Defense contractors see mixed impact from Gates proposals

Defense contractors are responding today to the prospect of gains and losses as a result of Defense Secretary Robert Gates’ proposals announced April 6 to reshape major Pentagon programs.

Lockheed Martin Corp. is reviewing Gates’ proposals for major programs in which it is involved, including the Air Force’s F-22 Raptor fighter jet and F-35 fighter jet, Marine’s VH-71 presidential helicopter program, the Navy’s Littoral Combat Ship and the Transformational Communications Satellite (TSAT), a spokesman said today.

“We’re assessing the impact of the secretary’s decisions on all affected programs,” Joe Stout, director of communications for Lockheed Martin Aeronautics Co. in For Worth, Texas, told Washington Technology. “As we move forward with the budget process, Lockheed Martin will continue to support our customers and work to deliver affordable solutions that meet their strategic and operational needs.”

Gates proposed to cancel the new presidential helicopter, to be designed and built by Lockheed Martin and AgustaWestland, due to high costs and schedule delays. He also intends to terminate the $26 billion Transformational Satellite program, and instead purchase two more Advanced Extremely High Frequency satellites as alternatives.

Gates said he supports purchase of only four more F-22 fighter jets built by Lockheed Martin; the Air Force had requested 60 additional fighters.

However, Gates also said he wants to accelerate funding for the F-35 Joint Strike Fighter, also built by Lockheed, to $11.2 billion in fiscal 2010. He also wants to increase purchases of the Littoral Combat Ship, to 55 ships.

Other defense contractors also will be affected by the proposals, if Congress approves them.

"We are assessing the complete budget recommendation to understand the total picture," said Anne Marie Squeo, director of public relations for Raython Co.

Gates proposed cuts to the Zumwalt-class destroyer, which may affect Raytheon. Raytheon Integrated Defense System serves as the prime mission systems equipment integrator for all of the electronic and combat systems for the Zumwalt-class destroyer program. The Navy awarded the work to Raytheon in 2005 under the Navy's DDG 1000 Detail Design and Integration contract. General Dynamics and Northrop Grumman are building the ship.

In addition, the Boeing Co.'s airborne-laser program loses funding for a second prototype aircraft under the proposed budget.

Boeing is the prime contractor for Airborne Laser, which will provide speed-of-light capability to destroy ballistic missiles in their boost phase of flight.

The Airborne Laser aircraft is a modified Boeing 747-400F whose back half holds the high-energy laser, designed and built by Northrop Grumman. The front section of the aircraft contains the beam control/fire control system, developed by Lockheed Martin, and the battle management system, provided by Boeing.

Gates laid out a blueprint for Pentagon spending in fiscal 2010 that makes changes to a large number of big-ticket weapons programs.

“Collectively, they represent a budget crafted to reshape the priorities of America’s defense establishment,” Gates said April 6. “If approved, these recommendations will profoundly reform how this department does business.”