Lockheed F-35 fighter in US deficit panel's sights

November 11, 2010, Thursday/ 09:00:00
The Pentagon should cut 15 percent of its arms purchases, 10 percent of its research spending and slash Lockheed Martin's F-35 fighter jet program to help balance the federal budget, the heads of a presidential panel said in a draft proposal on Wednesday.

The F-35, also known as the Joint Strike Fighter, is the US Defense Department's costliest weapons purchase at up to $382 billion over the next two decades.

The co-heads of the deficit-reduction commission suggested canceling the F-35's Marine Corps version. Separately, they suggested substituting Lockheed's older F-16 and the Boeing F/A-18E for half of the Air Force's and Navy's planned F-35 purchases.

Going with such a mix of F-35s and other fighters would save an estimated $9.5 billion through fiscal 2015, said the co-chairmen, Erskine Bowles and Alan Simpson.

Fourteen of the panel's 18 members need to approve a final report for President Barack Obama containing recommendations to balance the budget. In the absence of any such consensus, the full commission is unlikely to embrace such austerity moves on arms purchases.

The House of Representatives' incoming Republican majority generally supports sustained spending on weapons programs, making it even less likely such cuts will come to pass. Lawmakers from both parties are typically eager to bring home the jobs that arms programs create in their districts.

The panel heads suggested cutting Defense Department spending on research, development, test and evaluation by 10 percent to save $7 billion in 2015.

Killing the F-35's Marine Corps version, which has been troubled by technical problems, would save $17.6 billion for fiscal 2012 through 2015, the co-chairmen said.

Lockheed, the Pentagon's No. 1 supplier by sales, said in a statement, "We are currently reviewing the commission's proposed defense spending recommendations, however we believe it is premature to discuss any potential impact to the F-35 program."

Under current plans, 2,443 F-35s are due to be purchased by the United States.

INDUSTRY GROUP VOICES CONCERN

The arms industry's chief trade group, the Aerospace Industries Association, voiced grave concern at the draft recommendations.

If implemented, they would "undercut the capability of the nation's defense industrial base to design, build and support complex cutting-edge defense systems," Marion Blakey, the group's chief executive, said in a statement.

Eight countries have joined the United States to co-develop the radar-evading F-35 -- Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway.

Lockheed's chief executive, Robert Stevens, has said the F-35 program would account for more than 20 percent of the company's revenues and profits when full production kicks in, perhaps in five years.

The deficit panel's co-chairmen called for ending procurement of the Textron/Bell-Boeing V-22 Osprey tilt-rotor at 288 aircraft, close to two-thirds of the current planned purchase. They would substitute MH-60 helicopters built by United Technologies' Sikorsky unit to save $1.5 billion in 2015.

They suggested killing a proposed fleet of 573 ship-to-shore General Dynamics Corp landing craft that the draft recommendation valued at $15.6 billion.

Overall, the co-heads said a 15 percent cut in arms spending would save $20 billion in fiscal 2015, bringing arms procurement spending to $117.5 billion. They said that was slightly below the average for the past 10 years including war-related funding when adjusted for inflation.

Contractors like Lockheed, Boeing, Northrop Grumman Corp, General Dynamics and Raytheon Co have been working closely with the military in the hope of staving off deep cuts to weapons programs.

The panel co-heads' draft said the United States also should cut military personnel stationed in Europe and Asia by one-third. Such a move would save about $8.5 billion in 2015, according to recommendations on creating "a leaner, more efficient" US Defense Department.

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