2011 Budget Highlights Need For Rotorcraft, Reapers, Growlers & Joint Strike Fighter

A draft overview of the defense department’s fiscal 2011 budget request highlights a handful of weapons programs as key to current and future military operations. The document was leaked last week, but media reports have only mentioned a small portion of its content. The chapter of the overview describing technology investments includes three sections on weapons — enhancing capabilities for current conflicts, enhancing capabilities for future conflicts, and missile defense. Under the heading of enhancing capabilities for current conflicts, the budget overview cites the need to bolster special operations forces and develop improved cyber skills, however it only cites six specific weapons programs as high-priority investments:

— The UH-60 Blackhawk, MH-60 SeaHawk, CH-47 Chinook, and V-22 Osprey rotorcraft (good news for Sikorsky, Boeing & Textron).

— The MQ-9 Reaper unmanned aircraft derivative of the Predator (good news for General Atomics).

— The EA-18G Growler electronic warfare derivative of the carrier-based Super Hornet (more good news for Boeing).

Under the heading of enhancing capabilities for future conflicts, the budget overview describes the F-35 Joint Strike Fighter as the department’s “most important” tactical aircraft program, allocating more that $10 billion in 2011 to development and production while calling for termination of the plane’s alternate engine (good news for Lockheed Martin and primary engine builder Pratt & Whitney, bad news for alternate engine company General Electric). It also calls for pressing ahead with the KC-X aerial refueling tanker and terminating the C-17 cargo plane (good and bad news for Boeing), and describes naval shipbuilding plans to build two submarines, two Burke-class destroyers, two Littoral Combat Ships and one amphibious assault ship (good news for General Dynamics and Northrop Grumman). The section confirms termination of the Army’s Future Combat Systems program but states an intention to move ahead with next-generation ground vehicles (bad news for Boeing, probably good news for General Dynamics and BAE Systems). Finally, it reiterates plans to replace the canceled Transformational Satellite Communications program with additional AEHF satcoms (good news for Lockheed and Northrop).

The section on missile defense does not cite any specific programs other than confirming a restructure of the Airborne Laser program (probably bad news for Boeing), but the description of the “new missile defense approach” is clearly good news for the Aegis combat system (Lockheed), Terminal High Altitude Area Defense (Lockheed) and Standard Missile (Raytheon). In general, defense companies have little reason to be unhappy with the 2011 investment plan. The Obama Administration is funding weapons programs much more heavily that conservative critics had predicted. However, some of the companies — most notably Boeing, General Electric and Northrop — will need to lean heavily on their Washington offices to win congressional restoration of major programs targeted for death or deferral. I should note that Raytheon and Northrop Grumman make out better in the budget overview than the above description might suggest, because they supply so much content to programs on which they are not the lead contractor.