Manila is looking to rebuild the seaport and adjoining runway on Pagasa Island, which part of the chain of islands off the coast of the Philippines, Malaysia and Vietnam.
The Philippine government claims the effort is strictly designed to support commercial business and tourism to the island.
However local residents say the construction is the first step in creating a mini-naval base for U.S. and Philippine troops.
"It is near the Spratlys and U.S. can always check China’s aggressive campaign claim over Spratlys and maintain its military interest in the Asian region ... these advantages are non-negotiable," Salvador France, head of Pamalakaya, a local advocacy group in the region, told The Philippine Star on Monday.
The installation could also be used as a jumping-off point for counterterrorism operations in the Palawan region of the southern Philippines. The area is home to the Abu Sayyaf, an Islamic terror groups with ties to al Qaeda.
A U.S. special operations task force has been stationed in the region since 2001, supporting Philippine forces in their ongoing campaign against Abu Sayyaf and other Muslim extremist groups in the region.
American and Filipino forces are scheduled to begin military exercises in Palawan next month.
France also asserts the new facility on Pagasa Island will be the new home for thousands of U.S. Marines scheduled to leave Okinawa within the next two years.
DOD has planned to move the Marines to its installations in Guam, however the Pentagon is still reviewing plans for the move.
Congress blocked a request for additional funding to build up based in Guam in the fiscal 2012 defense bill, until DOD provides a road map on how the move will take place.
But that perceived foot-dragging by the department has drawn the ire of top congressional lawmakers in recent weeks.
"We acted, as is our responsibility, because of our intense frustration about the lack of progress on this issue," Sen. John McCainJohn Sidney McCainWhoopi Goldberg signs four-year deal with ABC to stay on 'The View' Collins to endorse LePage in Maine governor comeback bid Meghan McCain: Country has not 'healed' from Trump under Biden MORE (R-Ariz.) told Navy and Marine Corps leaders.
The review, which Congress requested to be complete by the end of March, has yet to be completed, McCain pointed out during a March 15 hearing of the Senate Armed Services Committee.
"I'm not going to let you continue to slow walk us on this issue," he warned.
Navy Secretary Ray Mabus told committee members that an private firm has been selected to conduct the assessment, but that company had not been put under official contract with DOD at the time.
However Marine Corps Commandant Gen. James Amos told the committee the services and DOD were confident the assessment is on track.
"Both our government and the government of Japan at the very highest levels are still working through some of the issues, [but] I am comfortable" with future plans for Okinawa and Guam, he said.
The Spratly Islands and the surrounding South China Sea have been an area of contention among China and its neighbors in the Pacific.
The Pacific region is the focus of the Pentagon's new national security strategy unveiled in February.
Beijing claims the islands and surrounding waters as sovereign territory of China. Other nations, including the Philippines, have made similar claims.
Commercial vessels from those neighboring countries have complained of being harassed by Chinese naval ships patrolling those waters in recent years, further inflaming tensions.
Pacific Command sent a Navy destroyer to the South China Sea last June as a check against China's aggressiveness in the region.
Statements coming from Manila in recent days have only added to that tension.
Philippine Defense Secretary Voltaire Gazmi told reporters on Tuesday that "there were many opportunities" for the Philippine government once the runway and seaport on Pagasa Island are complete.
However, he reiterated the facility would not be used for military purposes.