Pentagon Seeks 13% Weapons Increase as Obama Urges End to Cuts | Bloomberg Business

by Anthony Capaccio

(Bloomberg) — The Pentagon is seeking an increase of $20.4 billion, or 13 percent, for weapons and research as President Barack Obama begins a push to remove defense budget caps that would force cuts in spending instead.

The Defense Department blueprint for the year that begins Oct. 1 calls for $177.5 billion in procurement and research spending. It includes funds to replenish weapons used in Iraq, Syria and Afghanistan, from Lockheed Martin Corp.’s Hellfire missiles to tactical wheeled vehicles made by Oshkosh Corp.

Obama will call for an end to sequestration, the automatic spending cuts that apply to both defense and domestic programs, in a speech to House Democrats on Thursday. Pentagon spending is popular with many Republicans and spread across hundreds of congressional districts. The prospect of averting automatic cuts in it is key to the White House strategy, said two defense officials who asked not to be identified to discuss internal deliberations.

“It’s the first act in a multi-act drama that will be played out with Congress over 2015,” Byron Callan, managing director of Capital Alpha Partners LLC in Washington, said in an e-mail.

Details of the Pentagon’s plans are spelled out in the annual weapons cost report that will be released when Obama sends his budget proposal to Congress on Feb. 2. A final draft of the Defense Department report was obtained from an official briefed on the spending plans.

The Pentagon will propose a base defense budget of $534 billion for fiscal 2016, about $34 billion more than sequestration would allow. The budget totals and potential cuts are separate from procurement funds in the supplemental $51 billion being proposed for war spending. The Defense Department has indicated that those funds also would be cut if the military had to live with sequestration.

Cutting $20.5 Billion

A Pentagon assessment of program impacts published in April estimated that $20.5 billion would have to be cut from weapons modernization if sequestration resumes after a two-year break, including $16.7 billion from procurement.

Among Defense Department procurement requests that reflect major increases is $11 billion to buy 57 F-35 jets and spare parts from Bethesda, Maryland-based Lockheed. That’s up from 38 planes and $8.57 billion this year for the Joint Strike Fighter, the costliest U.S. weapons system.

Lockheed, the biggest U.S. contractor, also would benefit from an increase of $1 billion to $2.58 billion for 29 C-130J transport planes bought under an existing multiyear contract, an increase from 14 this year, and $769 million for 5,950 Hellfire missiles, including 2,081 bought with war-fighting funds. The Defense Department is buying 1,729 missiles for $206 million this year.

Boeing Tankers

An increase of almost $700 million over this year to $3 billion is proposed for continued development of KC-46 refueling tankers made by Chicago-based Boeing Co. and the purchase of 12 of the planes, up from seven this year.

Oshkosh, based in the Wisconsin city of the same name, would benefit from an increase of $43 million to $334 million for 1,357 of its Medium Tactical Vehicles, including 1,191 bought with war funds. That’s up from 550 purchased this year.

General Ray Odierno, the Army chief of staff, told the Senate Armed Services Committee on Wednesday that a resumption of sequestration would force the cancellation of the latest phase of a program by Falls Church, Virginia-based General Dynamics Corp. to fortify the hulls of wheeled Stryker infantry vehicles against improvised roadside bombs. The budget calls for $667 million to upgrade 62 vehicles, an increase of $73 million over this year.

Other Increases

The following is proposed funding for other major systems that would receive increases in fiscal 2016, compared with the current year:

  • Joint Light Tactical Vehicles: The Army wants $457 million to buy 559 new Joint Light Tactical Vehicles. The service will select a contractor in July. The vehicle is intended to replace multipurpose Humvees and could lead to as many as 17,000 vehicles for the Army and Marines. The request is an increase from $227 million this year. Oshkosh, Lockheed, and AM General LLC, based in South Bend, Indiana, are competing for the contract.
  • Global Hawk: $1.42 billion, or about $346 million more than this year, for continued development and modifications of the drones made by Falls Church, Virginia-based Northrop Grumman Corp., to include buying three of the pilotless aircraft, after none were purchased this year.
  • AH-64E: $1.45 billion, or a $489 million increase, to upgrade 64 Boeing Apache helicopters into the latest E model, up from 35 requested this year;
  • * JDAM: $559 million to buy 12,294 of the GPS guidance kits for Joint Direct Attack Munition bombs made by Boeing, with 5,953 funded from the war spending request, up from 2,973 missiles and $101 million this year.
  • VH-92A Presidential Helicopter: $507 million to continue development of the aircraft from United Technologies Corp.’s Sikorsky unit, up from $368 million this year.
  • AIM-9X: $424 million sought for 733 Sidewinder short-range air-to-air missiles made by Waltham, Massachusetts-based Raytheon Co., up from $273 million and 470 this year.
  • Small Diameter Bomb: $272 million to buy 375 Raytheon bombs used against moving targets, up from 144 this year.

via Pentagon Seeks 13% Weapons Increase as Obama Urges End to Cuts | Bloomberg Business.