Pentagon delay may pit Boeing against Northrup

Pentagon officials are weighing $21.7 billion in cuts suggested by the Obama administration, including cancellation of an airborne laser and putting off the purchase of aerial refueling tankers, according to a budget document.

The Office of Management and Budget submitted the list in its Jan. 29 guidance to the Defense Department. The document outlines "potential offsets" such as a five-year delay of the Air Force tanker contest that pits Boeing Co. against Northrop Grumman Corp. The move would save $2.37 billion in fiscal year 2010 and $13.3 billion through 2014, according to the list.

The OMB list is one of several being considered by Pentagon analysts as the recession forces policy makers to consider spending cuts across the U.S. government. The analysts were asked by Defense Secretary Robert Gates to review the fiscal 2010 budget, set to start Oct. 1, with a focus on programs with serious "execution problems."

The list and a separate chart prepared Feb. 3 for senior Defense officials of about $17.2 billion in potential cuts reflect the "hard choices" on weapons spending Gates said would be necessary when he testified to Congress on Jan. 27. Some of the items on the list and the chart overlap.

OMB suggested 12 Pentagon programs for cancellation and 10, including the tanker, for delays. The postponements also include Chicago-based Boeing's Future Combat Systems family of vehicles, drones and communications networks.

Marine Corps Vehicle

Among the suggested cancellations are Boeing's airborne laser anti-missile program; Falls Church, Virginia-based General Dynamics Corp.'s Marine Corps expeditionary fighting vehicle, and a new "transformational" communication satellite the Air Force wants to launch.

The contest to develop and build the satellite would pit Bethesda, Maryland-based Lockheed Martin Corp. against Boeing.

OMB spokesman Tom Gavin didn't return a telephone call for comment on the list.

The tanker program has been delayed for years. Los Angeles- based Northrop and Airbus SAS parent European Aeronautic, Defence & Space Co. won a contract valued at $35 billion in February 2008. Losing bidder Boeing successfully protested the award.