More cuts in defense spending a "given": Air Force

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Published December 20, 2012

| Reuters

Further cuts in U.S. military spending are certain, even if Congress and the White House find a way to avert damaging automatic reductions, a top U.S. Air Force general told Reuters as prospects for such a deal appeared to dim.

Lieutenant General Charles Davis, the top military official in charge of Air Force acquisition, said the Defense Department was working hard to identify ways to safeguard its most critical weapons programs but there were no easy answers.

At this point, he said, the prospect of further cuts to the overall Pentagon budget means every single acquisition program faces some reductions and schedule changes, which in turn would drive up the cost of individual weapons.

Mounting budget pressures also meant the Air Force would not be able to start developing new radar and satellites to replace aging current systems, Davis said, citing examples including the Airborne Warning and Control System (AWACS) or Joint Surveillance and Target Attack Radar System (JSTARS).

"There are definitely going to be cuts. We know that's a given," Davis said in an interview in his Pentagon office. He said it was unlikely the Pentagon's budget would remain unscathed even if it can avoid sequestration.

Any future cuts would be in addition to $487 billion already slated to take effect over the next decade.

The general's sober assessment came amid stalled talks between U.S. lawmakers and the White House about avoiding the so-called fiscal cliff, as across-the-board budget cuts and tax increases take effect in January.

Even if the two sides reach agreement and avert the full $500 billion in Pentagon spending cuts required over the next decade under "sequestration," top defense officials and industry executives are bracing for still undefined reductions.

Davis said the Air Force had already been thwarted by Congress in its bid to retire some aging F-16 and A-10 fighter aircraft in fiscal 2013 to save money for the many critical procurement bills coming due in coming years, and there were no other options that generated a similar level of savings.

The U.S. House of Representatives approved the final version of the annual defense policy bill on Thursday, a measure that blocked the Pentagon from carrying out several changes aimed at saving money because they would cut jobs in lawmakers' home districts.

Davis said it would likely take another year before lawmakers were more open to changes that would make the services more efficient. "We're still one budget cycle out from ... where we can truly do the things that make sense because we don't have the money to do everything."

UNPAID BILLS

Davis said there was some flexibility in the way the defense policy bill was phrased, but the bill would force the services to continue work on some programs the Pentagon had tried to cancel, without Congress providing the needed funding.

"It worries me a lot," he said. "It clearly does not reflect the fact that we have significant bills that we cannot pay right now, and they're going to grow through 2014."

The Air Force's top priorities were to protect a fixed-price contract it has signed with Boeing Co for 179 new refueling planes and safeguard the already reduced annual buy of Lockheed Martin Corp F-35 fighter jets, as well as a classified program to develop a new bomber, Davis said.

He said the Air Force's approach to acquisitions reflected the more budget-conscious times.

The service is doing initial technology development work on the new bomber, but that work was focused heavily on "what's already been out there, what's been tested, what's been proven," rather than pushing for brand new technologies.

"It'll be a bomber that meets our requirements, but we won't stretch the requirements to the point that we have to go out and invent a whole bunch of technology in order to do it. We just won't do it. Can't afford it. Won't happen," he said.

Davis defended the Air Force's handling of a $6.8 billion rescue helicopter competition that saw all but one competitor withdraw last week, saying the program was structured to clearly tell potential bidders what capabilities the Air Force wanted and what it could afford.

"If we had the budgets of 10 years ago, we'd have a different discussion. That's not the case anymore," he said, denying that the terms of the competition had been written to favor the Black Hawk helicopter built by Sikorsky Aircraft, a unit of United Technologies Corp.

"Nothing could be further from the truth," he said, adding that the Air Force would require Sikorsky to submit certified cost and pricing data if it turned out to be the sole bidder for the program when bids are due on January 3.

Boeing, Bell Helicopter, a unit of Textron Inc, EADS and Northrop Grumman Corp teamed with AgustaWestland, a unit of Italy's Finmeccanica SpA, all announced last week they would not bid for the work.

Davis said there was still a possibility the other potential bidders could change their minds and submit bids.

"We have seen that in major competitions before, these false punts, so to speak," Davis said. "I'm not surprised by anything I see these days."

(Reporting By Andrea Shalal-Esa; editing by Todd Eastham)

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