US arms costs up 4 percent versus prior estimates

The total projected cost of 95 major US arms programs had risen 4 percent, or about $64 billion, from previous estimates as of the end of last year, the US Defence Department told Congress Friday even as President Barack Obama seeks a tighter Pentagon budget.
The department said the average cost of Northrop Grumman Corp's high-flying Global Hawk reconnaissance drone had risen more than 25 percent, mainly due to "changing the mix" of aircraft to a larger percentage of a pricier model as well as a slow-down in planned purchases. Global Hawks are now being used over Japan in disaster recovery efforts, over Libya in the Nato-led enforcement of a no-fly zone and over the Gulf.
Overall, the 95 programs are together projected to cost about $1.7 trillion, including research and development, procurement, military construction, and acquisition-related operation and maintenance. The totals reflect anticipated costs as well as those to date, plus allowances for inflation.
The projected $64 billion increase came chiefly from six programs whose cost overruns date to the 2009 reporting period, the Pentagon said. Their breaches of threshholds set by the so-called Nunn-McCurdy law already had been sent to Congress, the department said in an overview of its December 2010 "Selected Acquisition Reports," a mandated update for lawmakers.
Lockheed Martin Corp's F-35 Joint Strike Fighter, the Pentagon's costliest arms purchase at some $382 billion over the next two decades, was responsible for the bulk of the cost rises attributable to these six programs, the department said. In January, Defence Secretary Robert Gates overhauled the F-35 program for the second time in a year, slowing its planned production ramp-up and adding $4.6 billion to the aircraft's development phase.
The increase for the other 89 programs mainly reflected planned purchases of more units, the Pentagon said. Obama on Wednesday called for shaving $400 billion from projected security spending through the 2023 fiscal year as part of a drive to achieve $4 trillion in deficit reduction by then.
Northrop Grumman said the primary reason for the Global Hawk's Nunn-McCurdy breach was "the reduction of Block 40 quantities from 22 to 11 aircraft due to budget pressures." The Air Force is changing its mix to a larger percentage of the costlier Block 30 models and less of the Block 40.