Tuesday, April 12, 2011

Lockheed-Martin F-35 Fighter Program Loses $2.16 Billion Under Budget Deal

The budget compromise up for consideration by Congress cuts $2.16 billion from Lockheed Martin Corp. (LMT)’s F-35 Joint Strike Fighter program and doesn’t include money for the jet’s alternative engine being developed by General Electric Co. (GE) and Rolls Royce Group Plc.
The White House and congressional leaders agreed to a $670.8 billion Defense Department appropriations bill for 2011 that is $18.1 billion below the Pentagon’s original request for the fiscal year that ends Sept. 30. The base budget proposed for the Pentagon is $513 billion while funds for the wars in Iraq and Afghanistan remain at $157.8 billion, the amount requested by the Obama administration, according to budget details released by the Senate.
The House and Senate are expected to vote on the bill by April 15, part of the plan to avert a government shutdown when the current stopgap funding measure is set to expire. The numbers released today don’t include military construction projects, which are approved by Congress in a separate bill.
The bill proposes a cut of $2.16 billion from the F-35 program because of production and aircraft testing delays, according to the document. The $382 billion program to build variations of the aircraft for the Air Force, Navy and Marine Corps is under scrutiny because of rising costs and schedule slips, including technical hurdles in developing the Marine Corps’ short-takeoff and vertical-landing version.
The bill would cut 10 aircraft from the Marine Corps variant, down to three this fiscal year. The draft legislation wouldn’t change the request for seven of the Navy’s aircraft carrier version. Some of the funding from the Marine Corps variant would go to the Air Force, which would buy a total of 25 jets, three above the original request.

F-35 Alternative Engine

The measure also doesn’t fund the GE/Rolls Royce engine for the F-35. The Pentagon doesn’t want the engine and issued a 90- day stop-work order last month. The primary engine for the fighter jet is built by Pratt & Whitney, a unit of United Technologies Corp. (UTX)
The House in February also voted to strip funding for the GE-Rolls Royce engine from a previous version of the defense appropriations bill for 2011. The Senate hasn’t included money for the project for the last two years, relying on negotiations with the House to reinstate funding for the GE engine.
GE and Rolls Royce will keep the “fighter engine team together by maintaining a core technical team to protect, enhance and advance propulsion technologies” for the joint strike fighter and “future combat aircraft,” Rick Kennedy, a GE Aviation spokesman, said in an e-mailed statement.

Mine-Resistant Vehicles

Lawmakers are proposing an addition of $228.4 million to test and buy General Dynamics Corp. (GD)’s Stryker vehicle, with a V- hull to deflect roadside bombs. They also included the administration’s requested $3.4 billion to buy Oshkosh Corp. (OSK)’s Mine Resistant Ambush Protected-All Terrain vehicles, or M-ATV. The 2011 defense appropriations bill also funds about $2.5 billion for intelligence, surveillance and reconnaissance equipment, including 48 MQ-9 Reaper unmanned reconnaissance/attack aircraft made by General Atomics.
The proposed bill cuts a total of $9 billion across all operations and maintenance accounts. It also cuts $500 million from the Obama administration’s request of $2 billion for Iraqi security forces funds.
Lawmakers plan to fund the 1.4 percent authorized pay raise for military personnel and agreed to add $670 million to cover shortfalls related to military personnel expenses.
To contact the reporter on this story: Roxana Tiron in Washington at rtiron@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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