How the US Navy prioritized readiness, and got more ships too

WASHINGTON — What happens when the chief of naval operations wants more money for readiness — maintenance, spare parts, munitions and training time — to create a more prepared fleet, but lawmakers prefer to buy more ships?

In this case, they both get their way.

Improving readiness has been the centerpiece of Adm. Mike Gilday’s work as CNO. Since 2020, he’s advocated for spending U.S. Navy dollars first on readiness, then on increasing lethality and then buying more capacity as budgets allow.

He has decried previous “maintenance holidays” the Navy took when it “made capacity king.” And he’s said that, as the U.S. grows more concerned a conflict with China could occur this decade, the Navy needs to double down on the fleet it has, rather than prioritize future ships that won’t arrive for years.

However, lawmakers see the size of the fleet as a way to measure deterrence. They also want to create the jobs generated through stable shipbuilding programs.

Defense News reviewed eight fiscal years of Navy spending — the approved budgets for fiscal 2017 through fiscal 2023, and the requested level for fiscal 2024 unveiled in March — to examine readiness spending trends during Gilday’s tenure and that of his predecessor, Adm. John Richardson. The term limit for a chief of naval operations is four years.

If Congress passes the Navy’s FY24 request as is, Gilday will have achieved a 22% increase in operations and maintenance spending over his time in office — in line with the 21% increase Richardson oversaw.

Gilday also will have overseen a 54% increase in weapons procurement spending, largely due to the nearly $7 billion request the Navy made for FY24 aimed at increasing the capacity of pivotal weapons production lines. This would compare to a 20% increase in weapons spending under Richardson.

And yet, despite Gilday’s concern that shipbuilding funds would crowd out readiness, shipbuilding spending ballooned during his tenure — up 75%, from $18.76 billion in FY21 to a requested $32.85 in FY24. This spending was essentially flat under Richardson.

That nearly doubled amount is partly due to the Columbia-class ballistic missile submarine program, designated the Navy’s top acquisition priority. For FY21, the Navy requested $4 billion for the effort, and most recently asked for $5.8 billion for FY24 as the rate of construction activity for the program accelerates.

But the increase in shipbuilding funds is also attributable to Congress, which, against Navy and Pentagon wishes, added in submarines and destroyers in some fiscal years and continued expeditionary ship production lines past the service’s plans. In fact, in FY21 Congress added one Virginia-class submarine and one Spearhead-class expeditionary fast transport, taking the request from eight ships for $19.9 billion to 10 ships for $23.3 billion.

In FY23, the current fiscal year, Congress added two Spearhead expeditionary fast transports and one Arleigh Burke-class destroyer, bringing shipbuilding from nine ships for $27.9 billion to 12 ships for $32 billion.

“I don’t think that anybody on the Hill has ever questioned the priorities” of readiness, then lethality, then capacity, Gilday told Defense News on March 28. “The friction really is the size of the fleet and adequately funding the capacity piece. So that’s been the challenge inside the top line that we’ve had.”

Gilday’s spending trends

Gilday took command as CNO in August 2019 as the Navy was nearing the end of sequestration spending caps from 2013. He also entered the job two years after a pair of fatal destroyer collisions highlighted severe training and maintenance deficiencies, and only months before the COVID-19 pandemic would wreak havoc on efforts to keep shipbuilding and ship maintenance work on track.

The labor shortages and inflation that followed intensified the challenge of improving readiness. And while the Navy has not played a direct role in the response to Russia’s invasion of Ukraine, the war has highlighted another readiness concern: the ability of weapons-makers to ramp up to meet high demand.

Even so, it’s clear Gilday did funnel more money toward select accounts aimed at making the fleet ready to fight today. While his overall operations spending increased at a similar pace as Richardson’s, under Gilday the Navy would see a 34% increase in flight-hours spending under the FY24 budget, compared to a 12% increase during his predecessor’s tenure. This “mission and other flight operations” funding line goes toward flight hours for pilots during routine training at home and missions on deployment.

The service would also see a 28% increase in ship-steaming days spending under Gilday, compared to 16% under Richardson. This “mission and other ship operations” line similarly includes ship training at home and operations overseas.

And the Navy would receive a 49% increase in spending on aviation logistics — though Richardson’s budgets actually increased spending here by 80% from FY17 through FY20, as then-Defense Secretary James Mattis focused on boosting aviation readiness rates across the services.

Though Gilday has specifically tried to improve the performance of ship maintenance availabilities, spending on depot maintenance hasn’t increased dramatically. If Congress were to pass Gilday’s FY24 request, he’ll have overseen a 14% boost in ship depot maintenance spending, which would be in line with the 15% increase Richardson recorded.

In parallel with this increased funding for depot maintenance, Gilday‘s Navy has also implemented a slew of process improvements meant to strategically spend money to keep maintenance periods on schedule.

At private yards that conduct maintenance on surface ships, the Navy has dropped from more than 7,000 delay days per year to fewer than 3,000, Gilday said in a March 28 hearing before the Senate Appropriations Committee’s defense panel.

That’s on track to drop further — below 900 days by the end of FY24 — meaning ships are coming out of maintenance closer to their planned dates.

Gilday characterized the FY24 request as fully funding ship maintenance, but said “we’re not satisfied … in terms of where we are with delay days. We definitely have work to do.”

He told Defense News the Navy is in some cases spending smarter, rather than spending more.

By law, operations and maintenance dollars are supposed to expire at the end of the fiscal year. This makes it tough to start a ship-repair period from October through December because the Navy can’t award the contracts early enough for yards to order material and assemble the workforce.

“I try to tip my hat to the Hill for giving us the authority to use the multiyear money” to carry out a pilot program meant to achieve a better flow of ship maintenance planning and execution, Gilday said. With this pilot program, ship maintenance dollars can span fiscal years, ensuring the Navy can award contracts early enough no matter the month.

Prior to 2020, the Navy was awarding ship maintenance contracts 61 days before the work started. Now, the average is 116 days, Gilday said, meaning private repair yards have more time to secure parts, materials and enough staff.

Was the fight for readiness dollars worth it?

Gilday said he has no regrets about prioritizing readiness spending.

“It absolutely has to be our first priority always,” he told Defense News. “What we have on the sea every day is what we’re going to have to fight with. And so we can never assume that making reductions in funding for people, parts, materiel [and] maintenance is going to somehow be mitigated, because it won’t. It only exacerbates the risk that operational commanders have to accept.”

Naval experts are largely supportive. Bryan McGrath, managing director at defense consultant The FerryBridge Group, told Defense News that the “CNO has to play with the hand that is dealt him, and [the Office of the Secretary of Defense] deals that hand.”

“To get a program balanced and through the wickets at OSD, the Navy almost certainly relies on Congress to round out the shipbuilding account once they take control of the process,” he added.

Bryan Clark, director of the Center for Defense Concepts and Technology at the Hudson Institute think tank, said it was “smart politically” to manage Navy budget top lines “by constraining shipbuilding and fully funding readiness.”

“With Congress willing to spend on ship construction and OSD only being willing to spend on high-end platforms, the CNO would have been unable to invest in other capabilities like unmanned” if Gilday hadn’t trimmed down shipbuilding and freed up space in his budget, Clark explained. “And since no one outside the uniformed leaders would prioritize readiness spending, this was a logical choice.”

But Brent Sadler, a senior research fellow with the Center for National Defense at the Heritage Foundation think tank, finds it frustrating that readiness and capacity were pitted against each other.

“We’re in an ‘and’ world, not an ‘or’ world. It’s not readiness or capacity; it’s readiness and capacity. They go hand in hand, and the Navy is much too small for its mission, and it doesn’t have a deep bench to pull on when we start getting into a crisis, let alone a full-on conflict,” he said.

McGrath said both readiness and capacity have fared well during Gilday’s tenure. “It seems undeniable that CNO has been able to move the needle on the accounts that are his priorities, just as it is undeniable that the Congress has moved the needle on items that are its priority — especially shipbuilding. This is not a bug in the system, but a feature.”

Though certain funding lines that contribute to readiness — depot maintenance, spare parts, training time and more — have increased over the last few years, experts had mixed opinions on whether the Navy is actually more ready thanks to that spending.

Sadler said Gilday “has done well overall in the aggregate,” including giving ships and planes better training.

“The maintenance is a mixed picture, but overall it’s basically kind of stabilized.” He added, however, that many ships and submarines find themselves waiting to go into maintenance when the private and public yards are backed up, meaning there’s a fundamental issue with repair capacity.

Clark said aircraft carriers are more ready than before, but submarines, surface ships and strike fighters are worse off.

“More money arguably kept it from being worse, but there are management and infrastructure problems contributing,” he said. “Ships aren’t kept on schedule due to operational demands — which are often not urgent since we are not actually at war — which increases costs and cascades into schedule changes and delays for other ships.”

The Navy’s approach to contracting means “yards compete for each maintenance availability individually, preventing them from making investments in infrastructure or workforce based on a reliable demand signal. And the Navy often does not have a good idea of the work needed for the availability, resulting in growth and schedule delays,” he added.

“Together, the result is fewer ships through depot maintenance per year at a higher cost.”