Feb 24 (Reuters) – The Pentagon’s fiscal 2015 budget
proposal will have a major impact on many key weapons programs
and the companies that build them, according to details released
on Monday by U.S. Defense Secretary Chuck Hagel and senior
defense officials.
If Congress enacts the plan, some programs will be
terminated, others will be slowed, and the Defense Department
will begin a few new procurement programs.
The following are some of the projected winners and losers
in the Pentagon’s fiscal 2015 budget and its priorities in the
coming years:
F-35 JOINT STRIKE FIGHTER
The Pentagon said it remained strongly committed to the
Lockheed Martin Corp F-35 fighter jet program, which
includes an engine built by Pratt & Whitney, a unit of United
Technologies Corp.
Northrop Grumman Corp and Britain’s BAE Systems Plc
also provide significant components for the aircraft.
Hagel did not provide details as to how many F-35 jets would
be funded in the fiscal 2015 budget or over the next five years.
But he said that if mandatory spending cuts remain in effect in
fiscal 2016 and beyond, the Air Force would have to defer the
purchase of 24 jets and the Navy would postpone procurement of
the F-35 carrier variant for two years.
A senior military official said it did not make sense to
cancel the Navy variant outright, since that would drive higher
cost of the remaining airplanes to be purchased by the Air Force
and the Marine Corps, and could unsettle international partners
on the program.
GLOBAL HAWK UNMANNED SPY PLANES
Hagel said the Air Force would retire its fleet of older U-2
spy planes, opting instead to maintain and modernize its fleet
of Global Hawk unmanned spy planes built by Northrop.
He said the decision was “a close call,” and marked a
reversal of the position the department took in its fiscal 2014
budget proposal – a proposal ultimately overturned by Congress.
He said Northrop had reduced the operating costs of the unmanned
plane and its longer range and endurance made it a better
platform for the future.
“We can’t afford them both,” said one senior defense
official, who spoke on background.
ENGINE MAKERS
Pratt & Whitney and General Electric Co would get a
boost from the Pentagon’s decision to add $1 billion in funding
for work on new jet engine technology. Some initial money has
already been put toward this effort, but the department is
adding significant funding for a program that will help protect
the design teams of the main enginemakers.
SHIPBUILDERS
The Pentagon’s proposed 2015 budget cut would truncate the
Littoral Combat Ship (LCS) program at 32 ships, instead of 52 as
currently planned. However, it calls for the Navy to examine the
range of options for developing a new surface warship that would
be more heavily armed.
Hagel said he had asked the Navy to submit proposals later
this year on the new program, including the possibility of a new
design and a modified version of the LCS ships. Lockheed and
Australia’s Austal build two different models of the
current LCS ships.
In addition, Hagel said half of the Navy’s cruiser fleet –
or eleven ships – would be “laid up” and placed in reduced
operating status while they are modernized and eventually
returned to service with greater capability and a longer
lifespan. That could result in significant orders for General
Dynamics and Huntington Ingalls Industries, which
build and service ships, as well as BAE Systems, which also does
much of the ships’ maintenance work.
At the same time, Hagel said the Navy would continue to buy
two destroyers and two attack submarines per year, orders that
benefit General Dynamics and Huntington Ingalls, as well as one
additional Afloat Staging Base built by a unit of General
Dynamics.
If sequestration budget cuts remained in effect, the Navy
would have to retire the USS George Washington aircraft carrier,
skipping a mid-year refueling that would have been carried out
by Huntington Ingalls and saving $6 billion, Hagel said. He said
the Navy would also have to slow the rate at which it bought new
destroyers.
BOEING
The Pentagon’s budget preserves funding for the KC-46
refueling tanker being built by Boeing Co, but it will
not include funding for the company’s F/A-18 Super Hornets or
EA-18G Growlers, according to defense officials.
Senior U.S. defense officials said the F/A-18 remained a
“very good airplane,” but the F-35 offered the military
additional electronic warfare capabilities.
“The F/A-1-8 is just not going to do it any more in those
out years,” said a senior military official.
GROUND VEHICLES
Hagel said the Army would cancel its Ground Combat Vehicle
program, and focus instead on next-generation technology. That
is a mixed bag for companies like General Dynamics and BAE
Systems that have invested heavily in the current program.
The new program would likely involve smaller funding amounts
in coming years.
(Reporting by Andrea Shalal, David Alexander and Phil Stewart;
editing by G Crosse)
