Pentagon to Seek Less for Missile Defense in 2014 Budget

The Pentagon will request $9.16 billion for missile defense programs for the 2014 fiscal year that begins Oct. 1, about $550 million less than this year’s $9.71 billion, according to internal budget figures obtained by Bloomberg News.

The missile defense proposal scheduled to be released April 10 is part of a $526.6 billion defense budget President Barack Obama will propose, according to government officials familiar with the budget plan who asked not to be named discussing it in advance.

The request is subject to congressional scrutiny and could be increased in areas lawmakers decide to give greater emphasis, such as the ground-based system of missile interceptors based in Alaska and California to protect the U.S. Last year, House members added money to start construction of a site on the East Coast. The Senate removed the funds, asking the Pentagon to conduct an environmental impact study instead.

Funding could also face additional across-the-board reductions if automatic cuts known as sequestration stay in place throughout fiscal 2014.

The administration’s reduced request comes despite heightened concerns about North Korean threats to attack U.S. bases in South Korea, Japan and Guam.

The Pentagon last week announced it was deploying Lockheed Martin (LMT) Corp.’s Terminal High-Altitude Area Defense system, which uses truck-mounted interceptors, to Guam. The Navy has stationed two Aegis-class destroyers, which are equipped to track and target missiles, in the region.

Representative Mike Rogers, chairman of the House Armed Services Committee’s missile defense panel, said in e-mail statement: “These repeated cuts are even more troubling given the advances in nuclear weapons and missile technology by the unstable regime in North Korea.”

‘Lip Service’

“The United States cannot be defended with lip service,” the Alabama Republican said. “It is time for President Obama to commit to a robust missile defense program now.”

This year’s missile defense request is lower than last year’s primarily because the administration is requesting no funding for the ground-based, mobile Medium Extended Air Defense System, or Meads, being developed by Lockheed Martin, of Bethesda, Maryland, with Rome-based Mbda Italia SpA. and Schrobenhausen, Germany-based LFK Lenkflugkoerpersysteme GmbH.

Congressional budget negotiators in December blocked further funding for the program. Lawmakers, however, included $400 million to complete U.S. participation in the Meads system in a continuing budget resolution Congress passed last month to keep the government operating through Sept. 30.

Missile Defense Agency spokesman Richard Lehner said he’d have no comment on the budget until it’s released.

Missile Contractors

Major missile defense contractors include Chicago-based Boeing Co. (BA); Dulles, Virginia-based Orbital Sciences Corp. (ORB); Waltham, Massachusetts-based Raytheon Co. (RTN); Falls Church, Virginia-based Northrop Grumman Corp. (NOC); and Lockheed Martin business units in Moorestown, New Jersey, and Dallas.

Last month, the Pentagon said it planned to spend $1 billion by 2017 to improve and deploy additional Orbital Sciences ground-based interceptors in Alaska to stop a small number of intercontinental ballistic missiles that could be fired from Iran or North Korea.

How much of that money will be included in the fiscal 2014 budget request depends in part on a test of the still-unproven system’s new warhead that won’t take place until later this year or in early 2014. The warhead failed two intercept tests in 2010.

The Pentagon is seeking about $1 billion in fiscal 2014 for the ground-based interceptor system managed by Boeing, an increase of about $100 million from this year.

Aegis Funding

Proposed spending on Aegis sea-based systems built by Lockheed Martin and Raytheon’s missile unit in Tucson, Arizona, increases to $1.5 billion from $1.4 billion.

Combined spending of $945 million for Lockheed Martin’s Patriot Advanced Capability-3 program, to include a “missile segment enhancement” upgrade for current missiles, remains about the same as the Pentagon’s request for fiscal 2013.

The administration’s proposed defense spending for fiscal 2014 doesn’t include automatic cuts of as much as $50 billion that will be imposed unless Obama and Congress rescind or amend the deficit-reduction requirement.

The total Pentagon request will drop to about $475 billion if Congress doesn’t roll back the automatic cuts, Todd Harrison, a budget analyst with the non-partisan Center for Strategic and Budgetary Assessments in Washington told reporters April 5.

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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