Bloomberg News

Pentagon Weapons Would Get $25 Billion Less Than Planned

March 04, 2014

Defense Secretary Chuck Hagel

Defense Secretary Chuck Hagel said in remarks at the Pentagon on Feb. 24, “Our recommendations favor a smaller and more capable force - putting a premium on rapidly deployable, self-sustaining platforms that can defeat more technologically advanced adversaries.” Photographer: Saul Loeb/AFP via Getty Images

March 4 (Bloomberg) --The Pentagon’s proposed $495.6 billion budget for the coming fiscal year would provide $154 billion for weapons purchases and research, $25 billion less than projected a year ago, according to the Defense Department.

The reduction is part of the $45 billion in savings that defense officials had to find to meet budget caps lawmakers agreed to in December. The budget would take steps to slow the growth in military pay and benefits, retire aging aircraft and maintain a military presence in Afghanistan and the Middle East.

“This funding level will allow the military to protect U.S. interests and fulfill the updated defense strategy -- but with somewhat increased levels of risk,” according to President Barack Obama’s proposed budget released today. The request, when adjusted for inflation, equals the Pentagon’s 2007 proposal, not including war operations.

If across-the-board cuts known as sequestration resume in 2016, “risks would grow significantly,” the administration’s budget says.

The weapons spending amounts released today reflect Defense Secretary Chuck Hagel’s pledge last week to shrink the Army and retire older planes in favor of newer systems such as Lockheed Martin Corp. (LMT:US)’s F-35 jet and Northrop Grumman Corp. (NOC:US)’s Global Hawk surveillance drones.

‘Indispensable Role’

“This is a budget that recognizes the reality of the magnitude of our fiscal challenges, the dangerous world we live in, and the American military’s unique and indispensable role in this country and in today’s volatile world,” Hagel said today in a statement.

The Pentagon’s Quadrennial Defense Review, an assessment carried out by the Defense Department once every four years and released today, said the budget crunch could hurt the military’s ability to engage in two simultaneous conflicts, compared with strategic guidance in 2012 that called for such capabilities.

“Budget reductions inevitably reduce the military’s margin of error in dealing with risks, and a smaller force strains our ability to simultaneously respond to more than one major contingency at a time,” the review released today said. “The department can manage these risks” under the current budget “but the risks would grow significantly if sequester-level cuts return” in 2016.

McKeon Objects

Representative Howard “Buck” McKeon of California, the Republican chairman of the House Armed Services Committee, issued a statement today rejecting the review, saying the strategy was “budget-driven” and fails to outline the military’s needs for the next 20 years as required by law. He said he would require the Pentagon to submit a revised report.

While the $495.6 billion budget proposal for the coming year, which doesn’t include spending on war operations, is within the congressionally approved limits for the year ahead, Congress must authorize and approve the spending. Hagel is scheduled to testify on the budget before the Senate Armed Services Committee tomorrow and the House Armed Services Committee the following day.

Lawmakers already have criticized his proposals to reduce Army forces to fewer than before the attacks of Sept. 11, 2011, while reining in some benefits for military personnel and retiring the A-10 attack aircraft.

The $154 billion Defense Department request for weapons acquisition and research and development is less than the $155.8 billion approved by Congress for the current fiscal year.

‘Cut Quickly’

“Readiness and modernization funding are the two pots of money that can be cut quickly, and that’s what the department is being forced to do,” said Todd Harrison, a defense analyst for the Center for Strategic and Budgetary Assessments in Washington. He said in an e-mail that the Pentagon should have started “letting people go sooner, particularly civilian employees,” in the face of the sequestration.

Under the Pentagon plan, spending on aircraft, including helicopters, would drop to $40 billion from the $45 billion requested last year, “reflecting the president’s new defense strategy,” according to a budget document.

The Army would retire its aging Kiowa Warrior helicopters, which conduct armed reconnaissance missions, and rely instead on upgraded Apache helicopters teamed with drones.

The Army budget request includes an increase in funding for its UH-72 Lakota light helicopter produced by Airbus Helicopters Inc. with $416.6 million to buy 55 aircraft, up from $171.2 million for 20 aircraft requested for this year.

While less would be spent on Army ground systems and piloted aircraft under the budget plan, funding for the Global Hawk would increase to $1 billion from the Pentagon’s $763 million request for the current year.

Boeing’s Tanker

That would pay for continued development of the Air Force Global Hawk Block 30 and 40 models, ground stations, new radar and a down payment on building the first four Navy versions.

Spending on Chicago-based Boeing Co. (BA:US)’s KC-46 aerial tanker would increase to $2.3 billion to buy the first seven aircraft, up from the $1.5 billion requested this year.

The Pentagon proposes spending $8.3 billion to buy 34 of the F-35s made by Bethesda, Maryland-based Lockheed in fiscal 2015, or eight fewer than previous projections, according to the figures. In addition to development funds, that includes $4 billion for 26 Air Force versions and $2.2 billion for six Marine Corps models and two Navy models. Still, that would be an increase from the 29 jets approved by Congress for this year.

Shipbuilding Plans

The budget for the Navy requests $22 billion for shipbuilding, including $7.4 billion for surface combatants and $7.7 billion for submarines such as the Virginia class being built by Huntington Ingalls Industries Inc. (HII:US) and General Dynamics Corp. (GD:US) and the Ohio-class program that would replace aging ballistic missile submarines.

The budget requests $248 million to buy the first two in a new class of Navy ship-to-shore vessels built by Textron Inc. (TXT:US) to replace the air-cushion landing craft that’s been in use for years.

Spending on ground combat vehicles would dip to $6.3 billion, $2 billion less than requested for this fiscal year. That reflects in part the cancellation of the planned Ground Combat Vehicle.

Some ground combat programs would increase. The budget request seeks $229 million to continue funding for the Army-Marine Corps Joint Light Tactical Vehicle to complete development, select a contractor and buy the first 183 vehicles. It also would provide $41 million to buy 444 tactical vehicles from Oshkosh Corp. (OSK:US), up from 240 last year, for the active-duty Army, National Guard and Reserves.

Deeper Cuts

The Pentagon’s budget projection for the five years ending in 2019 foresees $115 billion more in spending than currently authorized under sequestration.

If those reductions aren’t rolled back, the Pentagon may have to cut more deeply than planned into the Army’s ranks and halt the planned refurbishing of the aircraft carrier George Washington, leaving the Navy with 10 carriers instead of 11, Hagel said last week.

The Pentagon’s long-term plan calls for requesting $535 billion in 2016, or $35 billion more than the sequestration level; $544 billion for 2017, or $31 billion over the cap; $551 billion in 2018, or $27 billion over the cap; and $559 billion in 2019 or $22 billion over the cap.

The Pentagon budget previewed by Hagel last week would reduce the Army by 6 percent to about 490,000 personnel by 2015 from about 522,000 today, accelerating by two years the Army’s plan to reach that total by 2017. Hagel’s proposal also calls for reductions to about 450,000 by 2019.

Missile Defense

The Pentagon won’t conduct any negotiations to buy more than 32 Littoral Combat Ships, compared with the 52 originally proposed, Hagel said. Versions of the ship are made by Lockheed and Henderson, Australia-based Austal Ltd. (ASB)

The budget requests $2 billion for three vessels, one fewer than planned.

The Pentagon must “closely examine” whether the vessel “has the protection and firepower to survive against a more advanced military adversary and emerging new technologies, especially in the Asia-Pacific,” Hagel said.

Missile defense remains a spending priority, with the Pentagon requesting $1 billion for the Boeing-managed system of ground-based interceptors in Alaska and California. The request includes funds for a program to replace the current hit-to-kill warhead made by Raytheon Co. (RTN:US) that’s had three test failures.

Nuclear Mission

The Pentagon’s nuclear mission also gets a boost in the budget request with $198.4 million requested for Boeing to continue development, test and integration of the B-61 nuclear bomb tail-kit upgrade for the B-2 bomber and F-16 and F-15E fighters. That’s up from $33 million requested for this year.

The budget also requests authorization from Congress for a new round of military base closings, saying excess facilities are diverting money from “needed military capabilities.” Congress, whose members support their local bases as economic engines, has rejected base-closing requests repeatedly in recent years. Lawmakers say projected savings are exaggerated.

The budget requests $135.2 billion for military personnel costs, down from about $144 billion this year. The cut reflects savings from a smaller active-duty force, which is estimated to drop to 1.3 million troops from this year’s 1.36 million.

Hagel is seeking ways to cut the costs of military pay and benefits, which the budget says have grown 40 percent more than those for businesses since 2001.

Afghanistan Question

The budget proposes changes to the military health insurance system, a $1 billion cut in the annual subsidy to military commissaries and curbs in the growth of tax-free housing allowances. The Pentagon would spend $47.4 billion next year on health care for 9.6 million eligible military beneficiaries.

Specific funding for any Afghanistan presence in 2015 would be submitted as a budget amendment after a determination is made on troop levels. Afghan President Hamid Karzai has balked at signing a bilateral security agreement that the U.S. says is a condition for keeping a residual force. The administration is now waiting for the presidential election in April that will choose his successor.

Obama’s proposed budget also would provide $45.6 billion for national intelligence programs and $40.3 billion for the State Department and U.S. Agency for International Development.

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)
    • $192.85 USD
    • 1.21
    • 0.63%
  • NOC
    (Northrop Grumman Corp)
    • $149.9 USD
    • 1.35
    • 0.9%
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