On April 9, 2025, the Navy outlined aggressive goals to boost shipbuilding capacity—one Columbia-class and two Virginia-class submarines annually, along with advancing Ford-class carriers and Flight III destroyers. Meeting these targets requires expanding supply chains and overcoming workforce shortages that have slowed progress and created delays. To address these challenges, shipbuilders are accelerating outsourcing efforts. For example, Huntington Ingalls Industries (HII) recently moved major hull sections to Eastern Shipbuilding, while Austal USA partnered with Master Boat Builders to collaborate on Austal’s current programs, such as the Landing Craft Utility 1700 series. Additionally, in July 2026, Austal USA will open a new $750 million facility in Mobile to manufacture submarine modules.
In September 2025, HII announced new facilities and partnerships across multiple states, supported by more than $200 million in Maritime Industrial Base investments this year. The company also invested $367 million in capital expenditure in 2024 (a 25% increase over 2023) to continue increasing its shipbuilding capacity, and reached a memorandum of understanding with South Korea’s HD Hyundai Heavy Industries to explore opportunities for increased production. Cerberus Capital Management announced a significant joint maritime investment strategy with HD Hyundai as well. These developments, combined with historic funding under the “One Big Beautiful Bill” and the Executive Order Restoring America’s Maritime Dominance, signal unprecedented opportunity for contractors entering naval programs.
With more material flowing through distributed production networks and the supply chain, the stakes for material management have never been higher. Shipbuilding is a material-intensive process where each destroyer or submarine requires thousands of components sourced, tracked, and issued across multiple yards. For new entrants, this complexity demands a robust Material Management and Accounting System (MMAS) capable of managing and tracking bills of materials (BOMs), aligning with master production schedules (MPSs), maintaining inventory accuracy levels, and tracking government property. Contractors must assess their internal control systems, implement strong controls, maintain their effectiveness, implement corrective actions when discrepancies occur, and provide complete audit trails from purchase order to issue and return. Without these measures, companies risk schedule delays, audit findings, financial penalties, and reduced contract awards.
Contractors preparing to enter/support naval shipbuilding or other complex, material-intensive projects should assess and revise their material management policies, deliver training to affected personnel, and implement internal audits and self-assessments to ensure compliance. Accuracy metrics must be continuously monitored, and exceptions resolved promptly to maintain confidence with auditors and customers. In today’s environment, MMAS readiness isn’t just about passing an audit, it’s about enabling throughput, protecting margins, and meeting the customers’ aggressive delivery goals. Chess Consulting has extensive experience working with major shipbuilders and their subcontractors on a wide range of matters, such as business system compliance, CAS/FAR consultation, internal and external audits, special investigations and expert testimony. In particular, we’ve assisted with the design, assessment, and remediation of contractors’ MMAS to meet government standards and prepare for DCAA audits. If you have questions or need support, our team is ready to assist.