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US Secretary of Defense Robert Gates and General James Cartwright, Vice Chairman of the Joint Chiefs of Staff, at their joint news briefing on FY2010 budget recommendations - Source: Reuters
The United States would trim missile-defence spending, cancel
multibillion-dollar weapons programs but buy more arms for fighting
insurgents in places like Iraq and Afghanistan, under a 2010 budget
plan.
Defense Secretary Robert Gates proposed an overhaul of the world's
most powerful military arsenal, including cancelling a $22 billion
presidential helicopter program that President Barack Obama has
described as an example of Pentagon procurement gone amok.
Gates would end production of Lockheed Martin's F-22, the premier
US fighter jet, at the 187 now delivered or in the pipeline.
But Lockheed gets a boost with accelerated funding of its F-35
Joint Strike Fighter.
At a Pentagon briefing, Gates said the United States had the
defences it needed for now to protect from a long-range ballistic
missile of the type that North Korea fired on Sunday.
"It actually would not have changed it at all," he said when asked whether a successful test-firing would have changed his views on spending.
"We're in a pretty good place in terms of - with respect to the
rogue missile - rogue country missile threat," he said.
The defence proposals must still become part of Obama's formal
budget submission to Congress.
Lawmakers have the final say on spending and were already
gearing up to alter the plan.
Gates said he would kill the vehicle leg of the Army's Future
Combat Systems, a Boeing Co-led flagship of US Army modernization
built around an advanced digital network.
The Defense Department would review requirements for the vehicles
in light of changing US military needs and seek bids for the
revamped requirements later.
Also cancelled under Gates' proposal would be a projected $44
billion Transformational Satellite program that would have swelled
the coffers of rival bidders Lockheed or Boeing.
The proposals for fiscal 2010, which begins October 1, would add
funding for unmanned aerial vehicles and other intelligence,
surveillance, communications and reconnaissance programs designed
to thwart insurgents.
"Our conventional modernization goals should be tied to the actual
and prospective capabilities of known future ... adversaries, not
by what might be technologically feasible," Gates told reporters at
the briefing.
Defence stocks, beaten down for weeks on fears that years of rapid
growth in US defence budget was finally ending, rebounded following
Gates' presentation.
"There was a cloud hanging over those stocks, people wondering what
was going to happen, what the announcements were going to be," said
Giri Cherukuri, head trader Oakbrook Investments LLC.
The Standard & Poor's Aerospace and Defense index .GSPAERO
ended up 3.6%.
Shifting priorities
Gates' proposal would cut missile defence spending by $2.4 billion
in 2010, or roughly 15%; scrap a $25 billion competition for new
Air Force rescue helicopters, and buy 31 more of Boeing's F/A-18
fighter jets in 2010.
Overall, Obama has said he would seek roughly $918 billion for the
Pentagon's core budget in 2010, not including war funding, about
four percent more than the $883.2 billion Congress provided for
2009.
Gates' proposal would change the makeup of the spending, not the
overall figure.
It would revamp the way the Navy builds destroyers, kill a new
cruiser program, and end the VH-71 presidential helicopter program
run by Lockheed and AgustaWestland, a unit of Italy's Finmeccanica
SIFI.MI.
The end of F-22 production would be more than offset for Lockheed
by a proposed speedup of F-35 procurement from 14 aircraft per year
to 30 aircraft per year.
If approved by Congress, this would boost F-35 procurement from $11.7 billion to $19.2 billion in 2010.
The F-35 is being developed by the United States and eight
foreign partners.
Gates kept alive a $60 billion competition between Boeing and
Northrop Grumman Corp for new aerial refuelling tankers, saying the
Defense Department intended to seek new bids this summer.
Gates said he still opposed congressional moves to buy more
tankers and split them between the two competitors.
Retired Lt Gen Michael Dunn, president of the Air Force
Association, criticized Gates' plan to retire 250 aircraft without
replacements - older F-15s, F-16s and A-10s.
These recommendations, Dunn said, would undercut Air Force ability
to deter foes, carry out an air campaign, and rescue downed
fliers.
Gates put the final touches on his proposals this weekend even as
North Korea's missile launch sparked renewed debate over futuristic
programs including Boeing's planned Airborne Laser, a modified 747
jumbo jet designed to zap missiles soon after they are
launched.
The $17-billion-a-year missile shield is the Pentagon's costliest
arms development project. Gates proposed turning the airborne laser
into a research program, adding $1.2 billion to regional missile
defence programs, and said the Pentagon would put off buying more
ground-based interceptors for a site in Alaska.
Lockheed, Boeing and Northrop - respectively the Pentagon's three
biggest suppliers by sales - each have big stakes in elements of
the layered antimissile shield.
Six US senators - an independent, Republicans and Democrats - urged
President Barack Obama to restore full funding for missile
defence.
"The threat posed by rogue states with ballistic missiles has been
underscored by Iran and North Korea's recent missile tests," they
wrote.
Lockheed shares ended up 8.9% at US$73.28, Northrop rose nine
percent to US$47.94 and Raytheon rose 8.3% to US$41.66.
Even Boeing, which had been down for most of the session, ended slightly higher, up 1.3% at US$38.16.
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