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House Panel Slashes Army Modernization Plan
NewsMax.com Wires
Thursday, May 10, 2007

WASHINGTON -- The House of Representatives Armed Services Committee voted Wednesday to slash $867 million -- one-quarter of President George W. Bush's request -- from the Army's top modernization project and recommended killing a troubled scout helicopter program.

The panel voted to force the U.S. Defense Department to fund a controversial second engine for the F-35 Joint Strike Fighter, the costliest arms acquisition project ever.

The engine is being developed by General Electric Co. and Britain's Rolls-Royce Plc to compete against one built by the Pratt & Whitney unit of United Technologies Corp.. At issue is a potential $100 billion market.

The U.S. Defense Department has sought for the past two years to kill the alternate, interchangeable engine because of mounting costs for Lockheed Martin Corp.'s F-35 -- a projected $299 billion program through 2034.

The fiscal 2008 military spending bill at issue still must be dealt with in the Senate and full House.

The vote to ax 25 percent of President Bush's fiscal 2008 request for the Army's Future Combat Systems project, or FCS, was a blow to program co-managers Boeing Co. and Science Applications International Corp., among others.

The goal was to scrap redundant components and cut management costs, said Rep. Neil Abercrombie, the Hawaii Democrat who chairs the House panel's Air-Land subcommittee.

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The committee action would leave $2.8 billion in the 2008 budget to support what Abercrombie called FCS "core programs." It would require the Army to carry out a large-scale, operationally realistic test of the FCS communications and sensor network before manned ground-vehicle production.

The panel recommended cutting all of the about $470 million in fiscal 2008 procurement funds sought by President Bush for the so-called Armed Reconnaissance Helicopter being built by Textron Inc.'s Bell Helicopter unit.

It called on the Defense Department to hold another competition to obtain the required capabilities.

In March, the Army sent Bell Helicopter a "show cause" letter asking why the program should not be terminated. The first production option was to have been exercised last December. No operational aircraft have been produced. The aircraft's projected cost has doubled from $5.2 million to more than $10 million per aircraft.

The committee recommended adding $2.4 billion to the 2008 budget to buy 10 Boeing C-17 cargo aircraft; the White House had sought to end production of the C-17 in 2008.

The Future Combat Systems project would use advanced communications technology to link U.S. troops with manned and unmanned air and ground weapons and sensors.

Chicago-based Boeing, the Pentagon's largest supplier after Lockheed Martin Corp., and San Diego, California-based SAIC are partnered as the project's "lead systems integrator."

Boeing, reacting to the vote for both companies, said predictable, stable funding was critical to long-term success.

Repeated funding cuts "directly impact the delivery of FCS capabilities to our nation's soldiers," said Mary McAdam, a Boeing spokeswoman.

The Army originally estimated the FCS project's cost at $91 billion, a sum that has ballooned to more than $200 billion, Abercrombie said, citing a figure from the Pentagon's cost estimating group.

Committee Democrats beat back a Republican-led attempt to restore $200 million of the recommended $867 million cut, which equaled 25 percent of President Bush's request for the fiscal year that starts October 1.

Rep. Duncan Hunter, the panel's senior Republican and a candidate for his party's 2008 presidential nomination, said the size of the recommended cut worried him about the potential "long-term impact on the capability of the U.S. Army."

Abercrombie, who began his remarks by quoting President Dwight Eisenhower's warnings about the dangers to democracy of the "military-industrial complex," said his subcommittee had sought to balance the "health and capability of the current force with the needs of future capabilities."

"There is no question that some contractors will have to make some adjustments," he said. "But our military men and women have been making adjustments for years."

The committee voted to recommend what Abercrombie said would be a 40 percent jump in the Army's procurement account over last year's budget request.

© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.

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