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Updated: 7:54 a.m. Thursday, Oct. 20, 2011 | Posted: 10:43 p.m. Tuesday, Oct. 18, 2011

Local defense firms warned of cuts

Spending levels can’t be sustained, Air Force tells contractors.

By John Nolan

Staff Writer

DAYTON — Pending spending cuts of $450 billion or more will push the Air Force to take a much harder line with defense contractors, senior Air Force officials told an aerospace technology conference audience Tuesday.

“We are spending more money than we have,” Gen. Donald Hoffman, commander of the Air Force Materiel Command headquartered at Wright-Patterson Air Force Base, told contractors at the TechNet-Aero conference in Dayton Convention Center. “It is not sustainable for the long term. We have to address it.”

The Air Force will have to cut some existing programs in order to invest in promising new technology, and will listen if industry can make the service’s bureaucracy work more efficiently, Hoffman said.

The Materiel Command is responsible for technology research and development, and for acquiring, testing, evaluating and sustaining all Air Force weapon systems.

The command has 79,000 military and civilian employees who work at Wright-Patterson and eight other bases.

Wright-Patterson, with more than 27,000 employees, is the hub for Air Force acquisition, logistics and research.

The Air Force spent nearly $65 billion on goods, services and research and development in federal fiscal year 2010.

A bipartisan congressional committee will determine whether the Pentagon will face $450 billion in cuts or nearly double that amount during 10 years. The committee must identify approximately $1.2 trillion in total government spending cuts by late November. If not, the deeper across-the-board cuts will automatically be imposed starting in 2013. Those could be devastating for defense, Pentagon officials have said.

Air Force officials who buy new weapons and aircraft will have to insist that technologies be fully proven before they are provided to the government, which hasn’t always happened, said Lt. Gen. Janet Wolfenbarger, a former AFMC vice commander who is now a top official over Air Force purchasing at the Pentagon.

“We need a better understanding of the path ahead and the risks to those programs,” she told the audience.

The Air Force will scrutinize manufacturing costs for items it buys and pay closer attention to whether contractors deliver on time and on budget, Wolfenbarger said. It will consider offering incentives to industry for innovation and productivity, put more emphasis on small business to encourage innovation, and be choosier about what it pays to move from basic research to product development, she said.

Scott Coale, president of DaytonDefense, a regional association of defense contractors, said, “I think, certainly, that industry understands the gravity of what the Defense Department is facing.”

There are areas where industry can work with the Defense Department to be more efficient in weapons and technology supply, Coale said.

Providing fully demonstrated technologies that don’t need additional development would help. And the Air Force could help reduce costs by not insisting on state-of-the-art technology for all aspects of new weapon systems, Coale said.

But some companies may refuse to bid on defense supply contracts if the Pentagon should impose too many demands, said Loren Thompson, a defense industry analyst with the Lexington Institute in Arlington, Va.

“Defense companies recognize that budgets are going to get much tighter, but they’re not willing to give the Pentagon everything it wants, because they have to satisfy their investors,” Thompson said.

Defense contractors recognize the urgency, given the budget pressures all federal agencies are facing, said Jeff Hoagland, president and chief executive officer of the Dayton Development Coalition, a private-public economic development organization that works to support Wright-Patterson.

“When we’re looking at billions of dollars in cuts, through every agency, it’s a whole new world,” Hoagland said. “It’s one that everybody’s going to have to look at, and look at differently.”

Contact this reporter at (937) 225-2242 or jnolan@DaytonDailyNews.com.

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