The American Navy’s latest shipbuilding award is less a vote of confidence than an admission of failure. On February 20th Fincantieri won a contract to build four Landing Ship Medium (LSM) vessels at its Marinette Marine shipyard in Wisconsin. The deal looks like business as usual. It is, in fact, a political rescue mission for a yard left reeling by the cancellation of the Constellation-class frigate program in late 2025. More importantly, it is the test case for a radical new way of building warships: outsourcing the Navy’s own oversight to a private company.
At the heart of the LSM program is the Vessel Construction Manager (VCM), a commercial entity that will act as the prime contractor. This VCM, not the Navy, will manage Fincantieri, enforce schedules and control quality. The Navy is hiring a manager to manage its managers. A request for proposals for the VCM role was issued on February 17th; a firm will be chosen by mid-2026. It will oversee not just Fincantieri but also Bollinger Shipyards, which received a contract for engineering work in September 2025. This is a quiet acknowledgment that the Navy’s procurement system is broken, plagued by the sort of constant design changes that doomed the frigate.
“The VCM approach not only accelerates construction timelines but also strengthens our industrial base by engaging multiple shipyards,” argues Rear Admiral Brian Metcalf, the Navy’s Program Executive Officer for Ships.
The model has a precedent. The Maritime Administration (MARAD) used a VCM to build five National Security Multi-Mission Vessels, which were delivered on schedule and within budget—a rare feat in American shipbuilding. The Navy is also outsourcing the design. The LSMs will be built to a blueprint from Damen Naval, a Dutch shipbuilder, whose LST 100 design was selected in December 2025. An American warship, built in an American yard, to a Dutch design, overseen by a private American manager.
LSM Contract vs. Frigate Cancellation Impact on Fincantieri
$ billions
There was little choice. The frigate cancellation threatened to devastate Marinette Marine. The shipyard, a major employer in the politically sensitive swing state of Wisconsin, had invested heavily in the project. A collapse would have been politically intolerable. The LSM contract, backed by an additional $800m in congressional funding, is a lifeline designed to keep the workforce and production lines stable. It is a solution born of political necessity as much as strategic planning. The ships themselves are urgently needed for the Marine Corps, which requires them to shuttle small units and anti-ship missiles around islands in the Indo-Pacific.
To be sure, the new approach has powerful advocates. “The VCM approach not only accelerates construction timelines but also strengthens our industrial base by engaging multiple shipyards,” argues Rear Admiral Brian Metcalf, the Navy’s Program Executive Officer for Ships. By handing a manager a mature, “build-to-print” design and empowering it to run the build, the Navy believes it can avoid repeating past mistakes. The success of the MARAD programme suggests that a commercial manager can indeed impose the discipline that government bureaucracies often lack. If the VCM can shield shipyards from the Pentagon’s endless tinkering, it might deliver ships faster and cheaper.
Yet this turn to a commercial middleman is a damning verdict on the Navy’s own procurement corps. For decades, the service prided itself on being the world’s premier ship-design and acquisition organisation. It now implicitly admits it cannot perform this core function without commercial help. The risk is that the VCM simply becomes another layer of administration, adding its own costs and complexities without solving the underlying problem of unstable requirements. It diffuses accountability. When delays or defects inevitably arise, who is to blame: the builder, the manager, or the Navy that hired them both?
The new LSMs will eventually sail to the Pacific to counter a rising China. But the most important contest is already under way in a Wisconsin shipyard. It is a battle over how America builds its arsenal. For the country’s sea power, the most telling detail is not who builds the ships, but who is now paid to watch the builders.
