As billions are spent on the economy, Jim Wolf, Reuters, sees how much is left to keep major weapons programmes alive.
Date: 24 Oct 2008
Air Force Technology
The US armed services are manoeuvring to defend big-ticket weapon programmes as the nation’s economic woes mount and the government spends billions of dollars shoring up the financial system.
Experts say the services have a good chance of succeeding, to the benefit of contractors such as Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Raytheon.
To the extent there is budget pressure on the biggest programmes, they are likely to be stretched out or scaled back slightly rather than scrapped, several experts say. “It’s very rare for programmes to be actually cancelled,” says Steven Kosiak, vice president for budget studies at the Center for Strategic and Budgetary Assessments.
Even such controversial efforts as missile defence, which has been receiving about $10bn annually in recent years, was pruned by 3% this year by lawmakers – a measure of bipartisan support.
The air force is seeking the abrupt retirement of 314 F-15 and F-16 fighter aircraft and nine A-10 close-air support planes to save $3.4bn in fiscal 2010, which begins 1 October 2009. Its goal is to use the money to keep Lockheed’s next-generation
F-35 joint strike fighter on track, modernise bombers and buy unmanned surveillance planes.
In addition, air force officials have made it clear that they hope to extend production of Lockheed’s radar-evading F-22 air superiority fighter – a decision for a new president who will take office in January after the 4 November election.
And less than 24 hours after cancelling a projected $6.2bn deal with Textron’s Bell helicopter unit due to cost overruns and delays, the army said it would stage a new competition as soon as possible. The army said a new fleet of 512 reconnaissance and attack helicopters remained a ‘critical requirement’.
Political support
“Big weapons programmes generate so many jobs that they spawn potent political constituencies,” says Loren Thompson, a defence industry consultant. “Weapons programmes will be fiercely defended.”
The army is also seeking to protect its $160bn future combat systems programme, the centerpiece of its modernisation efforts. The programme is co-managed by Boeing and SAIC.
“We’re 100% behind it, and we’ll make it a priority in all of our budgeting going forward,” Army Secretary Pete Geren told reporters earlier this month, days after a $700bn financial rescue package was signed into law.
Not all defence-industry watchers believe military spending can be largely immune to the sputtering economy. James McAleese, a McLean, Virginia, government contracts lawyer, cites the army helicopter cancellation as signalling the start of leaner times for the defence industry. “This vote of no-confidence is an obvious wake-up call for the rest of the defence community for at least the next four years,” he says.
Spending patterns
The Bush administration has projected that defence spending, adjusted for inflation, will flatten and gradually decline starting in 2010, after peaking in fiscal 2009 that began 1 October.
Defence spending has risen four or five percentage points above the inflation rate over the past eight years.
Congress authorised $612.5bn for national security in fiscal 2009, including $542.5bn for the basic defence budget and a $70bn allowance for the wars in Iraq and Afghanistan.
Thompson says demand for fighter aircraft, ships, tanks and other multibillion-dollar weapons systems is driven mainly by overseas threats and domestic politics, not economic forces. Pentagon efforts to kill programmes have often been defeated by congress. Lawmakers kept alive a second engine for the F-35 fighter and the navy’s next-generation destroyer programme in 2008.
David Berteau, a defence industry analyst at the Center for Strategic and International Studies and a former Pentagon acquisition official, says the big programmes are based on ‘fundamentally sound requirements’. If they were not funded, the military would have to spend large sums to upgrade aging systems or abandon missions, “and we’re not going to do that,” he says.
Jacques Gansler, the chief weapons buyer from 1997 to 2001 who still advises the Pentagon on many issues, predicts the sums being spent on national security will not have a ‘precipitous decline’.
