DATE: Wednesday, October 1, 1997            TAG: 9710010454

SECTION: FRONT                   PAGE: A3   EDITION: FINAL 

SOURCE: BY DALE EISMAN, STAFF WRITER 

DATELINE: WASHINGTON                        LENGTH:   65 lines

NAVY REWORKS BUDGET, SEEKS FUNDS TO START WORK ON CARRIER

Navy and Defense Department officials are exploring ways to restructure their budgets for 1998 to increase the $50 million down payment on a new aircraft carrier approved by Congress last week, sources familiar with the discussions acknowledged Tuesday.

While several options are said to be under consideration, one source said the service is trying to come up with several hundred million dollars for the carrier, designated CVN-77, over the next few years. The investment would be tailored in large part to reduce the size of a final appropriation that is now scheduled for 2002, one source suggested.

The carrier would be constructed at Newport News Shipbuilding and is considered vital to the yard's long-term survival. It would cost about $5 billion and is to be the 10th and last ship in the Nimitz-class of nuclear-powered flattops.

Newport News is the only U.S. shipyard equipped to construct the Nimitz carriers, which are more than 1,000 feet long and carry up to 80 warplanes. The yard employs about 15,000 area residents.

Newport News asked Congress to provide $345 million for CVN-77 in 1998, even though actual construction is not scheduled to begin for another four years. Lobbyists for the firm, backed by area representatives, said the ``Smart Buy'' initiative would save up to $600 million in the long run by letting workers and suppliers get an early start on the project.

With their overall budget essentially frozen for the foreseeable future, Navy leaders need those long-term savings on the carrier to keep submarine, aircraft and surface ship projects on track. The service is said to be particularly interested in lowering the size of its 2002 payment on the ship, hoping to free up funds for other priorities.

Though the Senate favored the yard's program, House Republicans assigned a higher priority to securing another down payment - on the purchase of nine more B-2 ``Stealth'' bombers for the Air Force. When House and Senate negotiators sat down to work out their differences last month, both sides came away with less than they wanted.

``We've said all along that Smart Buy would continue,'' said Jerri Fuller Dickseski, a Newport News spokeswoman. The yard continues to work with the Navy and members of Congress to explore ways to get started on the ship now in order to save money later, she added.

While Congress finished work on the defense budget last week, sending it to President Clinton, one Congressional source noted Tuesday that an annual authorization bill, which is supposed to provide oversight for how the Pentagon operates, is still pending.

Hampton Roads' congressional delegation, the source suggested, is working on inserting language into that bill that would permit officials to reshuffle the budget, transferring money from other programs to provide more for the carrier.

Sources said the Navy also is trying to find more money for continued development of a prototype surface ship the Navy hopes to put to sea soon after the turn of the century. The budget approved by Congress provides only $35 million of the $85 million the service sought for that initiative.

Originally dubbed the ``arsenal ship,'' the ship is to be equipped with up to 500 missile launchers and at least one long-range gun. It would be manned by a crew of as few as 20, its weapons fired and guided by commands from nearby ships, airplanes or forces ashore.

The Navy redesignated the ship as the ``Maritime Fire Support Demonstrator'' earlier this year. Officials say it is a critical test bed for systems they hope to use in the development of a new generation of destroyers that will go to sea beginning in 2008. KEYWORDS: DEFENSE BUDGET

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