Navy scraps Biden-era submarine contract as overhaul costs surge toward $3B

The Navy is canceling a long-delayed overhaul of the USS Boise after costs ballooned to nearly $3 billion, with Secretary of the Navy John Phelan saying the submarine no longer made financial or strategic sense to repair.

In an exclusive interview with Fox News Digital, Phelan said the Los Angeles-class attack submarine had already consumed roughly $800 million and would require another $1.9 billion to complete — despite offering only about 20% of its remaining service life. Instead, the Navy plans to redirect funding and skilled labor toward building and delivering newer Virginia- and Columbia-class submarines, part of a broader push to accelerate ship production and overhaul troubled acquisition programs.

"At some point, you just cut your losses and move on," Phelan said.

The Navy originally awarded a roughly $1.2 billion contract in 2024 under the Biden administration to overhaul the submarine, nearly a decade after it was first slated for repairs, but updated estimates later showed the total cost to complete the work had surged far beyond initial projections.

"The Boise has been pier-side since 2015, cost nearly $800 million already, and it's only 22% complete — the math really does not work," he added.

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The decision comes as the Navy faces mounting pressure to expand and maintain its fleet amid growing competition with China, which has built the world’s largest navy by number of ships. U.S. officials have increasingly emphasized the need to speed up shipbuilding and submarine production to keep pace with rising global demands.

Boise’s problems long predate the canceled contract.

The submarine last deployed in 2015 and was slated to begin a routine overhaul the following year, but delays at Navy shipyards left it waiting years for an available dry dock.

As maintenance was pushed back, the situation worsened. The submarine lost its full operational certification in 2016 and its ability to dive in 2017, effectively sidelining it from combat operations.

Despite being a frontline attack submarine, Boise remained tied up at port for years as the Navy struggled with a growing backlog of repairs across its fleet, driven by limited dry dock space, workforce shortages and competing maintenance priorities.

The overhaul originally was planned to begin in 2016 but was repeatedly delayed for nearly a decade before the Navy finally awarded a contract in 2024 — by which point the submarine had already spent years out of service.

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Even after work began, the timeline stretched further, with repairs not expected to be completed until 2029 — meaning the submarine would have spent roughly 15 years inactive by the time it returned to sea.

Over time, Boise became one of the clearest examples of the Navy’s broader maintenance and shipyard challenges, frequently cited by lawmakers and defense analysts as a case study in delays, rising costs and declining readiness.

Phelan said a key factor in the decision was freeing up scarce shipyard labor and engineering talent currently tied up in the Boise overhaul, which he said could be better used to accelerate construction of newer submarines.

"One of our big constraints in our shipyards, particularly in submarine building, is labor and engineering talent," Phelan said. "We have a lot of that dedicated to this, which we could free up and put onto the Virginia-class submarine or Columbia and try to shift the schedule left on those."

He argued the overhaul no longer made sense from a return-on-investment perspective, comparing the cost of repairing the aging submarine to building a new one.

"The Boise represents 65% of the cost of a new Virginia-class submarine, yet it only delivers 20% of the remaining service life," Phelan said, adding that equates to roughly three deployments.

The Boise, commissioned in 1992, is a Cold War-era attack submarine designed primarily for open-ocean combat, while newer Virginia-class submarines are quieter, more versatile and better suited for modern missions, including intelligence gathering, special operations and operating in contested coastal environments.

"Is it time we just simply pull the plug on that one?" Sen. Mike Rounds, R-N.D., asked during a confirmation hearing in June 2025.

Chief of Naval Operations Adm. Daryl Caudle called the situation "an unacceptable story" and "like a dagger in the heart" for the submarine force.

No public criticism immediately surfaced after the decision was announced Friday.

Phelan described the program’s failure as the result of multiple factors over more than a decade, including engineering challenges, shifting priorities and strain on the Navy’s industrial base.

"I can’t point to one thing that killed it," he said. "I think it was a combination … the complexity of the engineering, COVID impacts, and pressure on the industrial base."

The cancellation is part of a broader effort by Navy leadership to reevaluate underperforming programs and change how the service approaches acquisitions, Phelan said.

"We’re reviewing every program," he said, adding the Navy is pushing for "radical transparency" and a shift away from what he described as a culture of accepting delays and rising costs.

Phelan said the decision reflects a broader push to prioritize speed and efficiency in delivering war-fighting capability to the fleet.

"We need to be more disciplined and move out faster," he said. "The president wants things yesterday."