THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, April 6, 1995 TAG: 9504060337
SECTION: FRONT PAGE: A4 EDITION: FINAL
SOURCE: BY DALE EISMAN, STAFF WRITER
DATELINE: WASHINGTON LENGTH: Medium: 51 lines
Newport News Shipbuilding increased the stakes Wednesday in its bid for the Navy's submarine business, claiming it could beat rival yard Electric Boat's price for a new generation of nuclear-powered subs by up to $10 billion.
The assertion by shipyard president W.P. ``Bill'' Fricks, made in testimony to a House subcommittee, was a dramatic increase from the $2 billion in savings he projected in remarks last month to another congressional panel.
Newport News already builds all the nation's aircraft carriers, making the Navy its most important customer. But the chance to corner the sub market has spurred the yard to mount a high-profile challenge to the Navy and the Clinton administration, which want Electric Boat to build at least the first of the new subs.
Fricks said his new savings estimate is based on construction of 45 subs, about 15 more than the Navy plans. His earlier claim of $2 billion in savings was based on construction of only the first five subs in the group, Fricks said.
Even if the Navy stops at 30 new subs, Fricks asserted, the Newport News yard could save taxpayers up to $7.5 billion over Electric Boat.
Electric Boat, which builds only submarines, probably would be forced out of business if it doesn't get the work. That would leave Newport News as the nation's sole nuclear shipbuilder; the Navy argues that because of security concerns, the nation should have at least two nuclear-capable yards.
The proposed 1996 defense budget includes about $700 million for design and other preliminary work on the first of the new subs, which is scheduled to go into production in 1998.
James E. Turner Jr., Electric Boat's president, told members of the House Appropriations defense subcommittee that permitting Newport News to compete for the new subs actually would increase the cost of the first sub by up to $1 billion and delay construction by two or more years.
Fricks countered that Newport News has given the Navy and a House subcommittee a detailed analysis of how it would beat Electric Boat's prices. The key to the savings, he said, is Newport News' ability to spread its overhead costs among a variety of private customers as well as the Navy.
A Navy official said ``based on what we've seen so far, there are some real questions'' about the savings claims. The Navy always has acknowledged that maintaining two nuclear yards would entail added costs, the official said, but believes there are good reasons to do so. by CNB