NEWPORT NEWS, VA. -- The Navy has broken off negotiations with Newport News Shipbuilding and Dry Dock Co. for a contract to build the second Seawolf-class submarine, Navy spokesmen confirmed.

The move may be related to a reported Pentagon proposal to shut Newport News out of future construction contracts for the submarine, which is estimated to cost more than $1 billion per boat.

Currently, the yard's work primarily consists of nuclear-attack submarines and Navy aircraft carriers. Lt. Greg Smith, a spokesman for the Navy News Desk in Washington, said the Navy suspended negotiations with Newport News because the Navy already has contracted with the Electric Boat division of General Dynamics Corp. to build the first Seawolf and officials don't know if the Seawolf program will be large enough to support two shipyards.

''I don't think there's any question that there will be a second Seawolf. The question is how many will there be, and at what rate will they be built?'' Smith said.

One staff member of the House Armed Services Committee, who asked not to be named, said the decision to suspend negotiations is the result of a Pentagon plan to use Newport News's competitor, Electric Boat, as the sole source for the Navy's submarines.

''There have been rumors, lately with lots of foundation, that the Pentagon wants to cut Newport News out of the process,'' the staffer said.

Jack Garrow, vice president for public relations at Newport News, had no comment on contract negotiations for the Seawolf.

Building one Seawolf is estimated by the Navy to take 12.5 million man-hours of work, the equivalent of 1,502 employees over a four-year period.

Newport News currently has a backlog of 11 Los Angeles-class submarines and three aircraft carriers, the last of which is scheduled for delivery in 1998. Seawolf replaces the Los Angeles-class submarines.

U.S. Defense Secretary Richard Cheney has said that if the defense budget is cut dramatically in the next five years, the Navy will reduce the number of aircraft carriers it has in service from 14 to 12. Navy officials have said that they would likely replace older ships with new carriers in such a reduction.

Pentagon officials have denied that they are considering using Electric Boat as the sole source for Seawolf.

A spokeswoman for the Naval Sea Systems Command confirmed that the Navy has suspended negotiations with Newport News, ''pending the outcome of the Secretary of Defense's Major Warship Review.''

Cheney ordered the review of the effectiveness and necessity of the Seawolf April 5. The report was to have been submitted to the House Seapower subcommittee this week, but has since been delayed.

Navy Secretary H. Lawrence Garrett III recommended to Cheney last month that the Navy ask for funding for 10 of the nuclear-attack submarines through fiscal year 1997, or an average of two per year. The Pentagon has already asked Congress for funding in fiscal year 1991 for two of the new Seawolf attack submarines.