The Navy. This service among all 5 is probably the most important not only from a war fighting point of view, but in terms of foreign policy. However, the Navy has made a number of grave errors in recent history which must be fixed.
1. Cancel the Littoral Combat Ship. Between 2004 and 2011, the Navy ran a contest between General Dynamics and Lockheed Martin for a contract to develop the Littoral Combat Ship. Basically, the LCS is meant to get in the shallows and chase down pirates and other hostiles, hunt mines, and hunt subs. In 2011 the Navy asked Congress purchase both designs, this has since been approved. The price for a single LCS is about 450 million dollars. The LCS also uses "modules" for specialized tasks like ASW, whcih can switched out for other modules to handle other tasks. However, as of 2011 not one of the "modules" supposed to be used in the LCS has become operational. At the same time the missile meant to be used by the LCS, the XM501 has been canceled, which takes away a good deal of the LCS's firepower. At the same time Huntington Ingalls has produced a frigate design based of the Coast Guard's National Security Cutter, called "Patrol Frigate 4921". This design offers several advantages over the LCS, better handling in heavy seas, longer range, slightly heavier armor (armor does matter in the littorals), greater firepower. All that is required is upgrading the radar and electronics to Naval standards, upgunning the 57mm cannon to a 76.2mm or a 127mm gun, adding several 25mm chain guns for close in fighting, and the addition of a towed sonar array.
2. Cancel the Zumwalts. Another Navy boondoggle is the Zumwalt-class of destroyers. The Zumwalt-class have an emphasis on land attack, while at the same time handling the duties of a regular destroyer. Originally, there were supposed to be 32 Zumwalts, as of 2012 there will only be 3 Zumwalts built. On top of this the Navy has stated that they no longer want the Zumwalts, and they would rather have more Arleigh Burkes. Also, in this instance quantity over quality should be the mantra, because destroyers are exponentially more valuable. Thus, the loss of one not as capable destroyer of which there are many, would not be felt as much as the loss of an extremely capable destroyer of which there are few. The cost of a single Zumwalt is 3 billion dollars, at the same time 5 Arleigh Burkes can be purchased for the same amount. There are also concerns that even though the Zumwalt is equipped for the land attack role, it will be unable to fufill it's duties as it pertains to naval fire support. In this instance the solution would be simply to purchase more Arleigh Burkes rather than the Zumwalt-class.
4. During the Cold War the U.S. was the best in the world at anti-submarine warfare (ASW), and had the best sub force in the world. However, since the so-called "Peace Dividend" sub force hgas dropped from 93 SSNs and 33 SSBNs, to 53 SSNs, and 14 SSBNs in 2011 (this does not include 4 SSBNs converted to SSGNs.). Some of these cuts are understandable, as the collapse of the Soviet Union there was not as great a need for a large sub fleet. However, with the rise of the PRC there is need for more subs, as carriers and surface warships might not be able to get close to Asia because of ASBM and cruise missile threats. Same goes for the Navy's ASW capability, at the end of the Cold War, American ASW crews were the best, however the skills which were honed by hunting Soviet subs in the North Atlantic have deteriorated with a lack of emphasis on the sub threat.
This is just a beginning on the road to rebuilding the Navy, there need to changes in the way the Navy selects it flag officers and makes promotions, naval aviation, women on subs and carriers, and the SEALs. But what is stated above, is an excellent start to rebuilding the Navy.