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LRS-B budget trimmed again in defence spending revision

The US Air Force’s delayed selection of Northrop Grumman for the Long-Range Strike Bomber programme could see project funding halved this fiscal year, with congressional authorisers recommending another $230 million reduction because of contract delays.

In all, the programme is likely to receive just $556 million for fiscal 2016 compared to the $1,25 billion requested by the Pentagon back in February. Congress has already pulled $460 million at the request of the air force, since that money would have expired before being spent.

The further $230 million downward adjustment is part of a $5 billion savings package proposed by the House and Senate armed services committees this week. Those decreases reconcile the 2016 national defence authorisation act (completed in September) with a new two-year budget deal, which boosts US defence spending by $33 billion in fiscal 2016 instead of $38 billion.

Other programmes facing budget cuts in the agreement include the air force’s new nuclear-armed cruise missile, which takes a $21 million hit because of “contract delays”. That leaves the Long-Range Standoff (LRSO) weapon with $16 million for planned technology maturation activities.

In an upward adjustment, $80 million has been added for more MQ-9s, built by General Atomics Aeronautical Systems.

Importantly, the adjustments leave intact several “unfunded priorities” that were authorised. Those include $979 million 12 Boeing F/A-18E/Fs and $846 million six Lockheed Martin F-35Bs. Another $65 million is added to buy one more Northrop Grumman MQ-4C and$468 million to keep the Fairchild Republic A-10.

The House could vote of the revised bill by Thursday.

The anticipated two-year budget deal has investors feeling optimistic, since the alternatives were a full-year continuing resolution that maintains fiscal year 2015 government spending levels or full sequestration. In response, Moody changed its outlook for the global aerospace and defence industry from stable to positive, with worldwide defence spending now tipped to grow by 2% to 3%.

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