US Defense Bill Draft May Ease Ban on Foreign Construction of Naval Auxiliary Vessels

A draft US defense bill for fiscal year 2027 signals a potential shift in policy regarding the construction of naval vessels abroad. The proposed legislation, released by the House Appropriations Defense Subcommittee, seeks to narrow the long-standing ban on foreign shipyards building US Navy ships. The restriction would primarily apply to "covered ships," defined as commissioned battle force ships included in the Navy's official fleet inventory.

“

The term “covered ship” refers to a commissioned battle force ship that is included in the battle force count of the Naval Vessel Register.

Under the proposed language, auxiliary vessels not classified as battle force ships, such as strategic transport ships, bulk fuel carriers, and hospital ships, may be exempted from the ban on foreign construction. This marks a departure from previous legislation, such as the FY2026 appropriations bill, which indicated that "any naval vessel" or major components could not be built in foreign shipyards. The current draft, if passed as is, could allow the US to utilize foreign shipyards for vessels operated by civilian crews and not designated as official warships.

This potential policy change is noteworthy given the US Navy's substantial budget request for FY2027, which includes funding for 16 auxiliary ships alongside 18 battle force ships. The total naval ship construction budget request amounts to approximately $65.8 billion. Earlier in June, the House Armed Services Committee approved an amendment that prohibits using authorized funds for battle force ships built in foreign shipyards, reinforcing the distinction between combat vessels and support ships.

“

None of the allocated funds could be used to build “any naval vessel” or major components in foreign shipyards.

While the amendment aims to prevent the overseas construction of auxiliary ships operated by civilian entities, the overall framework of the draft bill suggests a continued openness to foreign construction for certain types of naval support vessels. This development could present opportunities for international shipyards, such as Hanwha Ocean in South Korea, which has facilities capable of constructing such vessels.

“

What is noteworthy about this shift is that the US Navy sought a substantial budget for the construction of auxiliary vessels in its FY2027 budget request.