Navy Requests $25 Billion For Shipbuilding, Fleet Maintenance & Repair For FYs 92-93

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The budget request sent to Congress on February 4 provides a picture of changing priorities and increasing fiscal constraints in Navy spending.

$16.9 Billion For Shipbuilding The Navy has asked for $8.6 billion to build 12 ships in FY 1992 and $8.3 billion for 11 ships in FY 1993. The program calls for one SSN-21 Seawolf Class submarine in each year. General Dynamics-Electric Boat Division of Groton, Conn., is currently building the lead ship in this new class of attack submarine. Five Aegis destroyers are budgeted for FY 1992, four~in FY 1993. Bath Iron Works, Bath, Maine, and Ingalls Shipbuilding, Inc., of Pascagoula, Miss., compete for work in this program. Expenditures for sealift ships (taking into account funds remaining from previous years) are now budgeted at $1.6 billion over the next two years. These and other details are shown in Exhibit 1. Over the next six years, the Navy plans to order 58 new ships. These include a new aircraft carrier in FY 1995 and seven Seawolf submarines. Plans call for 22 Aegis destroyers over the six-year period. A new class of amphibious ships is planned beginning FY 1995. Details are shown in Exhibit 2.

Long-Term Outlook Good For Ship Repair The U.S. Navy plans to spend $7.8 billion for active fleet ship maintenance over the next two years. Another $275 million will be spent on reserve fleet maintenance. Active fleet maintenance plans call for nine overhauls and 145 short term availabilities in FY 1992—17 overhauls and 124 short term availabilities in FY 1993. Details are shown in Exhibit 3.

Despite near term reductions in activity, the long term outlook for ship repair still looks good. Spending for Navy ship maintenance and modernization has tripled over the past 15 years. There is no reason to expect a precipitous change in this trend. Ships require regular maintenance and continued upgrading— and the U.S. Navy is not about to disappear. Even allowing for a smaller future fleet, maintenance of Navy ships will provide a continuing business base over the next decade. $9.9 Billion For Equipment Procurement The Navy has requested $5 billion in FY 1992 and $4.9 billion in FY 1993 to fund procurement of ship support equipment, communications and electronics equipment, ordnance support equipment, spares and repair parts. The budget figures include the cost of equipment procurement and installation. Details are shown in Exhibit 4. Funds for ships support equip- ment are budgeted to be $1.8 billion in FY 1992 and $1.5 billion in FY 1993. Among major items to be procured are gensets, submarine propellers and equipment for firefighting, pollution control and underway replenishment. Included in this budget are some long lead items for nuclear reactors and propulsors associated with new submarine construction. A budget of $2.4 billion is requested in FY 1992 and $2.3 billion in FY 1993 for communication and electronics equipment. For modernizing frontline ASW units, Navy has requested $192 million in FY 1992 and $143 million in FY 1993 for procuring SQQ-89 surface ASW combat system backfits. Additionally, $331 million in FY 1992 and $363 million in FY 1993 is budgeted to procure BQQ-5 upgrades and communication backfits.

Ordnance support equipment is budgeted at $550 million in FY 1992 and $763 million in FY 1993. This includes $47 million in FY 1992 and $199 million in FY 1993 to procure the latest equipment for backfit into early production Aegis cruisers. Sixty- four million and $82 million in FY 1992 and FY 1993, respectively, is budgeted for one MK-41 vertical launch system in FY 1992 and two MK-41 vertical launch systems in FY 1993; $57 million in FY 1992 and $77 million in FY 1993 is budgeted to continue the modernization of MK-117 fire control systems.

For spares and replacement parts, $515 million is budgeted in FY 1992 and $568 million in FY 1993.

New IMA Report Available IMA has just prepared an indepth analysis of U.S. Navy ship maintenance, repair and modernization. The 200-plus-page report assesses future business opportunities and analyzes key competitor's market position. It includes details for FY 1992 and 1993 scheduled ship maintenance and equipment purchases—and provides an extensive data base on contract awards over the past eight years. Information in the report reflects the new budget sent to Congress on February 4, 1991.

The report is available for $575. To order, contact IMA Associates, Inc., 2600 Virginia Ave., NW, Suite 901, Washington, D.C. 20037; telephone: (202) 333-8501; or fax: (202) 333-8504.

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