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UPDATE 2-US Navy nominee vows focus on cost overruns

* Focus on acquisition reforms

* Cost overruns could harm U.S. security

* Defense review could affect shipbuilding plan (Adds further quotes from hearing)

WASHINGTON, April 28 (Reuters) - Ray Mabus, President Barack Obama’s nominee to become Navy Secretary, vowed on Tuesday to put an “intense” focus on acquisition reform if confirmed for the job, warning that ongoing cost overruns would threaten U.S. national security.

“The acquisition process has to be gotten under control or we’re going to unilaterally disarm ourselves,” Mabus, a former Mississippi governor and U.S. ambassador to Saudi Arabia, told members of the Senate Armed Services Committee.

Mabus said it is critical to match up military requirements with resources, ensure that technologies are mature before weapons systems move into production, and focus on getting “fair and adequate” contracts going forward.

“Acquisition reform is a top priority for President Obama and Secretary (Robert) Gates, and if confirmed, one of my highest priorities would be to support them by ensuring the Department of the Navy acquires weapons systems in the most efficient and cost effective way possible,” Mabus said in a written response to questions from the committee.

If confirmed by the Senate, Mabus, 60, would succeed Donald Winter, who left office on March 13. The secretary oversees all activities of the Navy, including its multibillion-dollar shipbuilding budget.

Mabus said he agreed with Gates that programs that do not perform well or are over cost should be immediately considered for termination.

Northrop Grumman Corp NOC.N, General Dynamics Corp GD.N, Lockheed Martin Corp LMT.N and other top Navy contractors are closely watching the Obama administration's effort to reform defense spending.

Mabus served as ambassador to Saudi Arabia from 1994 to 1996. He served as Mississippi governor from 1988 to 1992.

Mabus is a former board chairman and chief executive of Foamex International Inc FMXLQ.PK, a producer of cushioning for bedding, furniture, carpet and automotive markets. He helped lead the company out of Chapter 11 bankruptcy less than nine months after his appointment there, according to a White House statement announcing his nomination last month.

Mabus and Robert Work, nominated to become undersecretary of the Navy, both told the committee that they agree with the intent of Pentagon procurement reform legislation co-sponsored by Carl Levin, the Democrat who heads the Senate Armed Services Committee, and its top Republican, John McCain.

INDUSTRIAL BASE “SMALL”

Mabus said he would be closely involved with the Pentagon’s upcoming Quadrennial Defense Review, if confirmed, and said it could lead to changes in the Navy’s shipbuilding plan, which now calls for a 313-ship fleet.

In written answers, Mabus said U.S. surface combatants are “a key aspect of our nation’s strength,” and said he would work closely with Congress, the chief of naval operations, and industry to determine the appropriate size of the fleet and the number of shipyards needed to efficiently build warships.

Mabus told senators the current number of shipyards is “very small,” and to maintain the industrial base the Navy needs in the future, the service needs to work hard to ensure continuing competition among those shipyards.

He said in his written answers that he would also examine actions and strategies needed to mitigate or prevent a potential shortfall in fighter aircraft that the Navy would face in coming years, even if it continued to buy Lockheed F-35 Joint Strike Fighters and F-18 fighters at currently planned rates.

He said Gates had announced plans to buy 31 Boeing Co BA.N F-18 aircraft in fiscal 2010, including nine F-18E/F fighters and 22 E/A-18G Growler jammer aircraft, followed by the purchase of 24 more F-18 fighters over the next two years.

“It is essential that we maintain an effective naval strike capability to support the joint force,” Mabus said. (Reporting by Andrea Shalal-Esa, editing by Dave Zimmerman and Gerald E. McCormick)

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