Boeing ABL: No More Planes; Boeing GMD: No More Interceptors; Boeing EMD: Coasting On Old Funds

Gates Plan Cuts 14 Percent Of MDA Funds; Aegis-Standard Missile Program Does Well, As Does THAAD System; Lawmakers Worried

Just after North Korea yesterday demonstrated a vast advance in its long-range missile capabilities, Secretary of Defense Robert Gates today unveiled a budget plan that would freeze, slash or effectively terminate several missile defense programs, including the main protection against long-range missiles.

But Gates said that other systems geared to killing short- and medium-range missiles could have taken down that North Korean missile if it had threatened the United States, an argument that some members of Congress aren’t buying.

The budget plan for the fiscal year ending Sept. 30, 2010, now must be reviewed by President Obama, who could choose to change it. In a good cop-bad cop scenario, dropping plans for some of the cuts would make a well-liked president even more popular. But Gates likely wouldn’t roll out a plan markedly countering Obama’s views, so it is probable Obama may endorse much of his plan.

Finally, Obama will send the defense budget proposal to Capitol Hill, where the Gates plan already is encountering a firestorm of protest from lawmakers on both the right and left. (Please see separate stories in this issue.)

Congress has final say on defense spending, meaning that Capitol Hill is about to become a major battleground over the future of defense acquisition programs, including missile defense initiatives.

Missile defense and other large military procurement programs led by The Boeing Co. [BA] would be hit hard multiple times in the Gates budget plan, while some major missile defense programs led by Lockheed Martin Corp. [LMT] and Raytheon Co. [RTN] would do well.

Specifically, the Gates plan would curb procurement in the Airborne Laser (ABL) and Ground-based Midcourse Defense (GMD) missile protection programs.

GMD is the designated system to defeat incoming enemy intercontinental and long-range ballistic missiles, especially those that North Korea may launch, while ABL is able to take down enemy missiles of any range just after the enemy launches them, when those threatening weapons are most easily tracked, before they can emit multiple warheads or confusing decoys or chaff. Officials noted that the ABL has been meeting its milestones, and has been poised for a critical test this year when for the first time it would shoot down a target missile.

But the Gates plan in fiscal 2010 would purchase no more aircraft beyond the one ABL plane now operating, turning the ABL program into a research project. "You cut it off at the present experimental plane," said Marine Corps Gen. James E. Cartwright, vice chairman of the Joint Chiefs of Staff, responding to questions from Space & Missile Defense Report. "There will not be a second tail [plane] in the buy." Roughly seven or eight ABL aircraft would be required for an operating system.

Cartwright did acknowledge there is value in developing directed energy weapons such as lasers, and perhaps progress can eventually be made in the ABL program to resolve weight, cost, power and other problems. For now, "It is not ready for production," Cartwright said. The understanding of directed energy technology is merely "rudimentary" at this point, he said.

At least ABL wasn’t canceled outright, the way Gates scrap-heaped some programs. "It needs to go further," Cartwright said.

The Gates plan also would buy no further interceptors for the GMD system in Alaska, contrary to earlier plans. Rather, there would be testing on the GMD system, as some Democratic lawmakers have advocated.

In the ABL system, a highly modified 747-400 jumbo jet contributed by Boeing contains laser systems by Northrop Grumman Corp. [NOC] and a beam control-fire control system by Lockheed.

The ABL has "significant affordability and technology problems," and its operational role is "highly questionable," Gates asserted.

He also proposes using some old money from the current fiscal 2009 budget year to fund the European Missile Defense (EMD) program in the next budget. EMD is designed to protect Europe and the United States against the threat of missiles from Middle Eastern nations such as Iran, a nation that just weeks ago launched a satellite into orbit, proving that Tehran possesses the technology to build intercontinental ballistic missiles. Iran also is producing nuclear materials in thousands of centrifuges. (Please see Space & Missile Defense Report, Monday, Feb. 9, 2009.)

For the EMD, "the discussion right now is that there is sufficient funds in [the current fiscal 2009] that can be carried forward to do all of the work that we need to do at a pace that we’ll determine as we go through the program review, the Quadrennial Defense Review, and negotiations with those countries," Cartwright said. He referred to the Czech Republic, where the EMD radar would be emplaced, and Poland, where EMD interceptors would be installed in ground silos.

That decision to provide no new funds to EMD came even as President Obama said that Iran constitutes a threat.

Speaking in the Czech Republic, in Prague, Obama said, "Let me be clear; Iran’s nuclear and ballistic missile activity poses a real threat, not just to the United States, but to Iran’s neighbors and our Allies."

Obama also denied speculation that he was dropping plans to build the EMD, leaving EMD supporters in the two countries hanging in the wind.

"The Czech Republic and Poland have been courageous in agreeing to host a defense against these missiles," Obama said. "As long as the threat from Iran persists, we will go forward with a missile defense system that is cost-effective and proven."

The ABL, GMD and EMD programs are led by Boeing. And the news for the second-largest defense contractor was even bleaker than that. The Gates plan would eliminate further buys of the Boeing C-17 transport plane and any acquisition of the planned future combat search and rescue helicopter under a contract that Boeing had won. Also axed was the planned $26 billion Transformational Satellite system that Boeing and Lockheed sought. (Please see separate story.) And a large chunk of the $200 billion Army Future Combat Systems program, involving some $87 billion for new vehicles, was thrown into question. Boeing and SAIC coordinate the program.

Gates also decided to end the F-22 Raptor supersonic cruise, super stealth aircraft program (Lockheed), making the most advanced fighter in the world, at 187 aircraft, just four more than the recent 183 level. Originally the Air Force was to receive 750, but that was later chopped to 381, then down to 277, and finally to 183. While the Air Force recently said it needed about 60 more of the planes, Gates said the service now agrees with the 187 figure. With fewer planes bought, the cost of each one soared. But Gates said he will accelerate buying the successor aircraft, the F-35 Joint Strike Fighter, or Lightning II, also by Lockheed (with others).

Another part of the U.S. multilayered ballistic missile defense (BMD) system, the Kinetic Energy Interceptor (KEI) program, would have to settle for more research and development in the Gates plan. Like ABL, KEI would hit enemy missiles in their vulnerable "boost" phase of flight, just after launch from a pad or silo.

Cartwright, responding to questioning from us about KEI, said it is time to rethink the entire concept of killing enemy missiles in their boost phase.

To be sure, he sees value in killing enemy weapons early in their ballistic flights.

"Looking at the boost phase is going to be an area that we’re going to do more R&D," Cartwright said. "Clearly, there is great leverage in working in missile defense in the boost phase, because you catch it before you have the sophisticated threats or capabilities that might emerge, decoys and things like that. But we’ve got to figure out what the right way forward is, what the right balance is between the mid-course and the terminal. We’ve got now a good mid-course. We’ve got a good terminal capability. What do we need in the boost phase? What kind of attributes does it have for mobility and location, etcetera? Those are the things that we’ve got to understand before we go any further with the boost phase."

As for the Patriot Advanced Capability-3, or PAC-3, interceptor, it is in production and will continue to be produced, "so that system’s working," Cartwright said. (Lockheed, Raytheon)

Yet another program facing bad news would be the Multiple Kill Vehicle, designed to take on enemy missiles spewing out multiple warheads or other items. This program would be terminated.

Gates overall would chop about $1.4 billion from the roughly $10 billion Missile Defense Agency budget, and restructure how MDA operates. Critics say Obama is planning to use money raked in by cutting defense programs as bill payers for other budget priorities, including domestic concerns. The Gates plan would focus more on BMD systems to kill short- and medium-range enemy missiles, rather than intercontinental ballistic missiles.

This is in keeping with the outlook of some key Democratic lawmakers in Congress.

Obama has said missile defense is fine, provided it is guaranteed to work and is "cost-effective."

The Gates plan would, however, support continuing programs such as the sea-based Aegis weapon control system (Lockheed) and Standard Missile-3, or SM-3, interceptors (Raytheon), also paralleling thinking of those Democratic legislators.

As well, Gates would provide $200 million to upgrade six more Aegis ships to missile-defense capability, beyond the 18 ships now upgraded and several more planned currently. And Gates would support the Terminal High Altitude Area Defense, or THAAD, system, also by Lockheed. Together, the Aegis and THAAD programs would receive a $700 million vote of confidence from the Gates plan.

"The SM-3 and the THAAD are coming out of their testing and are moving towards full-rate production," Cartwright continued. "We need those assets. You can see just in the past weekend the value of THAAD and having its system" as North Korea launched the missile.

Generally, Gates and Cartwright, speaking at a Pentagon news briefing, said the budget plan is needed to cope with new threats and types of war confronting the United States.

"We will restructure [missile defense efforts] to focus on the rogue state and theater missile threat," Gates said.

Before his plan is finalized, however, Obama must review and approve it. Gates conceded that the cuts he is proposing in existing programs will be opposed by many in Congress, noting that proposed cuts will mean tough futures for many companies and their employees.

He indicated that he already has heard the lawmakers’ arguments, and rejected them.

Gates Ready To Fight

"I know that in the coming weeks we will hear a great deal about threats, and risk and danger — to our country and to our men and women in uniform — associated with different budget choices," meaning the funding cuts he proposes.

"Some will say I am too focused on the wars we are in and not enough on future threats," Gates said. But he already has his rejoinders ready.

"The allocation of dollars in this budget definitely belies that claim," Gates insisted.

If spending remains robust in some programs, to "over-insure against a remote or diminishing risk" in an area where the United States already is dominant, that will mean "a dollar not available to take care of our people, reset the force, win the wars we are in, and improve capabilities in areas where we are underinvested and potentially vulnerable," he said. "That is a risk I will not take."

While many on Capitol Hill and industry see the secretary of defense as playing the villain here, Gates characterized himself as the good guy, ready to "ruthlessly separate appetites [of military services seeking weapons systems] from real requirements."

Gates paraphrased the Rolling Stones, telling service leaders that you can’t always get what you want, but you just might find you get what you need.

It is time, he said, to stop aspiring to "those things that are desirable in a perfect world from those things that are truly needed in light of the threats America faces and the missions we are likely to undertake in the years ahead."

He also argued that he is doing heavy lifting here, saying it is easy to speak of the need for budget discipline and acquisition reform, but it is "quite another to make tough choices about specific systems and defense priorities based solely on the national interest and then stick to those decisions over time."

Gates said he and Obama look forward to working with Congress, industry and others in deciding how to whittle down procurement spending to what the military needs.