Major Cuts Scheduled for V-22 Osprey ProgramDec 13, 2005 07:19 UTC by Defense Industry Daily staff
Dan Dupont of Inside Defense (see their special Budget Blog) emails us to note that US Department of Defense is cutting $1.1 billion from the Marine Corps’ MV-22 Osprey program, and moving to implement the cut in the FY 2007 budget process.
The reason for the cut is unusual, and the exact effect at this point is unpredictable. Ironically, the cut comes shortly after the first combat-ready MV-22 Block B was delivered to VMM 263 of the US Marine Corps’ 2nd Marine Expeditionary Force.
The rationale for the $1.1 billion cut, defense officials told Inside The Navy, is a discrepancy: the Office of the Secretary of Defense’s Cost Analysis and Improvement Group (CAIG) has a cost estimate for the program that is about $1.1 billion lower than the Navy’s estimate (CAIG is usually higher and more conservative), while being slightly higher on the R&D side.
Military.com reports that the switch means $1.1 billion will be cut from procurement and $50 million will be added to Osprey research and development. Money cut from the program would be rerouted to other defense budget priorities.
The Pentagon approved full-rate production of the aircraft on Sept. 28, 2005, allowing the $50 billion program for 450 or so V-22s to proceed. This decision by the DoD could affect the overall number of Ospreys that the Marines are scheduled to receive, but Boeing spokesman Jack Satterfield told the Philadelphia Inquirer the budget cut would cover a much broader scope of the program. “It takes money out of the program, but not necessarily for the next fiscal year,” Satterfield said. “I would assume we would move up to 16 aircraft in 2007 as scheduled.”