WASHINGTON – A defense industrial base report shaped in the closing days of the Clinton administration suggests that Bath Iron Works could be hurt by Pentagon plans to restrict shipbuilding to two Arleigh Burke-class destroyers, DDG-51s, per year.

While Bath’s future is linked to its efforts to win contracts associated with a new Elmo Zumwalt-class destroyer, DDG-21s, the tail end of the production cycle for the Burke class has been sure work for the Maine shipbuilder, and the other yard manufacturing the same ships – Litton Ingalls Shipbuilding in Pascagoula, Miss.

According to Inside the Navy, a trade publication, the internal Pentagon estimates of military expectations shows cutting production from three to two of the $900 million ships could make some operations at both facilities uneconomical. About half of the money ends up in the hands of the lead shipbuilder, with the rest channeled to companies elsewhere that build components that go in the ship, especially electronics.

While Bath could be “hurt,” Inside the Navy said, the lack of shipbuilding work “could … cripple Ingalls.”

The industrial base report was signed by Clinton’s Navy Secretary Richard Danzig. The future of military strength is now in the hands of a new team led by Defense Secretary Donald Rumsfeld. There have been no early indications about shipbuilding, with the initial focus on military strength – as expressed by President Bush – aligned to current war-fighting needs.

“Workload at [Ingalls] will drop below their survivable business operation employment levels unless there is additional work added,” the industrial report said, according to Inside the Navy.

With just a shift of one ship off the construction platter, the potential exists that each yard will have a $175 million shortfall over several years, the Defense report states.

“These results indicate a more serious industrial base issue at [Ingalls] than [Bath] for the two DDG-51 ships per year scenario,” Inside the Navy reported the study said. While Ingalls was said to be “seriously challenged,” Bath would take less of a blow. Bath’s “workload never breaches the survivable business operational level.”

Part of Bath’s resilience is due to its work on another military ship, the LPD-17 amphibious landing ship. Bath is also in competition to build the Coast Guard Deep Water cutter.

The industrial base assessment is a tool that decision-makers use to design weapons procurement requests for Congress – which will make the final decisions on what to build and how much to spend. The industrial base assessment is important because lawmakers often look at the bottom line as they relate to overall budgets but don’t – or can’t – consider the impact on the future capability to build a weapon or product if the underlying data have not been collected.

The United States has reduced its shipbuilding capabilities over the years, and now major warships are built in fewer locations. For example, Newport News Shipbuilding constructs aircraft carriers and another General Dynamics facility in Connecticut constructs submarines.

The Navy is now trying to assess competing plans for the Zumwalt class ship, and has ordered enhanced “survivability” to be crafted into the Zumwalt in the wake of the attack on the USS Cole in the Middle East.

Defense Week, another defense trade publication, reported recently that new – and still secret – automated damage-control mechanisms could compartmentalize water flow from a hull breach like the one suffered by the Cole. The Zumwalt will likely have a double hull.

At a Pentagon news conference, Secretary Danzig had told reporters that the United States should explore the most advanced design opportunities when its starts to buy the expected 32 Zumwalt-class warships in 2009. The price tag for the smaller, faster, more heavily armed ship will be $750 million, Defense Week said.

General Dynamics, which operates Bath, is leading a so-called “blue” team that includes Lockheed Martin and Northrop Grumman to design its version of the ship. A separate “gold” team, led by Litton Ingalls, includes Raytheon Electronics and Boeing. A winner is expected to be announced in April.

Litton’s design remains a secret, but Bath officials said its design would make the ship “more robust” than the Arleigh Burke class, Defense Week said.