US House panel OKs $690 bln in 2012 military spending

WASHINGTON May 12 (Reuters) - A bill that would provide $690 billion for the U.S. military complex in fiscal 2012, including operations in Iraq and Afghanistan, has been approved by the U.S. House of Representatives' Armed Services Committee.

The legislation would authorize $553 billion for the Defense Department's base budget, the same amount sought by President Barack Obama in the request he sent to Congress in February.

The bill also includes $119 billion for "overseas contingency operations" such as Iraq and Afghanistan plus $18 billion for the Energy Department's military-related nuclear activities, Chairman Howard McKeon said in a statement on Thursday.

The Senate Armed Services Committee is expected to take up its version of the National Defense Authorization Act next month. The two versions must be passed by the full House and Senate and any differences must be ironed out before being sent to Obama for his signature into law.

Congress provided $668.6 billion for the U.S. military complex in fiscal 2011, which ends on Sept. 30, down from the $709 billion requested by Obama.

The House bill for 2012 added $425 million aimed at continuing the production line for the Army's M1 Abrams tanks, a General Dynamics Corp (GD.N) program, and M2 Bradley fighting vehicles, made by BAE Systems Plc (BAES.L).

The plan currently advocated by the Army would result in the first break in tank production since 1941, lasting one to three years.

Roscoe Bartlett, chairman of the subcommittee that overseas tactical air and land forces, argued that such a gap could end up costing more than keeping Abrams tank and Bradley fighting vehicle production lines going while preserving important parts of the U.S. military industrial base.

An Army spokeswoman did not immediately return a telephone call seeking a comment.

The House panel voted 54-to-5 Wednesday to require the Pentagon to let General Electric Co (GE.N) and Rolls-Royce Group Plc (RR.L) continue development of their alternate engine for the F-35 fighter as long as it was done at no cost to the government, despite the Pentagon's formal cancellation of a competitive engine program last month.

United Technologies Corp (UTX.N), which builds the Pratt & Whitney engine powering F-35 early production models, criticized the provision as "a testament to how hard it is to kill a program in Washington."

"This provision is nothing more than a back-door earmark that will put taxpayers on the hook for millions of dollars," said Marty Hauser, a United Technologies spokesman.

GE spokesman Rick Kennedy called Hauser's assertion that U.S. taxpayers could be stuck: "flat untrue."

He said GE would pay "other government costs," for instance to cover its interaction with government personnel, as part of a standing $100 million-plus offer to self-fund continued development and testing of its engine at least through the end of fiscal 2013.

Obama is seeking to shave $400 billion, or 4 percent, from roughly $10 trillion in projected national security-related spending through fiscal 2023 as part of a national debt reduction drive. He has criticized the second engine as wasteful and unnecessary. Last year, he threatened to veto any spending bill that went on funding it.

McKeon, the House panel's chairman, said in a May 5 speech that any savings identified by the Pentagon must go back into Defense Department spending. (Editing by Maureen Bavdek)