Exclusive: Pentagon budget seeks to kill 7 arms programs

WASHINGTON (Reuters) - The Pentagon’s fiscal 2011 budget continues the Obama administration’s drive to get “the most bang for the buck” by terminating seven major weapons programs and shifting resources to focus on emerging threats.

Draft budget documents obtained by Reuters show the Pentagon will again propose halting Boeing Co’s C-17 transport plane and a second engine for Lockheed Martin Corp’s F-35 fighter jet -- two programs on its kill list last year that were revived by lawmakers during the budget process.

This year, the Pentagon is also targeting the costly development of a new Navy cruiser and a replacement for the Navy’s aging EP-3 intelligence aircraft. The Pentagon says it will use enhanced Navy destroyers to fill any resulting capability gap from losing the new cruiser.

The Pentagon plan also would scrap work on an advanced infrared missile warning sensor program for which Science Applications International Corp and Raytheon Co have been competing, and end a Pentagon human resources system by Northrop Grumman Corp. One document said $500 million had been spent on the Northrop program over 10 years with “little to show and limited prospects.”

“Our goals include focusing defense resources -- dollars, people and leadership attention -- where they are most critically needed. We seek the most ‘bang for the buck’ -- the best security payoff for every taxpayer dollar invested,” said one of the documents.

The documents, labeled as “draft” and “pre-decisional,” showed continued strong funding for shipbuilding, fighter and electronic warfare aircraft and other weapons programs. They also pointed to continued effort to beef up intelligence programs, unmanned systems, cyber security, and enhanced efforts to counter biological, chemical and nuclear weapons.

The Pentagon plans to ask Congress for more than $9.6 billion for various rotary wing aircraft. These include $1.2 billion for Boeing CH-47 Chinook helicopters; $3.1 billion for different models of H-60 helicopters built by Sikorsky Aircraft, a unit of United Technologies Corp; and $2.7 billion for V-22 tilt-rotor planes built by Boeing and Bell Helicopter, a Textron Inc unit.

The proposed budget request also includes $10.7 billion to continue development and procure 42 Lockheed F-35 fighters under a restructured program aimed at stabilizing cost and schedule, with a main engine built by Pratt & Whitney, a unit of United Technologies. One additional F-35 is included in the Pentagon’s separate war funding request.

The budget does not include funding for an alternate, interchangeable engine for the F-35. The second engine is being developed by General Electric Co and Britain’s Rolls-Royce. The Pentagon said it considered discontinuing that work due to cost and management issues.

The draft documents called for additional funding of $203 million in fiscal 2011 and $2.3 billion in fiscal 2012 to add 26 EA-18G electronic attack planes built by Boeing, saying military commanders considered that an urgent need.

In total, the fiscal 2011 budget will pay for procurement of 22 F/A-18E/F fighter jets at a cost of $1.9 billion, as well as 12 E/A-18G electronic attack variants for $1.1 billion.

The budget includes funding for a new aerial refueling fleet at an estimated cost of $35 billion, eyeing a contract award this summer and procurement to begin in fiscal 2013.

Northrop Grumman has said it will not compete against Boeing for the contract unless significant changes are made to the terms of the competition, which are due out soon.

Shipbuilding accounts for $14.1 billion of the 2011 budget request, funding that would pay for nine new ships. Included are two DDG-51 destroyers, two Virginia-class submarines, two Littoral Combat Ships and one amphibious assault ship.

A separate report by the Pentagon’s chief weapons tester raised critical questions about the LCS ships in particular, saying that neither of two competing designs would survive a hostile combat environment.

The Army’s ground modernization program will receive mostly research and development funding, but the budget will back development of a new ground vehicle after cancellation of the Future Combat Systems program last year.

The budget foresees spending about $4 billion over the next five years to maintain the U.S. bomber industrial base, study plans for a possible new bomber, and upgrade existing B-2 and B-52 bombers. Some analysts had predicted that the bomber program could be eliminated completely, but defense companies argued strongly for at least continued research dollars.

In space, another area that has seen major cost overruns in recent years, the Pentagon said it would end its partnership with the Department of Commerce on a polar-orbiting environmental satellite being developed by Northrop, and develop separate satellite systems.

Ballistic missile defense will remain a priority, drawing about $9.9 billion in funding, including $8.4 billion for the Missile Defense Agency, the documents showed.

The Pentagon declined to comment.

“The president will announce the budget on February 1. Until then, it would be inappropriate for us to discuss it,” said Navy Commander Darryn James, a Pentagon spokesman.

Reporting by Andrea Shalal-Esa; Editing by Matthew Lewis, Gary Hill