WASHINGTON — The Office of Management and Budget is considering using $1.85 billion in reconciliation funding to procure foreign-built warships for the U.S. Navy from Japan or South Korea. The move follows a Pentagon request for $1.85 billion in Navy research and development funds for "two separate study and procurement efforts" to assess allied shipbuilders’ ability to construct future cruisers, destroyers, and frigates.

An Office of Management and Budget official stated, "The fact is, no one spends $1.85 billion studying something. That money is there for procurement of assets." The official added, "In the case of frigates, that would purchase an entire frigate, depending on who the manufacturer is." The OMB envisions that hull, mechanical, and electrical structures of the first one or two ships would be produced abroad in Japan or South Korea, with combat systems integration led by an American defense contractor.

The administration is in discussions with South Korean shipbuilders Hanwha, HD Hyundai, and Samsung Heavy Industries, as well as Japanese firms Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and Japan Marine United (JMU) Corp., about potential U.S. Navy ship construction. Japan Marine United has laid the keels for two Aegis System Equipped Vessel cruisers within the past year and plans to deliver them in 2028 and 2029.

OMB officials argue the approach would introduce needed competition and capacity into the U.S. defense industrial base. "This actually gets at what we’re looking at, on adding competition and capacity in the United States. Japan and Korea are both building advanced surface combatants at a much lower cost than what we’re seeing here in the United States," an OMB official said. The official noted that Japanese and South Korean shipyards have embraced modernization and robotics, enabling faster production at lower cost.

"We just doubled the shipbuilding budget of the United States Navy. They are already one to four years behind schedule on every major program. If I just keep giving them money, they’re just going to go farther and farther behind. This is the only way to shake up the paradigm," the official said. The Government Accountability Office reported in 2025 that workforce challenges, supply chain fragility, and aging infrastructure have hindered Navy ship production despite nearly doubling the shipbuilding budget over the past two decades.

Lawmakers have expressed skepticism in recent hearings about using foreign companies to alleviate capacity pressures on U.S. shipyards.