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January 8, 2010

Gates Returns Boeing, Lockheed, Northrop Programs To Spend Plan

By Tony Capaccio, Bloomberg News

U.S. Defense Secretary Robert Gates directed the Air Force to return to its proposed budget three major programs the service offered to cancel, including one by Boeing Co. to build and install upgraded software in the cockpits of C-130 transports, according to a budget document.

Gates ordered restoration of $285 million in 2011 and $1.843 billion overall through 2015 on the C-130 program.

He also told the Air Force to restore $2.4 billion for an Internet-like radio that Lockheed Martin Corp. is building for aircraft and vessels.

In addition, he instructed the service to add $280 million to continue installing upgraded Pratt & Whitney engines on the Northrop Grumman Corp. Jstars surveillance plane.

Gates’s order is in an unreleased document he signed Dec. 23 that’s the basis for the new defense budget to be released Feb. 1.

The Air Force offered the cuts in August as part its effort to meet the Pentagon’s direction to cut about $24.2 billion, or about 3.8 percent, from its $632 billion five-year plan.

Defense spending since fiscal 2000, adjusted for inflation, has grown about 43 percent. When war costs are included, the number increases to 72 percent. Gates has called for modest growth going forward, with emphasis on improving the security of nuclear weapons, building capabilities to conduct irregular warfare, cyber defense and long-range strikes.

Gates’s directive means “either the service’s budget priorities are out of sync with those of the defense secretary or that that the proposed cancellations were advanced knowing there was little likelihood they’d be accepted,†said Loren Thompson, a defense analyst for the Lexington Institute, an Arlington, Virginia-based defense research organization.

Gates, in a move that benefits the Air Force and aircraft makers such as B-2 bomber contractor Northrop Grumman, told the service to add a total of $1.6 billion to its budget through 2015 to support industry efforts for a new bomber program that would begin in 2013.

Air Force spokesman Vincent King said the service will have no comment on the fiscal 2011 plan until it is announced next month.

Randy Belote, spokesman for Los Angeles-based Northrop Grumman, said the company hasn’t been officially notified of the status of the Jstar engine program.

United Technologies Corp.’s Pratt & Whitney engine unit would make 76 of the new engines that would go on 19 aircraft. Congress so far has provided funds for three of the planes.

Gates may be supporting the C-130 program because the Army and Marine Corps have become “heavily dependent on those propeller-driven airlifters in Iraq and Afghanistan,†Thompson said. “So installing up-to-date communications and navigation equipment is necessary to assure the safety and success of U.S. warfighters.â€

The C-130 Hercules is the world’s most widely used short- and medium-range transport with over 2,200 built since the 1950s.

The Air Force has about 427, including newer model C-103Js, which have the upgraded cockpit electronics. The plane is used in all military theaters including Iraq and Afghanistan.

The program to install 221 upgrade kits on older C-130s was to run through 2017. Congress has approved $1.7 billion for the program, and Boeing is producing the first 22 kits. The C-130 upgrade program has seen cost growth that pushed it to $5.8 billion from $4.1 billion.

Jennifer Hogan, spokeswoman for Chicago-based Boeing, said the company has “not received any official word on the status†of the C-130 program. The company has about 130 employees working the program in Long Beach, California, San Antonio, Fort Walton Beach, Florida and St. Louis, she said.

Gates told the Air Force to budget $285 million for the program in 2011 and increase funding annually to $653 million in 2015, according to the document made available to Bloomberg News. He also directed the Air Force to work with the U.S. Special Operations Command and identify other aircraft that should be upgraded.

Suzanne Smith, spokeswoman for the Bethesda, Maryland-based Lockheed Martin, referred calls on the Joint Tactical Radio program to the military program office in San Diego. Pentagon spokesman Jeff Mercer declined to comment on the Air Force budget until it is released.

The new radio would be fitted on helicopters, airplanes, ships, submarines and ground stations. The system, which uses secure, Internet-like communication, is intended to allow U.S. forces to communicate by voice and video and exchange data.

Of the major “transformation†programs designed to network different weapons platforms that were started by former Defense Secretary Donald Rumsfeld, the radio system is the only one that has survived the Obama administration.

Lockheed’s partners on the program include BAE Systems Plc, General Dynamics Corp., Northrop Grumman Corp. and Raytheon Co.

Gates directed that the Air Force and Navy shift money from other programs to the radio program, restoring $2.4 billion in research and procurement funds, starting with $236 million in 2011 and increasing to $717 million by 2015.

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Do you think it was smart, after some years ago convincing all the right folks that the AMP was the most cost-effective means for a most important modification, to say "...well, we really didn't mean it..."?

I hadn't seen that quote; who was it that said that?

I believe General Schwartz said something like its nice but we can't afford it.

My $0.02

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