for funding.

“Accountability goes beyond just regulations. It’s fundamental for building a stronger, more efficient Navy and Marine Corps,” Phelan stated. “With my leadership, the Navy will strive for clean audits like the Marines have achieved.”

The Navy is currently facing challenges with overspending and a cumbersome contract system, all while trying to expand its presence in a rapidly evolving situation in the Pacific, particularly concerning China.

Moreover, the Navy has had difficulties maintaining existing ships, while new vessels are experiencing considerable delays—some contracts extending delivery times by up to three years. China’s shipbuilding capabilities continue to advance, presenting a competitive edge. In 2020, the U.S. Navy had 360 ships, compared to China’s 296, according to a recent report.

Phelan and Kilby intend to refocus efforts toward shipbuilding in alignment with directives from President Donald Trump to boost production levels.

“I oversee three critical areas that guide the Navy and Marines. These include enhancing shipbuilding, fostering a culture of accountability and innovation, and improving the welfare and training of our personnel,” Phelan conveyed during the session.