DEFENSE FIRMS GET SHOT IN ARM : VALLEY CONTRACTORS LAUD BILL SIGNING.

Byline: Daily News Staff and Wire Services

President Clinton's approval of $265.6 billion in defense spending will mean more work for the nation's top contractors.

Litton Industries says the authorization measure could translate into additional revenue for the Woodland Hills-based company's shipbuilding and aircraft navigation business lines.

Funds for four Aegis-class guided missile destroyers are included in the bill. Two ships would be built at Litton's Ingalls Ship Building Division in Pascagoula, Miss.

Recent plans called for three ships per year, with Litton and Bath Iron Works alternating between one and two projects. Now it looks like both companies will build two ships in fiscal 1997, said Litton spokesman Bob Knapp.

The contracts typically send about $300 million through the shipyards per boat, Knapp said.

But he cautioned that it's too soon to say exactly how much of an increase the company will see.

That's because the bill, signed Monday, only outlines funding levels. Before the government can spend the money, Congress must pass a more specific appropriations bill.

``We can't say what this will do for employment. It's likely to save jobs rather than add jobs,'' he said.

Still, the measure could open the door to more defense-industry workers just as the November presidential election campaign shifts into high gear in vote-rich California and Texas.

The measure authorizes spending $3.7 billion for a ballistic missile defense system - $855 million more than Clinton had requested. Republicans added the money, saying Clinton wouldn't develop an antimissile system quickly enough.

The nation's top defense contractors - McDonnell Douglas Corp., United Technologies Corp., General Dynamics Corp., Boeing Corp., Lockheed Martin Corp. and Litton - stand to gain from the measure that would ensure:

Construction of a third Seawolf attack submarine, while also permitting funding to develop a new generation of smaller attack submarines. General Dynamics is building the last Seawolf and will split with Newport News Shipbuilding the work on the new attack subs.

Continued development of the F-22 fighter, the V-22 Osprey, the Joint Advanced Technology program, and the Comanche helicopter.

$3.7 billion for the U.S. ballistic missile defense program.

$234 million for construction of six F/A-18 C/D fighter planes for the Navy. McDonnell Douglas builds the F-18 planes.

$2.1 billion for continued development and initial production of the next-generation F/A-18 fighter plane, the E/F.