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Weapons Programs at Great Risk, Pentagon Analyst Says

Weapons programs such as Lockheed Martin Corp. (LMT)’s F-35 jet face “terrible” reductions of Pentagon funding in coming years under automatic spending cuts, according to the military’s independent cost analyst.

“We need to modernize the force,” from new fighter aircraft to submarines, and “we are not going to be able to stay on that path” under the process called sequestration, which will cut about $50 billion a year from planned defense spending, Christine Fox, director of the Pentagon’s primary cost analysis group, said in an interview.

“We’d have to do terrible things to modernization” to wring out immediate savings because reductions in Army personnel, efficiencies and military compensation will take time to pay off, she said.

Fox heads an independent office created by Congress in 2009 as part of the Weapon Systems Acquisition Reform Act. Her staff conducts detailed reviews of program costs and long-term budgets. They also advise leaders when the budgets appear unrealistic.

She said she wants to counter a growing impression that the Pentagon can absorb $500 billion in cuts over a decade because it grew fat on spending in the war years that followed the terrorist attacks of 2001.

‘Draconian Changes’

“The narrative is building a momentum that to me is adding up to ‘not too bad, maybe we should do this,’” Fox said.

Fox said the reductions can’t be accomplished solely by reducing military compensation, closing more bases, finding efficiencies, overhauling acquisition processes and making more or faster cuts to Army troop levels beyond the decrease to 490,000 personnel already planned by 2017.

Sequestration “will force us to make very draconian changes to force structure and modernization,” Fox said. “We’ll have to do that because you can’t get all of the savings out of the categories people are talking about,” she said.

Fox spoke today in an interview before a scheduled presentation at a Washington conference sponsored by defense consultant James McAleese and Credit Suisse Group AG.

Deputy Defense Secretary Ashton Carter said at the conference that if sequestration continues beyond this year, “of course we’ll have to terminate” weapons programs.

“Nobody wants to do that, but what I don’t want to do is -- if we are driven to lower budget levels -- just react by stringing things out,” he said. “That’s the worst thing for the taxpayer and the warfighter.”

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

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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