Lockheed Martin Corp.’s program to build a new spy plane for the U.S. Army will be cut $2 billion or 70 percent in the Pentagon’s proposed long-range budget.
The decision is outlined in a Dec. 20 budget memo signed by Deputy Defense Secretary Gordon England. The Army had planned to request about $3.4 billion in fiscal 2007 through 2011 for the program known as the Aerial Common Sensor.
Lockheed has had problems controlling the plane’s weight and cost, and the Army will announce Thursday whether the program will be terminated. Work was halted Sept. 14 for a major review of whether the No. 1 defense contractor can provide a plane capable of meeting Army and Navy reconnaissance and eavesdropping requirements.
“Cutting that much money from the program clearly foreshadows either program termination or a long delay and major restructuring,” said Loren Thompson, a defense analyst with the Arlington, Virginia-based Lexington Institute.
The Pentagon’s long-range budget plan carries “the assumption that it was going to be killed,” Thompson, who has followed the program, said when informed of the numbers.
Lockheed Martin beat Northrop Grumman Corp. in August 2004 for the contest to produce the new plane. The program would be worth as much as $6 billion if the Navy decided to buy up to 19 aircraft on top of the Army’s 33.
Army Secretary Francis Harvey said in October that the program’s problems were due to a confluence of factors, including Lockheed’s performance and service demands that the company meet potentially impossible military requirements.
“The trend was clear – it’s going to be behind schedule, it’s going to be over cost, so ‘Time Out’ on both sides,” Harvey said in an interview.
Lockheed Martin spokesman Thomas Greer declined comment, saying the company has not been made aware of any budget decisions affecting its programs.
England, in his memo, said $208 million taken from this Lockheed spy plane would be used to upgrade two existing Army reconnaissance planes built by Northrop Grumman Corp.
These two programs would receive a total of $106 million in fiscal 2007 and $51 million in both fiscal 2008 and 2009 for installation of more sophisticated sensors and gear to protect them against enemy air-to-ground missiles, The two Northrop aircraft are the Airborne Reconnaissance Low, which takes pictures and can eavesdrop, and the Guardrail Common Sensor that can detect enemy ground radar and other enemy electronics. Lockheed’s spy plane is intended to replace these two aircraft.
Embraer Airframe Bethesda, Maryland-based Lockheed, the largest U.S. defense contractor, would use an Embraer EMB-145 airframe to house the equipment needed for battlefield intelligence and surveillance missions, such as eavesdropping on radio transmissions. The plane is too small for the 15,000 pounds of equipment.
Lockheed is operating under an $879 million development contract that includes Brazil’s Empresa Brasileira de Aeronautica SA, Argon Engineering Associates Inc., BAE Systems Plc, Harris Corp., L-3 Communications Holdings Inc. and Raytheon Co. More than 40 percent of the work was to be performed at Lockheed’s facility in Littleton, Colorado, and as much as 17 percent outside the U.S.
Lockheed Martin shares rose 4 cents to $65.94 at 4:16 p.m. after composite trading on the New York Stock Exchange.
