In March 1971, United States Naval construction battalions (Seabees) arrived on Diego Garcia to begin the construction of the Communications Station and an airfield. To satisfy the terms of an agreement between the UK and the United States for an uninhabited island, the plantation on Diego Garcia was closed in October of that year. The plantation workers and their families were relocated to the plantations on Peros Bahnos and Salomon atolls to the northwest; those who requested were transported to the Seychelles or Mauritius. In 1972, the UK decided to close the plantations throughout the Chagos, including those on Peros Banhos and the Salomon Islands, and deported the Ilois to their ancestral homes on either the Seychelles or Mauritius. The then-independent Mauritian government refused to accept the islanders without payment, and in 1974, the UK gave the Mauritian government an additional ₤650,000 to resettle the islanders.
By 1973, construction of the Naval Communications Station (NAVCOMMSTA) was completed. In the early 1970s, setbacks to United States military capabilities in the region including the fall of Saigon, victory of the Khmer Rouge in Cambodia, the closure of the Peshawar Air Station listening post in Pakistan and Kagnew Station in Ethiopia, the Mayaguez incident, and the build-up of Soviet Naval presence in Aden and a Soviet airbase at Berbera, Somalia, caused the United States to request, and the UK to approve, permission to build a fleet anchorage and enlarged airfield on Diego Garcia, and the Seabees doubled the number of workers constructing these facilities.
Following the fall of the Shah of Iran and the Iran Hostage Crisis in 1979–1980, the West became concerned with ensuring the flow of oil from the Persian Gulf through the Strait of Hormuz, and the United States received permission for a $400 million expansion of the military facilities on Diego Garcia consisting of two parallel 12,000-foot-long (3,700 m) runways, expansive parking aprons for heavy bombers, 20 new anchorages in the lagoon, a deep water pier, port facilities for the largest naval vessels in the American or British fleet, aircraft hangars, maintenance buildings and an air terminal, a 1,340,000 barrels (213,000 m3) fuel storage area, and billeting and messing facilities for thousands of sailors and support personnel.