President-elect Barack Obama's transition officials are in early talks about making significant cuts in some high-priced weapon systems, seeking savings to offset budget deficits and help pay for arms sought for conflicts in places like Afghanistan and Iraq.
Defense industry executives say the first cuts may be seen in the fiscal 2010 Pentagon budget, which Mr. Obama will send to Congress early next year.
An executive with a top 10 defense contractor, who asked not to be named, said his deeply concerned industry had hoped the cuts would not come until the 2011 budget, but the transition is now discussing an accelerated process to free up money for immediate war-related items and for domestic programs.
Three defense executives with contacts in the Obama transition told The Washington Times of the budget talks - but also said no final decisions had been made.
"They could do something as early as the 2010 budget," a second executive said, referring to the fiscal year that begins Oct. 1.
The issue has become more acute as the federal budget deficit balloons in the face of huge bailout legislation and a decline in tax revenues because of the economic downturn.
Bailout packages approved or in the works - including potential government obligations such as loan guarantees - total more than $8 trillion thus far, amid expectations that the worst of the recession is yet to come.
Military spending was not a big issue during the presidential campaign. But in several speeches, Mr. Obama indicated that he will cut funding for some expensive systems.
In particular, he mentioned "slowing" procurement of the Future Combat System (FCS), an array of land and air combat vehicles designed to take the Army into the next generation of warfare.
Advisers have told Mr. Obama that the FCS program is wasting money as it fails to produce the new systems and that funds could be better spent on current war needs.
The Pentagon estimated the FCS total life cycle cost at $175 billion in 2003. Today, the price tag is $300 billion, after the Army extended the buying timeline and added new systems.
The first defense executive, whose company is involved in the FCS, conceded, "The FCS has probably doubled in cost and complexity and really not delivered a lot. We have not been able to bring the technology to efficient levels."
The source said the money might be better spent on items that help soldiers now - such as retooled M1 Abrams tanks. He said some soldiers in Iraq believe the heavily armored vehicles give them the best protection against improvised explosive devices (IEDs) while conducting operations in places like Baghdad and Mosul.
Pentagon spokesman Bryan Whitman told The Times, "It would be premature to discuss in any detail in the next program budget. That budget - the president's budget - will be submitted by the new administration next year. Until then, I would be cautious with any sources that believe they know what will or will not be in it."
The Obama team seems to be on the same page as Defense Secretary Robert M. Gates, whom the president-elect picked as his Pentagon chief.
Mr. Gates has lamented what he sees as the development by the military branches of costly, complex systems for the next generation at the expense of items that help the troops now.
"I have noticed too much of a tendency towards what might be called next-war-itis - the propensity of much of the defense establishment to be in favor of what might be needed in a future conflict," Mr. Gates said in May.
The secretary is now working on Mr. Obama's first defense budget.
"We've just started the process of discussing the '10 budget with the transition team," Mr. Gates said at a Dec. 2 news conference. "And so we've provided them with briefings, but so far there hasn't really been any reaction."
The second defense company executive said there is talk within the Obama transition of cutting other programs in addition to the Future Combat System.
Among the programs that might be targeted are littoral combat ships, the F-22 Raptor stealth fighter and certain missile defense systems.
The defense budget has grown tremendously under President Bush to fund the overall war on terror, the wars in Afghanistan and Iraq and next-generation systems such as the F-22 and FCS.
President Clinton's last defense budget submission in 2001 totaled $305 billion. In October, Mr. Bush signed a $512 billion fiscal 2009 Pentagon budget.