THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, May 17, 1995 TAG: 9505170044
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY DALE EISMAN, STAFF WRITER
DATELINE: WASHINGTON LENGTH: Long : 105 lines
Newport News Shipbuilding could construct the Navy's next generation of nuclear-powered submarines for billions of dollars less than rival yard Electric Boat of Groton, Conn., three independent analysts told senators Tuesday.
The precise scope of those savings - Newport News claims they could reach $10 billion for the 30-boat class of subs - remained in dispute after a contentious, daylong hearing of a Senate Armed Services subcommittee.
But with budgets tight, the analysts' agreement that Newport News could do the work for substantially less appeared to undercut the Navy's case for sticking with Electric Boat and to bolster Newport News' audacious attempt to put its rival out of business.
``We can save the American taxpayer up to 10 billion dollars. Just let us compete,'' said W.P. ``Bill'' Fricks, Newport News' president. The Clinton administration's attempt to direct such a major program to one yard, when another qualified bidder wants a shot at it, is unprecedented, he said.
``You're pursuing a policy of economic homicide. You're trying to kill Electric Boat,'' retorted Sen. Joseph I. Lieberman, D-Conn. And given its huge profits on other Navy contracts, particularly aircraft carriers, Newport News is ``asking us to pay'' for its assault on the Groton yard, he said.
The heated rhetoric underscoredthe enormous stakes in the debate for Virginia and New England. The new subs, the first of which the Navy wants to begin building in 1998, will cost an estimated $1.5 billion each and provide thousands of jobs.
The Navy wants $700 million in its 1996 budget, which Congress is now considering, for design and other ``advance procurement'' costs of the new sub. Newport News and Electric Boat are the only two shipyards able to build nuclear ships, but Electric Boat builds only submarines while Newport News also builds aircraft carriers.
In addition to the new generation of subs, Electric Boat is fighting for a $1.5 billion appropriation to finish the third and final sub in the Seawolf class. That super-quiet sub, which the Navy now concedes is too expensive for the budgets of the 1990s, is Electric Boat's projected ``bridge'' to the next generation.
The administration's attempt to keep Electric Boat going dates to a 1992 campaign promise by then-Democratic nominee Bill Clinton. The future president helped solidify his support in New England by promising to overrule a Bush administration decision to stop construction of the Seawolf.
Nora Slatkin, the Navy's top acquisitions official, on Tuesday cast the administration's policy in national security terms. The Seawolf is vital to preserving Electric Boat, she said, and only by doing that can the Navy ensure that it will have two shipbuilders capable of building nuclear submarines.
The independent analysts, however, argued that there's little chance that the nation will need more than the four subs per year Newport News is capable of building. Electric Boat's three-per-year capacity also should exceed any conceivable need, they said.
Slatkin also argued that by keeping two yards the Navy will have a hedge against a natural disaster, accident or terrorist attack on one.
Such arguments often seemed almost a sideshow from the main debate over the cost of the third Seawolf and the Navy's plan to use Electric Boat for future subs.
While Newport News claims of savings on the new boat may be overstated, said Cindy Williams of the Congressional Budget Office, Navy figures suggesting that any savings would be marginal are probably understated. Analysts from the Congressional Research Service and General Accounting Office also questioned Newport News figures but agreed that the yard could do the work more cheaply than Electric Boat.
Slatkin conceded that the two-yard policy would cost the taxpayers more than reliance on Newport News alone. Using Electric Boat ``is the most cost-effective approach,'' she said. ``We never said it's the cheapest.''
But Fricks and Virginia Sens. John W. Warner and Charles S. Robb countered that Newport News will be out of the sub business and unable to compete for contracts in the next century if Electric Boat has a corner on the market now.
``The thought that we could call up Newport News at some point in time and say, `How about building us a couple of submarines because you're nuclear-capable?' - that's ridiculous,'' Warner fumed.
He challenged Navy assertions that most of the specialized skills needed for sub building at Newport News are transferable from the yard's work on carriers.
Warner also appeared to extract a grudging admission from Vice Adm. Joseph T. Lopez, the Navy's top expert on its future needs, that political considerations are at play in Navy's attempt to direct the sub work to Electric Boat.
``You would think that competition in general is the best way to go,'' Lopez said. ``But the decision has been made by the secretary (of the Navy) and I support it.''
Later, pressed by subcommittee Chairman William S. Cohen, R-Maine, Lopez said he is concerned that delays that would accompany shifting the sub program to Newport News would hurt the Navy's ability to meet its military commitments. ILLUSTRATION: Graphic
Color photos
Sen. John W. Warner, R-Va.
Sen. Joseph I. Lieberman, D-Conn.
Newport News Shipbuilding and Electric Boat of Connecticut are vying
to build the next generation of nuclear-powered submarines, which
cost $1.5 billion each. The Senate Armed Services subcommittee is
debating the issue.
by CNB