Amid combat operations and related efforts to clear mines and open sea lanes in the Strait of Hormuz, all while sustaining a naval blockade, Chief of Naval Operations Adm. Daryl Caudle estimates the Navy needs between $6 and $8 billion above what was budgeted for the current fiscal year “to be whole and solvent for [Fiscal Year] 26,” he told reporters at a round-table event on Wednesday.
Delivering his State of the Navy address in Norfolk, Virginia, later that evening, Caudle said more than 27,000 sailors and more than two dozen ships had supported combat operations in America’s conflict with Iran.
“Think about the scale of what your sailors accomplished,” he said. “We brought together naval forces from waterfronts on both coasts.”
In addition to operations, Caudle said costs for personnel are ballooning with what the Navy said are record numbers of reenlistments while in combat theater, which comes with unplanned bonuses to dole out and military moves to fund.
“What does that come out of legally? There’s only one place really that can come out of for me, and that’s my [facilities] readiness sustainment modernization account,” Caudle said. “That goes right to the heart of your CNO, because that’s the foundry account, and so that thwarts some of the work I’m trying to do with unaccompanied barracks and other things.”
Among Caudle’s most emphasized stateside pursuits is his “No Sailor Lives Afloat” initiative, which aims to move unaccompanied sailors living on ships into shore-based housing. In his address, he said the Navy had successfully moved more than 6,000 sailors off ships and was in the process of investing more than $375 million across 95 different construction projects for barracks and housing, chow facilities and gyms.
A Thursday report from The Guardian contained accounts, denied by the Navy, that combat spending was forcing the service to shift funds from payroll accounts, which then had to be backfilled by accounts earmarked for future spending.
Meanwhile, Caudle said the Navy had to replenish its missile stockpiles and grow in both personnel and ship production to meet readiness targets for a scenario involving multiple conflicts. Regarding increasing production of munitions including the Tomahawk and SM-6 missile, he said the military had to demonstrate stable demand with its own funding.
“What we’ve recognized is this has to be a risk-sharing venture. The way we buy down risk for them to refacilitize, recapitalize, start more shifts is to give them longer contracts,” Caudle said, adding that the goal was to standardize contracts of at least seven years. “And what we’re seeing is a fundamental shift already with those levels of commitments and orders. Tomahawk production’s up, SM-6 production’s up, and you’re already seeing the fruits of this.”
In June, the White House requested $67.1 billion in supplemental funding for the Defense Department to replenish depleted munitions and cover the cost of months of combat in Iran. In testifying before Congress in July about the request, a combative Secretary of Defense Pete Hegseth was grilled by lawmakers about the conflict, undertaken without consulting Congress, and the unclear objectives of the costly war.
Meanwhile, the defense budget request for Fiscal Year 2027 nears a historic $1.5 trillion, an increase of more than 40% over the previous year.
“I don’t think we should be offended by $1.5 trillion,” Caudle said, adding that the figure didn’t even reach the 5% of GDP that the U.S. requested NATO allies invest in their own defense.
“I mean, it takes a lot of money to go give the security, the vital national interest and security of our system, with an armed forces that we need to allow the economic machine of the United States to work most effectively,” he continued. “If there’s any plug that I would give all of you, it’s ‘I need my money,’ OK?”
