Pentagon’s Five-Year Plan Months Away, Comptroller Says

The Pentagon’s five-year spending plan, a blueprint awaited by contractors in a time of budget cuts, probably won’t be produced until late December, according to the Defense Department’s comptroller.

“Where we end up will depend” on decisions President Barack Obama and the White House budget office “will probably make in December,” when “they tell us what dollars we will have available,” Pentagon Comptroller Robert Hale said in an interview. “I don’t know what they’ll say. They don’t know what they’ll say yet.”

The plan for the five years starting Oct. 1, 2014, depends in part on whether congressional budget talks that began this week provide relief from about $50 billion a year of reductions from planned spending under the automatic cuts called sequestration. If not, Defense Secretary Chuck Hagel said in July, the Pentagon will have to choose between a “much smaller” force or a decade-long “modernization holiday” that would affect major weapons systems.

“Hale is saying that budget uncertainty could persist well into next year,” said Kevin Brancato, a defense analyst at Bloomberg Government. “Defense contractors that have been delaying acquisitions and forgoing investments will have to wait even longer.”

While Hale said deep cuts would require “a fair number of changes in a variety of areas,” he said “I’m going to stop short of saying whether you’ll see major cancellations” because that decision hasn’t been made.

Hale said the Pentagon’s costliest weapons system, the $391.2 billion program to develop and build Lockheed Martin Corp. (LMT)’s F-35 fighter, wouldn’t escape scrutiny for potential cuts.

“It’s an important program and we want to be darn sure we don’t damage the program, so we’ll work hard to avoid” that, “but yeah, we’re going to have to consider it,” Hale said, even as the Pentagon considers increasing annual production of the F-35 starting in fiscal 2015.

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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