August 12, 2009 / 8:28 PM / 8 years ago

Lockheed's F-35 may be flying into budget storm

WASHINGTON (Reuters) - The Pentagon may want to consider scaling back Lockheed Martin Corp’s multinational F-35 fighter program, the costliest-ever U.S. arms-purchase plan, as part of stepped-up budget belt-tightening, an analysis by an influential research group said.

The private Center for Strategic and Budgetary Assessments, several of whose one-time experts are now serving in senior Obama administration jobs, cited the F-35 as just one example of programs ripe for review by the Department of Defense during its once-every-four-year, top-to-bottom re-assessment now under way.

“Rather than buying both new long-range bombers and thousands of short-range F-35 fighters, DoD might consider whether the new bombers ... could represent a cost-effective substitute for some number of these new fighters,” said the CSBA analysis, of President Barack Obama’s fiscal 2010 budget request. The CSBA analysis was released on Wednesday,

Moreover, the use of unmanned systems “could enable a radically different force structure that achieves the same level of effectiveness at a much lower cost,” added the report by the center’s Todd Harrison.

Harrison was tapped this year to replace the CSBA’s long-time defense budget analyst, Steven Kosiak, who now oversees defense spending at the White House Office of Management and Budget.

Kosiak, along with the center’s Barry Watts, voiced similar concerns in a 2007 CSBA report, concluding a decision on the F-35’s future should be reached “sooner rather than later.”

The new CSBA report said funding for weapons acquisition was projected to remain flat over the next five years and that, based on the past, “current plans are likely to prove substantially more costly to execute than assumed by the administration.”

One of the stated goals of the defense budget for fiscal 2010, which starts October 1, is to focus more on irregular warfare needs in places like Iraq and Afghanistan versus all-out war against a potential foe such as Russia or China.

After Lockheed Martin, the Pentagon’s biggest suppliers are Boeing Co, Northrop Grumman Corp, General Dynamics Corp, BAE Systems Plc and Raytheon Co.

The industry already has begun adjusting to the Pentagon’s shifting priorities with new lines of unmanned vehicles and robots, cyber-security systems, logistics capabilities and enhanced offerings for intelligence, surveillance and reconnaissance.

Obama asked Congress in May for a total of $663.8 billion for the Defense Department in fiscal 2010, including $130 billion to fund the wars in Iraq and Afghanistan, according to the Pentagon. Harrison counted another $4 billion in “mandatory” funding, including accrued payments to military retirements.

In real terms, the base budget is about four percent above the level reached in fiscal 1985, the previous peak for the U.S. defense budget, and is at the highest level since World War Two, the report said.

As a share of the overall U.S. economy, however, the defense budget was higher during the Korean and Vietnam wars than it is today, Harrison said at a briefing.

The report said military pay, healthcare, retirement and other benefits were growing faster than the overall defense budget, threatening to “crowd out” arms procurement and research and development.

“Options for dealing with the tightening budget situation are limited,” Harrison wrote. “In the coming years, pressure will likely continue to grow for DoD to scale back its plans, including both major modernization efforts and force structure plans.”

Lockheed is developing three radar-evading F-35 models to replace at least 13 types of aircraft for 11 nations initially. At a projected cost of about $300 billion, the United States currently plans to buy 2,443 F-35s for the Air Force, Navy and Marine Corps.

Eight countries are F-35 co-development partners: Britain, Canada, Italy, Denmark, Netherlands, Norway, Turkey, and Australia.

Northrop Grumman and BAE Systems are Lockheed’s chief F-35 sub-contractors. Two separate, interchangeable F-35 engines are under development. One is built by United Technologies Corp’s Pratt & Whitney unit; the other by a team of General Electric Co and Rolls-Royce Group Plc.

Reporting by Jim Wolf; editing by Carol Bishopric

Our Standards:The Thomson Reuters Trust Principles.
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