The announcement came Wednesday evening through a terse social media post from Sean Parnell, Hegseth's spokesperson, who offered no explanation for the sudden departure. Undersecretary Hung Cao, a former Virginia Senate candidate and special operations veteran, will serve as acting Navy secretary.

According to The New York Times, Phelan's tenure was "marred by feuds with senior leaders throughout the Pentagon, including Defense Secretary Pete Hegseth and Deputy Defense Secretary Stephen Feinberg." The disputes centered on fundamental disagreements over the Navy's struggling shipbuilding program and broader military priorities.

Feinberg had grown increasingly dissatisfied with Phelan's handling of the Navy's major shipbuilding initiative and had been systematically stripping responsibilities from the Navy secretary, a congressional official told the Times. The deputy defense secretary's intervention in naval affairs represented an unusual breach of Pentagon hierarchy that signaled Phelan's diminished standing.

Despite being a significant contributor to Trump's 2024 campaign, Phelan's political connections couldn't shield him from the internal power struggle. A senior administration official told NBC News that President Trump and Hegseth "agreed new leadership at the Navy is needed," though neither provided specific reasons for the decision.

Phelan entered the role as an outsider—just the seventh non-veteran to serve as Navy secretary in the past 70 years. His background as a billionaire financier rather than military service member put him at odds with Pentagon traditionalists from the start. The Senate confirmed him in March 2025 by a 62-30 vote after contentious hearings focused on his qualifications for the role.

The timing of Phelan's departure highlights the Pentagon's evolving priorities under Hegseth's leadership. The defense secretary has made clear his intention to prioritize what he calls "warfighting capability" over other considerations, a philosophy that has put him at odds with officials focused on broader institutional concerns.

The shipbuilding program at the center of the dispute represents billions in defense contracts and the Navy's long-term strategic capabilities. Phelan had pushed for aggressive expansion of the fleet, while Feinberg favored a more measured approach focused on existing programs. The disagreement reflected deeper philosophical differences about military priorities and spending.

Phelan's departure also comes amid broader tensions between Trump appointees and career military officials over the administration's defense policies. The Washington Post reported that Phelan "clashed repeatedly" with Hegseth over multiple issues beyond shipbuilding, suggesting fundamental incompatibility between the two leaders.

Hung Cao, who will serve as acting secretary, brings a different profile to the role. A Navy veteran with special operations experience, Cao ran unsuccessfully for Senate in Virginia and has been a vocal supporter of Trump's military policies. His appointment signals Hegseth's preference for leaders with combat experience over business backgrounds.

The Pentagon's handling of the departure follows a familiar pattern: sudden announcement, minimal explanation, and immediate replacement with someone more aligned with current leadership priorities. This approach has characterized several recent high-profile firings across the Defense Department.

Industry observers note that the constant turnover in Navy leadership creates uncertainty for defense contractors and long-term planning. Major shipbuilding projects require years of consistent oversight and clear strategic direction—conditions that become difficult to maintain with frequent leadership changes.

For Hegseth, Phelan's removal represents another step in consolidating control over Pentagon operations. The defense secretary has made clear his intention to prioritize what he calls "warfighting capability" over other considerations, a philosophy that has put him at odds with officials focused on broader institutional concerns.