The chief executives of 14 U.S. defense companies urged Congress on Monday to pass a defense spending bill for fiscal 2011 instead of extending the current stopgap measure that keeps funding at 2010 levels.
The failure of Lawmakers to pass a defense appropriations bill for fiscal 2011, which began on Oct. 1, could have serious consequences, the CEOs of Lockheed Martin Corp (LMT.N), Boeing Co's (BA.N) defense business and a dozen other companies said in a letter to congressional leaders.
U.S. Defense Secretary Robert Gates warned last week that Congress was causing a "crisis on my doorstep" by failing to approve Pentagon spending, inaction that could lead to a funding shortfall and hurt the military.
"Failure to address funding decisions for individual national security programs on a full-year basis will lead to program dislocations, funding interruptions, and adverse consequences on U.S. employment not only in the current fiscal year, but for many years to come," the industry executives said in their joint letter, noting the current continuing resolution limited production rates and banned new program starts.
Robert Stevens, chief executive of the largest U.S. defense contractor Lockheed, said the defense industry faced schedule delays, higher costs and other unnecessary risks unless lawmakers pass a fiscal 2011 defense appropriations bill.
"Without appropriate full-year funding decisions on national security programs, we will face costly schedule delays and breaks in production that will increase overall program costs and interrupt the delivery of critical equipment to warfighters," Stevens said in a separate statement.
U.S. lawmakers have not passed the fiscal year 2011 defense appropriations bill and the Pentagon, like the rest of the federal government, is operating under a stopgap measure that keeps funding at 2010 levels. Congressional inaction would effectively force the Pentagon to operate with $23 billion less than Obama requested for the Pentagon in the 2011 fiscal year, which runs through the end of September.
It has also forced NASA to keep developing a rocket it has said it does not want and the National Oceanic and Atmospheric Administration to delay launching two new weather satellites.
PENTAGON ACCOUNTS FOR 19% OF US SPENDING
Defense spending is likely to be one of the main battlegrounds for President Barack Obama after he sends his fiscal 2012 budget proposal to Congress next Monday.
The Defense Department accounts for 19 percent of U.S. federal spending and roughly half of discretionary, non-mandated spending -- making it a target for lawmakers looking for ways to slash the gaping budget deficit.
The industry executives said they understood and supported the need to tackle U.S. fiscal challenges, and knew that cuts to aerospace and defense programs could be in the offing.
But they warned that maintaining the short-term continuing resolution instead of passing a full-year budget could harm weapons programs and the U.S. industrial base. Nearly a dozen industry associations sent a similar letter to House Speaker John Boehner last week.
U.S. lawmakers are divided over the issue of reducing U.S. deficits, with some favoring cuts to defense spending, while others say those cuts could hurt troops and military readiness at a time when the U.S. wars in Iraq and Afghanistan continue.
Gates announced plans last month to cut $78 billion from the Pentagon's core $550 billion-plus spending plan from 2012 through 2016. His plan calls for cutting up to 47,000 troops from the Army and Marines starting in 2015 after Afghan forces are scheduled to take the lead on security in that country.
The plan would also kill the the Marine Corps' $13.2 billion expeditionary fighting vehicle (EFV), a General Dynamics Corp (GD.N) landing craft program and Raytheon Co's (RTN.N) "SLAMRAAM" surface-to-air missiles, while delaying the purchase of 124 radar-evading Lockheed F-35 fighter aircraft. (Reporting by Andrea Shalal-Esa; editing by Steve Orlofsky and Andre Grenon)