* Unless Congress acts, Pentagon faces $500 bln more in cuts
* Automatic cuts described as "singularly stupid"
By Andrea Shalal-Esa
WASHINGTON, Nov 5 The Pentagon's top arms buyer
on Monday said he expected U.S. lawmakers to agree in coming
weeks to delay implementation of an additional $500 billion in
automatic defense spending cuts that are due to start taking
effect in January.
Undersecretary Frank Kendall said the Defense Department had
begun early planning for the process known as sequestration,
which would cut the military's budget by an extra $50 billion a
year, on top of over $50 billion in annual cuts already on the
Planning was difficult because the Pentagon would not have
much leeway to implement the cuts, Kendall said, noting that as
written, the law would force the department to cut every budget
account -- except military personnel costs -- and perhaps every
single budget item, by just under 10 percent.
Calling sequestration "a singularly stupid way to take money
out of the Defense Department," Kendall said no one in Congress
wanted the cuts to kick in on Jan. 2 as currently planned and
President Barack Obama was determined to avert the reductions.
"There's some work to be done to get from here to there,"
Kendall told a conference hosted by the National Contract
Management Association. He said the Pentagon had also looked
carefully at discussions in Congress about imposing some
additional cuts short of $50 billion as part of a compromise.
"A few billion dollars might be acceptable, but when you
start talking about $10, $20, $30, $40 (billion), to say nothing
of $50 billion, that really means we have to go fundamentally
rethink what kind of Defense Department we have," Kendall said.
Cuts of that magnitude would force tough choices about "what
capabilities we would keep and what capabilities we would drop."
U.S. defense companies like Lockheed Martin Corp
have been warning for over a year that uncertainty about future
budget levels is depressing investment in facilities, hiring and
mergers and acquisitions across the sector.
Lockheed, Northrop Grumman Corp, Boeing Co
and Raytheon Co told investors last month that they were
focused on cutting costs and drumming up foreign sales to
maintain profits despite what they see as a long cycle of budget
challenges after more than a decade of growth.
Kendall, who served at the Pentagon during the last big drop
in defense spending after the end of the Cold War, said Defense
Secretary Leon Panetta was determined to avoid what happened
then, when troops lacked equipment and funds for training.
He said the Pentagon's fiscal 2013 budget proposal had
already accepted some risks, but allowed the military to reach
its newly revamped strategic goals. Large-scale additional
spending cuts would make it impossible to achieve those goals
and would be "very hard" to absorb, he added.
Kendall said he expected lawmakers to enact "some kind of
deal that will delay sequestration during the "lame duck"
session, when Congress meets after the election, that is due to
begin the week after next.
Then Congress and the White House could together tackle a
bigger budget deal in early 2013, he said, adding: "I'm an
He said the Defense Department was also continuing its
efforts to reform the way it buys goods and services, and make
weapons systems more affordable. Kendall's office plans to
unveil additional reform efforts next week, an aide said.