UPDATE 1-Pentagon eyes 2-3 pct procurement cut in 2010 budget
* Cut to procurement budget could be 2 pct to 3 pct
* Bigger cuts possible in later years
* Pentagon to finalize budget in next weeks (Adds quotes, details)
WASHINGTON, March 11 (Reuters) - The Pentagon is examining a range of options to trim its procurement spending by about 2 percent to 3 percent in its fiscal 2010 budget that begins Oct. 1, Deputy Comptroller Kevin Scheid said on Wednesday.
Scheid said bigger cuts to the Pentagon's major weapons programs were possible in later years, but those decisions would be made during the preparation of the fiscal 2011 budget, and guided by a major review of Pentagon programs and policy, the Quadrennial Defense Review, which is due to wrap up in August.
"We're looking at about 2 percent to 3 percent of the procurement accounts in FY10," Scheid told reporters after addressing a conference co-hosted by Aviation Week and McAleese & Associates. The Pentagon budget for 2009 included $181.2 billion for weapons purchases.
"I think your major muscle movements will be in FY11, both positive and negative, and they'll be informed in the QDR," Scheid told reporters, referring to the Quadrennial Defense Review.
Scheid said Defense Secretary Robert Gates had stated clearly that he did not favor shaving small amounts from a wide variety of programs and keeping them all on the books, but was focused on the strategic tradeoffs that were needed.
"He wants to do this in a strategic and thoughtful way so that we can best prepare for the threats that we're going to face in the future," he told the conference.
The White House's Office of Management and Budget had given the Defense Department a list of possible program savings, including a recommendation to delay a $35 billion competition for new refueling aircraft, but no decisions had been made, Scheid said.
"We take all of OMB's recommendations seriously, but it was a recommendation," he said. "It's been picked up with more significance than it probably needed to be."
The Pentagon would finish its work on the fiscal 2010 budget within the next few weeks, in time for the White House to submit an overall U.S. budget to Congress in late April, Scheid said.
The Pentagon's top defense contractors include Lockheed Martin (LMT.N), Boeing (BA.N), Northrop Grumman (NOC.N) and General Dynamics (GD.N). (Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn)
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