Pentagon Budget Plans $178.8 Billion for Procurement and R&D in FY 2013

The Pentagon's fiscal 2013 budget plan calls for the spending of $178.8 billion to develop and buy new warships, fighter jets, and other major weapons, a 7.5 percent drop from the level initially projected for the coming year, according to a detailed budget document obtained by Reuters.

The total acquisition amount, including $9.1 billion in war-related funding, is down about 12.2 percent from the level requested in last year's budget, the document shows. The fiscal 2012 acquisition request included $15.4 billion in war funding.

The fiscal 2013 plan foresees spending of $109.1 billion for procurement and $69.7 billion for research and development, compared with earlier projections of $117.6 billion for procurement and $75.7 billion for R&D.

The document shows that the U.S. military is maintaining high levels of spending on most aircraft and ships as it shifts its focus to the Asia-Pacific region under a new military strategy announced last month by President Barack Obama and Defense Secretary Leon Panetta.

At the same time, funding for ground-vehicle programs will be far lower as the U.S. military reduces the size of the Army and Marine Corps after 10 years of war in Afghanistan and Iraq.

It doesn't look that bad for the Air Force and Navy procurement accounts, but the Army is clearly getting less money, said Virginia-based defense consultant Jim McAleese. He said the Boeing Co., the No. 2 U.S. weapons maker, fared well in the budget overall, especially given a sharp increase in funding for the KC-46 refueling tanker to $1.82 billion from $877 million, as did the Lockheed Martin Corp., the No. 1 supplier.

Huntington Ingalls Industries Inc., the company spun out of the Northrop Grumman Corp. last year, also did better than expected, with the Navy adding $781.7 million for initial construction funding of a new aircraft carrier, and $1.6 billion for the refueling of the USS Abraham Lincoln carrier.

Truck maker Oshkosh Corp. was hit hard by the Army's downsizing, losing about $600 million in funding for heavy trucks and a continued slowdown in a medium-vehicle program.

Panetta last month gave highlights of the 2013 budget, his first as defense secretary and the first that takes into account a deficit-reducing measure passed by Congress that requires cuts of $487 billion from projected spending over the next decade.

It is also the first Pentagon budget since the Sept. 11, 2001, terrorist attacks on America that requests less funding than the year before.

Weapons makers such as Boeing, Huntington Ingalls, Lockheed Martin, and Northrop Grumman -- as well as the General Dynamics Corp. and Raytheon Co. -- have been anxiously awaiting details about their programs.

The Pentagon is due to formally release the details on Monday when Obama sends his 2013 budget request to Congress, which must approve the spending plan.

Aircraft Funding Down

The plan for the 2013 fiscal year, beginning on Oct. 1, requests $9.17 billion for the Pentagon's biggest weapons program, the F-35 Joint Strike Fighter, down slightly from $9.25 billion requested in fiscal 2012.

That includes $2.7 billion for ongoing development of the radar-evading supersonic jet, and $6.15 billion to pay for 29 jets, down from $6.33 billion for 31 jets in fiscal 2012.

Panetta announced last month that the Pentagon would slow the ramp-up in production of the new fighter to allow more time for testing and thus avert costly retrofits.

Overall spending on aircraft programs will drop 12 percent to $47.6 billion in fiscal 2013 from $54.2 billion in the fiscal 2012 budget request, mainly due to a 41 percent drop in funding for the Lockheed-built C-130J transport plane, and a 32 percent cut in funding for the V-22 Osprey.

The Pentagon proposed spending $835 million on seven more C-130J airlifters in fiscal 2013, down from $1.43 billion for 12 planes in fiscal 2012.

Funding for the V-22, a tilt-rotor aircraft built by Boeing and Bell Helicopter, a unit of Textron Inc., would drop to $1.91 billion for 21 aircraft, from $2.8 billion for 35 planes in fiscal 2012.

The plan foresees spending of $1.25 billion for six high-altitude unmanned Global Hawk spy planes built by Northrop Grumman -- three for NATO and three for the Navy. Panetta announced last month that the Pentagon was canceling work on the Air Force's Block 30 variant.

The plan would increase funding for the AH-64 Apache helicopter built by Boeing by 55 percent, funding 40 remanufactured helicopters and 10 new aircraft. Northrop Grumman and Lockheed also have a big role in the program.

Funding for the UH-60 Black Hawk helicopter built by Sikorsky Aircraft, a unit of the United Technologies Corp., would continue a five-year procurement agreement with $1.3 billion for 59 of the twin-engine helicopters.

Ground-Vehicle Budget Falls 32%

The Pentagon's spending plan includes $10.9 billion for ground vehicles, 32 percent less than the $16 billion requested in fiscal 2012. The new request includes $117 million for continued development of a new light tactical vehicle for the Army and Marine Corps and a heavier new Ground Combat Vehicle.

Funding for the Family of Heavy Tactical Vehicles built by Oshkosh would drop to $58.1 million for 1,534 vehicles from $650 million for 9,336 vehicles funded in fiscal 2012.

Missile-defense spending would remain fairly stable at $9.7 billion under the fiscal 2013 request, maintaining work on several air- and missile-defense capabilities such as the Patriot PAC-3 missile built by Lockheed.

It would fund the Medium Extended Air Defense System (MEADS) joint program with Germany and Italy at $400.9 million, completing development testing.

Shipbuilding programs would get $22.6 billion in the fiscal 2013 request, down from $24 billion in the fiscal 2012 request. That will fund 2 Virginia-class nuclear attack submarines, 2 DDG-51 destroyers, and 4 littoral combat ships.

Space programs would get $8 billion, a drop of 22 percent from the $10 billion requested in fiscal 2012, due to fewer satellites and launches, and the cancelation of Northrop's Defense Weather Satellite System.

(Editing by Mohammad Zargham)