The Naval Aircraft Factory (NAF) was established by the United States Navy in 1918 in Philadelphia, Pennsylvania. It was created to help solve aircraft supply issues which faced the Navy Department upon the entry of the U.S. into World War I. The Army’s requirements for an enormous quantity of planes created a decided lack of interest among aircraft manufacturers in the Navy's requirements for a comparatively small quantity of aircraft. The Navy Department concluded that it was necessary to build a Navy-owned aircraft factory in order to assure a part of its aircraft supply, to obtain cost data for the Department’s guidance in its dealings with private manufacturers and to have under its own control a factory capable of producing experimental designs.
On 27 July 1917, Secretary of the NavyJosephus Daniels approved the project; the contract was let on 6 August 1917 and ground was broken four days later. The entire plant was completed by 28 November 1917, 110 days after ground breaking. When it was completed the greatest need was for patrol flying boats, so production of the H-16 patrol aircraft was started. On 27 March 1918, just 228 days after ground breaking and 151 days from receipt of drawings, the first H-16 built by the NAF was successfully flown. On the following second of April the first two NAF-built H-16s were shipped to the patrol station at Killingholme, England. After World War I, when the 1922 United States Navy aircraft designation system came into effect, the second letter of the codes designating the manufacturer appropriately specified the latter N for all airframe designs coming from the Naval Aircraft Factory from then on, through all of World War II.
During its lifetime the Naval Aircraft Factory provided the Navy with its own manufacturing and test organization, and also built aircraft designed by other manufacturers to evaluate the cost of aircraft submitted by industry. The NAF ended aircraft production in early 1945. The existence of the Naval Aircraft Factory was controversial at times, as it put a federally funded industrial activity in direct competition with civilian industry, and this was one of the reasons it was disestablished. Upon disestablishment, the aircraft test functions were passed to the newly formed Naval Air Test Center at Naval Air Station Patuxent River, Maryland.