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Lawmakers challenge Air Force budget, drone cuts

By Andrea Shalal-Esa

WASHINGTON (Reuters) - Lawmakers on Tuesday called top Air Force officials to task over recent acquisition missteps and raised concerns about their budget plans for fiscal 2013, which calls for cancellation of Northrop Grumann Corp's unmanned Global Hawk plane.

Air Force Secretary Michael Donley and Chief of Staff General Norton Schwartz defended the proposed cuts as necessary to comply with the Budget Control Act and start reducing the federal deficit, but acknowledged they were "not without risk."

Schwartz told the defense subcommittee of the House Appropriations Committee, which controls the Pentagon's purse strings, that he would have preferred a budget proposal that maintained the service's "overwhelming superiority."

But the proposed budget would still give the Air Force a competitive edge if it had to fight a major war and secondary conflict soon after, he said.

"It would not be a cakewalk, but we would prevail," he said.

Representative Bill Young, a Florida Republican who chairs the defense appropriations subcommittee, said he remained concerned about supporting any legislation that would have "an adverse effect on readiness and our warfighters," signaling his intention to revamp the Air Force budget proposal.

The Air Force, already under fire for its handling of remains at Dover Air Force Base, faced renewed questions about its oversight of acquisitions last week when it cancelled a $355 million contract with Sierra Nevada Corp and Brazil's Embraer for 20 small airplanes after discovering problems with its own documentation of the deal.

Representative Ander Crenshaw, a Florida Republican, said he was surprised to hear about the latest issue given the Air Force's problems with the high-profile refueling tanker competition between Boeing Co and Europe's EADS.

The Pentagon cancelled a contract award to EADS and its U.S. prime contractor, Northrop Grumman Corp, after government auditors faulted the Air Force's handling of the $35 billion competition.

"You ought to learn from your mistakes," Crenshaw told the Air Force officials.

AIR FORCE INVESTIGATION

Donley reiterated his disappointment about the latest contract issue and said an investigation was under way to determine what happened. He said the Air Force would likely have to "start from scratch" and redo the competition for the 20 small planes, which would delay delivery for several months.

Hawker Beechcraft, which had sued to reverse the contract award to Sierra Nevada and Embraer, and Sierra Nevada have said they would bid again for the work, which could be worth up to $1 billion over time.

Both Democratic and Republican lawmakers grilled Air Force leaders about their decision to cancel the Block 30 version of Northrop's Global Hawk unmanned, high-altitude plane and put 18 planes already purchased into storage, while spending $1.1 billion to keep the much older, manned U-2 spy planes flying.

They cited a Pentagon document from last June that authorized continued work on the Global Hawk program despite significant cost increases, noting that it still provided the most affordable way to do the required surveillance work.

Donley said the decision would save the Air Force $2.5 billion over the next five years, and was made after the Pentagon lowered its requirements for the surveillance function, which meant the mission could be accomplished by the manned U-2 planes, which have a shorter range but are cheaper to operate.

Representative Norm Dicks, the top Democrat on the subcommittee, said he hoped the Air Force was doing all it could to find other uses for the 18 Global Hawk planes already paid for -- instead of parking them in a warehouse somewhere.

"I just think the American people are going to have a hard time understanding" the Air Force's abrupt change of course on the program, he said.

Donley said the Air Force was open to further discussions on what to do with the planes, and had not yet decided what to do with funds already appropriated for the program in fiscal year 2012, which ends September 30.

Northrop said it remained in discussions with the Air Force about termination fees and other issues.

(Reporting By Andrea Shalal-Esa; Editing by Bernard Orr)

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