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Navy says budget crisis threatens jobs, industry

WASHINGTON (Reuters) - The failure of Congress to pass a spending bill for fiscal 2011 could force the Navy and Marine Corps to raid procurement and other accounts to pay sailors and Marines and cost the U.S. some 10,000 jobs, Navy Secretary Ray Mabus told a Senate hearing on Tuesday.

Mabus said the Obama administration would need to revamp its fiscal 2012 budget request for the Navy if lawmakers kept funding for fiscal 2011 at 2010 levels or even if they passed a full-year spending bill that cut funding from proposed levels.

In either case, he told the Senate Armed Services Committee, "the proposed fiscal year 2012 budget will not be sufficient to recover from the delays, cancellations and mitigations we have been forced to put in place this year."

Mabus said it could take three years for Navy maintenance and procurement plans to get back on track.

Defense Secretary Robert Gates and other officials have ratcheted up criticism of Congress for failing to enact a defense spending bill for fiscal 2011.

House of Representatives lawmakers were working on a sixth stopgap spending bill to keep the government running beyond a March 18 deadline, as the Senate bickered over when to vote on two longer-term measures.

Mabus told the committee disruptions were likely in the supply chain, planned maintenance, and training.

He said the budget crisis would have a profound effect on a long list of Navy and Marine Corps procurement programs, resulting in higher costs for years to come.

He said it would:

* Force the Navy and Marine Corps to raid procurement and other accounts to offset a $600 million shortfall in accounts used to pay sailors and Marines.

* Prevent the start of construction of a Virginia-class submarine to be built by Northrop Grumman Corp and General Dynamics Corp, resulting in a breach of a multiyear contract. This, he said, would almost certainly drive up the cost of submarines.

* Prevent start of construction of a Mobile Landing Platform to be built in San Diego by General Dynamics.

* Prevent start of construction of one or possibly both DDG-51 destroyers to be built in Maine and Mississippi by General Dynamics and Northrop, and prevent completion of modernization of a DDG-51 destroyer.

* Delay fourth and final funding payment for continued work on the USS Gerald Ford aircraft carrier, or CVN 78, and advance procurement for the next carrier.

* Prevent procurement of nuclear reactor cores to refuel a carrier and ballistic missile submarine.

* Cut Marine Corps procurement by $563 million, preventing purchase of helicopters and equipment like air conditioners and heaters.

* Force the Navy to defer maintenance on 70 helicopters and other aircraft, and 290 aircraft engines

(Reporting by Andrea Shalal-Esa; Editing by Toni Reinhold)

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