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NAVY NEW NAVY BUDGET: OVER $100 BILLION Changes Create New Supplier Opportunities The Department of Defense has requested $311.6 billion in new bud- get authority for the fiscal year (FY 1987) beginning October 1, 1986. Included in the budget request, big- gest ever in U.S. peacetime history, is $11 billion allocated for construc- tion of 21 ships and conversion of three others. The budget also requests $25.7 billion for the Navy's "O&M" ac- count (operations and maintenance, often referred to as the "readiness" account). Of that total, $1.1 billion is allocated for "ship maintenance and modernization" of the Navy's strategic submarine forces (Polaris, Poseidon, and Trident ballistic mis- sile submarines, or SSBNs); another $5.3 billion is set aside for ship maintenance and modernization of the Navy's general purpose ships— the battleships, cruisers, frigates, destroyers, attack submarines, and other combatants and support ships that would do the bulk of the fight- DEPARTMENT OF THE NAVY SHIPBUILDING AND CONVERSION, NAVY (IN MILLIONS OF DOLLARS) ing in a "conventional" (non-nu- clear) as opposed to a "strategic" (nuclear) conflict. Projection tables, trend statistics, and other supporting data provided Congress by Secretary of Defense Caspar Weinberger in his Feb- ruary 5 "Annual Report to the Con- gress" also show the following: • The Department of Defense's five-year defense plan (FYDP) pro- jects additional increases in the budget authority that will be re- FY 1985 FY 1986 FY 1987 FY 1988 QTY $ QTY $ QTY $ QTY $ NEW CONSTRUCTION TRIDENT SUBMARINE (SSBN) 1 1,503.6 1 1,309.4 1 1,509.1 1 1,516.5 ATTACK SUBMARINE (SSN-688) 4 2,665.0 4 2,540.9 4 2,332.6 3 2,046.9 NEW DESIGN SSN (SSN-21) - - - - - 454.3 - 160.2 AEGIS CRUISER (CG-47) 3 2,752.9 3 2,612.3 2 1,924.3 2 1,902,6 DESTROYER (DDG-51) 1 976.0 - 74.0 3 2,527.8 3 2,354.6 MINE COUNTERMEASURES SHIP (MCM) 4 344.5 2 197.2 - - 3 272.2 COASTAL MINEHUNTER (MSH-1) - - 4 184.5 4 196.1 4 181.8 AMPHIBIOUS LANDING SHIP DOCK (LSD-41) 2 476.6 2 373.4 - - - - AMPHIBIOUS LANDING SHIP DOCK (LSD-41/CV) - - - - - - 1 311.2 AMPHIBIOUS ASSAULT SHIP (LHD-1) - 39.2 1 1,268.3 - 232.0 1 1,046.9 OCEAN SURVEILLANCE SHIP (TAGOS) 2 99.7 2 115.1 3 148.1 3 193.9 FLEET OILER (TAO) 3 463.0 2 266.3 2 275.5 2 319.9 AMMUNITION SHIP (AE) - - - - - - 1 369.8 LANDING CRAFT AIR CUSHION (LCAC) (9) 230.1 (12) 307.0 - - (9) 221.3 SURVEY SHIP (TAGS) 2 196.7 - - - - - - FAST COMBAT SUPPORT SHIP (AOE) - - - - 1 612.7 - - OCEANOGRAPHIC RESEARCH SHIP (AGX) - - - - 1 33.0 - - CONVERSION/ACQUISITION AO JUMBO (C) - - - - 1 62.3 1 49.5 ACOUSTIC RESEARCH VESSEL (AG) - - 1 57.0 - - - - AMPHIBIOUS SLEP - - - - - 23.1 - 97.8 BATTLESHIP REACTIVATION - - 1 469.0 - - - - CV-SLEP 1 714.5 - 52.0 - 83.5 1 544.8 MOORED TRAINING SHIP DEMONSTRATION (MTSD) (C) - 30.0 (1) 175.4 - - - - AVIATION SUPPORT SHIP (TAVB) (C) 1 35.3 1 26.9 - - - - STRATEGIC SEALIFT - 31.0 - 228.4 - 27.8 - 50.4 STRATEGIC SEALIFT ENHANCEMENT - - - - - 20.7 - 18.4 CRANE SHIP (TACS) (C) 1 30.5 3 82.5 2 61.1 2 59.9 ALL OTHER COSTS — 443.8 — 500.8 — 522.2 — 577.3 TOTAL: SHIPBUILDING AND CONVERSION, NAVY 25 11,032.4 27 10.840.4 24 11,046.2 28 12,295.9 This four-year "snapshot" table showing the Navy's actual fiscal year 1985 and 1986 shipbuilding programs and the funding requested for FY 1987—and expected at this time to be requested for FY 1988—shows, perhaps better than any other single table could, the importance of Navy shipbuilding to the U.S. shipbuilding and shipbuilding support industries. Perhaps the most important single fact to remember about the program is that, because the Navy has five years in which to obligate the funds appropriated—and wants to increase its decision time to seven years—most of the money appropriated in fiscal years 1985 and 1986 is not yet obligated. Moreover, most of the money that is obligated has not yet passed the prime contractor level; most subcontractors, systems manufacturers, suppliers, and other second- and third-echelon members of the shipbuilding community still have an excellent opportunity, therefore, to win one or more major contracts for the programs indicated. quested in each of the next four fis- cal years. The overall five-year plan will take the DOD budget from the $311.6 billion requested for FY 1987 to $332.4 billion in FY 1988 to an eventual $395.5 billion in FY 1991. (It will, that is, if Congress approves the annual DOD requests in toto, and no one in official Washington believes that will happen.) • The Navy's five-year shipbuild- ing program will continue on track at about the same pace—20 or so new-construction ships funded each year, and four or five major conver- sions. There seems to be a reason- able chance that most of that pro- gram will be funded, although some specific line items could be delayed or stretched out over a longer time frame. Some others could be accel- erated, though. • The O&M readiness account will also be maintained at about the same level, and in fact will probably be increased somewhat. The official projections on this have not been released (the five-year defense plan and five-year shipbuilding plan are required by law to be submitted to Congress), but the Weinberger re- port and the "posture" statements submitted by Navy Secretary John F. Lehman Jr. and Chief of Naval Operations Adm. James D. Wat- kins all say much the same thing: ships now operational will be kept in service longer; there will be greater emphasis on maintaining ships and aircraft now in the active inventory at a higher degree of readiness than there will be on new procurement; and more and better equipment will be turned over to the Naval Re- serve, and that equipment also will be maintained at a higher degree of readiness. All of that translates into more rather than less O&M fund- ing. For the U.S. shipbuilding and shipbuilding support industries the new budget comes as a welcome relief. There have been dire predic- tions emanating from Capitol Hill that the so-called Gramm-Rudman- Hollings budget-balancing legisla- tion passed late last year would, among many other things, decimate the defense national program in general and create particular havoc with the procurement accounts. House Armed Services Committee Chairman Les Aspin (D-Wis.), for example, has said that "G-R-H," as 22 Maritime Reporter/Engineering News
