Among the cuts proposed by the Pentagon is the Air Force search and rescue replacement helicopter...what does this mean for the FVT search and rescue vehicle???
Pentagon Pushes Weapon Cuts
New Focus on Unconventional Conflicts; Defense Contractors Gird for Political Battle
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By AUGUST COLE and YOCHI J. DREAZEN
WASHINGTON -- Defense Secretary Robert Gates on Monday unveiled a sweeping overhaul of weapons priorities to reorient the U.S. military toward winning such unconventional conflicts as the war in Afghanistan rather than fighting China, Russia or other major powers.
[Defense Secretary Robert Gates said his budget would 'profoundly reform' military spending.] AFP/ Getty Images
Defense Secretary Robert Gates said his budget would 'profoundly reform' military spending.
With thousands of jobs at stake, political battles over the proposal are likely to be intense. The defense secretary is seeking a wide range of cuts, affecting pet programs at almost every major U.S. contractor, as well as several high-profile contracts with European companies.
Mr. Gates's proposed baseline 2010 Defense Department budget of $534 billion is up 4% from last year. But it signals a major departure from business as usual at the Pentagon, with a heavy emphasis on overhauling a procurement process that he and congressional leaders have decried as being too heavily influenced by powerful contractors.
The new budget halts new orders of F-22 fighter jets and allocates billions of dollars in new funding for such low-tech weapons as the unmanned drones being used to hunt insurgents in Iraq, Afghanistan and Pakistan.
The Pentagon chief said his plan represents "one of those rare chances to match virtue to necessity; to critically and ruthlessly separate appetites from real requirements," and that politics played no role in his analysis. "There's no doubt a lot of these decisions will be controversial," he said, adding that he hoped lawmakers would rise above "parochial interests."
Defense Overhaul Draws Wide Rebuke
Mr. Gates's proposed shake-up is expected to stoke debate about the importance of weapons-manufacturing jobs and appears to mark a turning point for an industry that enjoyed record business during the Bush administration.
Mr. Gates said Monday he planned to halt new purchases of the F-22 Raptor fighter jet from Lockheed Martin Corp. after delivery of 187 of the aircraft already ordered. He also said there would be no more orders for Boeing Co. C-17 transport planes beyond the 205 planned.
Both companies said his decision would prompt thousands of layoffs, handing congressional opponents a potentially potent political weapon. Mr. Gates tried to pre-empt criticism, saying Monday that any job losses would largely be offset by new positions to be created by companies receiving additional Pentagon money in coming years.
Defense Secretary Robert Gates announced a sweeping set of reforms designed to reorient the U.S. military, away from big threats like Russia, with a focus towards operations like those in Iraq. August Cole reports.
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Mr. Gates proposed boosting certain programs, including Lockheed Martin Corp.'s F-35 Lightning fighter jet, as well as a variety of unmanned aerial vehicles.
The Army's $200 billion Future Combat Systems program, led by Boeing and SAIC Inc., would be trimmed through a call to cancel an $87 billion high-tech ground-vehicle effort. Mr. Gates said plans for the program "do not adequately reflect the lessons of counterinsurgency and close quarters combat in Iraq and Afghanistan."
Other cancellations included an advanced satellite communications program, and the replacement of Air Force search-and-rescue helicopters. Shipbuilding is also getting trimmed, with the Navy holding off on a futuristic cruiser program. An older destroyer design will go back into production.
The International Association of Machinists and Aerospace Workers denounced the decision to discontinue the F-22 jet as unwise. "We simply cannot afford to cannibalize our national defense to repair damage caused by reckless financial institutions and greed-crazed corporate executives," union president Tom Buffenbarger said in a statement.
Contractors, including Boeing and Lockheed, said they were still studying Mr. Gates's decisions.
Defense stocks rallied after the budget announcement, ending a drawn-out period of uncertainty. Lockheed shares rose $5.97, or 8.9%, to $73.28; Northrop Grumman Corp. gained $3.96, or 9%, to $47.94; Boeing was up 47 cents, or 1.3%, at $38.16; General Dynamics Corp. rose $2.90, or 6.8%, to $45.56; Raytheon Co. was up $3.19, or 8.3%, at $41.66.
One big test for the defense plan will be winning over key Democratic lawmakers. Pennsylvania Rep. John Murtha, chairman of the House Appropriations Defense Subcommittee, said the plans were an important "first step in balancing the Department's wants with our nation's needs," but would require careful review.
Missouri Democratic Rep. Ike Skelton, chairman of the House Armed Services Committee, said the proposed budget was a "good faith effort," but that "the buck stops with Congress."
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A U.S. Air Force photo of two F-22 Raptor aircraft flying in a training mission off the coast of Florida.
Connecticut Sen. Joe Lieberman and Oklahoma Sen. Jim Inhofe urged in a letter "not to allow deep cuts in U.S. missile defense programs that are critically important to protecting our homeland and our allies against the growing threat of ballistic missiles." The Missile Defense Agency budget is being cut by $1.4 billion.
Mr. Gates's plans have clear international implications. His decision to increase spending on the F-35, which involves European nations and defense companies, from $6.8 billion in 2009 to $11.2 billion in 2010 secures the program's future and will help keep costs in check for such allies as the U.K. and the Netherlands.
Mr. Gates also said he intended to cancel the Lockheed-led effort to build a new fleet of Marine One helicopters for the president.
Finmeccanica's AgustaWestland is a partner on that program, which had called for heavily modifying a US101 helicopter into a flying limousine. Mr. Gates said he decided to cancel the program because costs doubled to more than $13 billion and the schedule slipped to six years overdue. Finmeccanica said in a statement that the move would have no impact on the company's financial guidance and is in no way related to the technical characteristics of the helicopter."
Beyond military hardware, Mr. Gates said the Pentagon plans a 5% increase in the number of special operations forces, or 2,800 people. He called for plans to recruit more cyber-warfare experts, and to add Army helicopter pilots and maintenance crews, in a move that will help support operations in Afghanistan.
Mr. Gates also plans to hire more than 30,000 new civilian officials over the next five years, gradually reducing the number of contractors to 26% of the Pentagon work force, down from a current 39%.
Write to August Cole at august.cole@dowjones.com and Yochi J. Dreazen at yochi.dreazen@wsj.com
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