Bloomberg News

Pentagon Weapons Buyers Say Continued Cuts May Delay Aircraft

October 23, 2013

Chief weapons buyers for the U.S. military services outlined the impact of continued defense budget cuts, including a delay of 25 aircraft for the Navy and Marine Corps that would have been purchased this fiscal year.

Written testimony submitted today for a House subcommittee hearing from Sean Stackley, the Navy’s assistant secretary for acquisition, his Army counterpart Heidi Shyu and the Air Force’s William LaPlante represented worst-case estimates of budget cuts facing the Pentagon in the year that began Oct. 1.

While the Pentagon has tried to shelter from cuts its costliest weapons systems, led by Lockheed Martin Corp. (LMT:US)’s F-35 fighter, pressure is growing for reductions in weapons accounts because President Barack Obama has for the second year exempted the accounts that pay military personnel. Compensation amounts to about $137.1 billion of the president’s proposed $526.6 billion defense budget, not including war costs.

The first obstacle facing the Pentagon is the impact of a stopgap funding measure that freezes defense spending at current levels and would require a reduction of about $20 billion if continued throughout the fiscal year. The current stopgap measure goes through Jan. 15.

The second obstacle is a full round of automatic cuts, known as sequestration, requiring a reduction of about $52 billion.

Unless Congress and Obama reverse the sequestration cuts, the Navy may have to delay plans to purchase aircraft, Stackley said in testimony submitted to the House Armed Services subcommittee on Tactical Air and Land Forces.

Growler, Osprey

Some of the affected aircraft include four Boeing Co. (BA:US) EA-18G Growler electronic warfare planes, two Boeing P-8 reconnaissance aircraft and as many as three V-22 Osprey tilt-rotor aircraft made by Textron Inc. (TXT:US) and Boeing, Stackley said. Two Navy or Marine Corps F-35s wouldn’t be bought out of the 10 planned, he said.

Shyu said in her statement that sequestration at the current level may require delaying the purchase from Chicago-based Boeing of 12 Apache helicopters in addition to 13 cut last year. The Army wouldn’t pay General Dynamics Corp. (GD:US) to modify as many as 50 Stryker vehicles into a “Double-V” model that improves their capability to withstand roadside bomb blasts, she said.

LaPlante said in his testimony that the Air Force may have to cut as many as five of 19 F-35s it planned to buy from Bethesda, Maryland-based Lockheed this year.

“Our modernization forecasts are bleak” if sequestration continues into fiscal 2015, LaPlante said.

“Program disruptions will cost more taxpayers dollars to rectify contract breaches, raise unit costs and delay delivery of critical equipment,” he said.

The biggest U.S. defense contractors are reporting third-quarter earnings this week that showed they have endured federal budget cuts so far with little harm to their profits.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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Companies Mentioned

  • LMT
    (Lockheed Martin Corp)
    • $158.08 USD
    • 0.15
    • 0.09%
  • BA
    (Boeing Co/The)
    • $126.96 USD
    • 0.17
    • 0.13%
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