Senate Committee Approves $513 Billion Defense Bill for 2012

The Senate Appropriations Committee approved a $513 billion defense spending bill for next year that would cancel the Army-Marine Corp Joint Light Tactical Vehicle program and a Northrop Grumman Corp. (NOC) satellite project.

The annual spending measure supports the Lockheed Martin Corp. (LMT) F-35, trimming $695 million from the $9.7 billion request. Still, the panel warned the program’s future “could be in jeopardy” if costs aren’t brought under control. The panel voted to maintain annual production at 35 aircraft through 2013 instead of increasing to 42 aircraft.

The overall $513 billion bill for the fiscal year beginning Oct. 1 essentially freezes military spending at this year’s level.

Sent to the full Senate by voice vote yesterday, the bill fully funds weapons programs including Northrop Grumman’s Global Hawk drone and Boeing Co. (BA) Chinook and Apache helicopters.

The bill also covers the Navy’s shipbuilding program, and the Senate panel added $1 billion to the Defense Health Program’s $33.8 billion request. It endorsed a pending Bell Helicopter Textron-Boeing multi-year V-22 Osprey contract, saying it would save $420 million over annual purchases.

The bill reduces the Pentagon’s $111 billion procurement request by $9 billion, operations and maintenance by $8.2 billion and its research request by $4.2 billion.

Radio, Missiles

Among cutbacks, the panel reduced funding for Boeing’s joint radio programs and for Lockheed Martin’s Thaad missiles. The $833 million missile request was reduced by $162 million because the amount “exceeds” Lockheed’s production capacity, the committee said.

The panel said it is terminating the Northrop Grumman-lead Defense Weather Satellite Systems, which the Air Force planned to begin in 2018, citing a “difficult and confusing set of management issues” and “uncertainty in cost estimates.”

“Each of these areas of risk indicate the system is not on a sound acquisition footing despite” a program restructure 18 months ago, the committee report says. The panel provided a $150 million termination fee to Northrop to end its current contract. The Air Force in May authorized Northrop to start working on the system.

The panel’s biggest termination was the estimated $54 billion Army and Marine Corp Joint Light Tactical Vehicle.

The Pentagon had requested $243 million to continue engineering and manufacturing development -- a phase that has doubled to 48 months from 24 months and with costs projected to more than double to $669 million, it said. The first vehicles also wouldn’t appear until 2017, the panel said.

Development Contracts

Three companies in 2008 won technology development contracts for the program: General Tactical Vehicles, a joint venture of General Dynamics Land Systems, part of Falls Church, Virginia-based General Dynamics Corp. (GD), and South Bend, Indiana- based AM General LLC; BAE Systems Land & Armaments, part of London-based BAE Systems Plc (BA/); and Bethesda, Maryland-based Lockheed Martin.

The program “which was initially launched as a model for a revised acquisition approach has already had significant changes in requirements and cost growth,” the panel said.

“The inability to keep program requirements stable has resulted in significant cost growth early and projected acquisition costs will make the program unaffordable in this challenging economic environment,” it said.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.