Panetta Said to Seek Cancellation of L-3’s U.S. Army C-27J Transport Plane

Defense Secretary Leon Panetta may seek a greater role for the U.S. Navy’s Virginia-class submarines by outfitting them with additional cruise missiles, according to a person familiar with plans to be announced today.

Panetta will lay out the Pentagon’s $525 billion budget plan for fiscal 2013 and also may ask Congress for authority to close domestic military bases, the person said.

The U.S. Navy’s Virginia-class submarines, built by General Dynamics Corp. (GD) and Huntington Ingalls Industries Inc. (HII), will be redesigned to carry out so-called prompt global strike missions, the person said.

Panetta also will propose reducing the Army from 562,000 personnel to 490,000 by fiscal 2017 and the Marines from 202,000 to 182,000 by that date, according to the person, who spoke on condition of anonymity before Panetta presents his budget outline at the Pentagon.

Air Force aircraft will be reduced to match a reduction in personnel under a defense plan to be outlined today by U.S. Panetta, according to the person.

Panetta will propose canceling the C-27J transport plane made by L-3 Communications Holdings Inc. (LLL), and Alenia North America, a subsidiary of Italy’s Finmeccanica SpA (FNC), the person said. Panetta may also call for retiring some C-5 and C-130 transport planes, both made by Lockheed Martin Corp. (LMT)

The Pentagon budget will call for reducing the number of Air Force tactical air squadrons to 43 from 50, while plans for new bombers and refueling aircraft will go forward, according to the person.

The Defense Department will say it can find $60 billion in savings by reducing waste and overhead, increasing information- technology efficiency, streamlining staff and inventory management.

To contact the reporters on this story: Roxana Tiron in Washington at; Gopal Ratnam in Washington at

To contact the editor responsible for this story: Mark Silva at

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