Where the Pentagon May Cut—or Spend
Light Tactical Vehicles
U.S. Army and Marine Corps plans to buy a fleet of new armored trucks could be at risk. The Joint Light Tactical Vehicle program is estimated to cost between $10 billion and $30 billion, according to the Congressional Research Service. Without it, the Army and Marines would depend on armor-fortified versions of Cold War-era Humvees made by AM General.
Body Armor, Rifles, Backpacks
Spending on contracts for body armor, night-vision equipment, backpacks, and small arms may decline $2.44 billion over the next couple of years as U.S. troops withdraw from Iraq and Afghanistan, according to a Bloomberg Government study by Sopen Shah. Savings should increase with the conclusion of those wars and cuts in the number of service members stationed elsewhere overseas.
Former Defense Secretary Robert Gates said in January that Army uniformed personnel will be reduced by 27,000 starting in 2015, and the Marines may cut 20,000. For every reduction of 10,000 nondeployed military personnel, the U.S. could save as much as $1 billion annually, according to Gordon Adams, associate director at the Office of Management and Budget under President Bill Clinton.
Advanced Fighter Jets
Lockheed Martin’s $382 billion F-35 Joint Strike Fighter is the only advanced jet in development. Congressional scrutiny may trigger cuts in the proposed purchase of 2,443 F-35 planes for the U.S. Air Force, Navy, and Marine Corps. If the already delayed vertical-take-off-and-landing version of the F-35 were dropped, Lockheed could lose as much as $33.2 billion in revenue, according to a Bloomberg Government study.
Carrier Strike Group
The U.S. Navy is reviewing its plans to maintain 11 aircraft carriers and may mothball at least one of the giant warships built by Huntington Ingalls Industries. That would mean related cuts to the vast support structure in the carrier’s strike group, which includes cruisers, destroyers, and other escort vessels, warplanes, and about 7,500 sailors. The potential savings: about $2.6 billion a year.
The U.S. military is expected to keep buying variants of the Black Hawk helicopter made by Sikorsky, a unit of United Technologies, along with Boeing’s Chinooks. The Army’s helicopter procurement budget should still rise to about $4.7 billion in 2016 from $4.4 billion in 2012, according to data compiled by Bloomberg Government.
Radars and Sensors
The electronics market will grow cumulatively to a total of about $45 billion by 2020, from $37 billion this year, according to Teal Group analyst David Rockwell. The Pentagon is buying electronic jamming devices and cloud-penetrating radar systems as well as sensors, networks, and computers, the central nervous system for military platforms.
The global market for drones is set almost to double over the next decade, to $11.3 billion, according to Teal Group’s Philip Finnegan. The analyst expects U.S. spending on research and development and procurement for unmanned aircraft to increase from $4.3 billion to $7.8 billion. The Pentagon plans to more than triple its inventory of strike and surveillance drones provided by such manufacturers as General Atomics Aeronautical Systems and Northrop Grumman.
Smartphones and Tablets
The U.S. military plans to expand its use of smartphones and tablets. Each branch has tested products such as Apple’s iPad and iPhone and HTC’s Touch Pro2. So far, General Dynamics’ Sectéra Edge and L-3 Communications’ Guardian are the only smartphones accredited for use on the Defense Dept.’s classified networks. Next-generation devices may erode the Pentagon’s dependence on Research In Motion’s BlackBerry.
Defense Secretary Leon Panetta told Congress that America’s next “Pearl Harbor” could be an attack on its computer networks. The Pentagon’s spending on cybersecurity is forecast to grow by 9.5 percent annually from the current level of $4.5 billion, according to John Slye, an analyst at Input, a market research firm in Reston, Va.