-1x Boeing Share News (BAES)

By Andrea Shalal-Esa

WASHINGTON, Oct 21 (Reuters) - U.S. defense budget cuts willaffect the Army's plan to develop a new ground combat vehicleand most other acquisition programs, with some facing delays orcancellation, Army Secretary John McHugh said on Monday.

"I find it difficult to envision any significant number ofour developmental initiatives that won't be affected," McHughtold reporters at the annual Association of the U.S. Armyconference. "And some we'll have to cancel."

McHugh singled out developing a new ground combat vehicleand improving the Army's communications and computer network aspriorities, but, he said, even those programs would have to berevamped if mandatory across-the-board budget cuts remained inplace.

General Dynamics Corp, which built the M1A1 Abramstank, BAE Systems Plc, maker of the Bradley fightingvehicle, and Boeing Co, which builds several differenthelicopters for the Army, and others were looking for clues to the impact of spending cuts.

Army Chief of Staff General Ray Odierno told reporters theJoint Light Tactical Vehicle program, which is to replace theworkhorse Humvees used by the military, and replacements for theUH-60, CH-47 and Apache helicopters were also priorities.

"The bottom line is we can't afford all of that. And sowe're going to have to make some tough decisions," he said,adding that analysis was underway to help make those decisions.

He said the current budget environment meant the Army mighthave to delay some weapons programs by four to five years.

Neither McHugh nor Odierno provided details on exactly whichprograms might be cancelled, revamped or delayed.

Army acquisition chief Heidi Shyu later told reporters theGround Combat Vehicle program and the Armed Aerial Scoutprogram, which was aimed at replacing aging OH-58 Kiowa Warriorhelicopters, were at risk unless Congress reversedacross-the-board budget cuts mandated by sequestration.

"Either we are going to delay it or we're going to have toterminate it or we're going to have to continue on and finish acertain phase," Shyu said of the two programs.

She said understood industry's need for more certainty, butsaid the Army's acquisition plans were "lurching because ourbudget is lurching. We have no control over that."

Acquisition programs were hardest hit because it took longerto generate savings from troop reductions, and operations andmaintenance accounts were still stretched by the war inAfghanistan, Shyu said.

Decisions about future end strength and military readinessalso played into acquisition decisions, Shyu said, noting thatmilitary commanders were having to weigh what capabilities theycould give up, and what was "good enough."

Shyu said the Army would continue to invest in research onlighter weight armor and other promising technologies, as wellas incremental upgrades to existing weapons.

She said BAE System's Paladin Integrated Management program,which enhances the reliability of the M109A6 howitzer, just wonapproval from the high-level Defense Acquisition Board to startlow-rate initial production.

The Army planned to proceed with some procurement plans,including an integrated air missile defense and a $6 billionprogram for a Armored Multipurpose Vehicle to replace M113vehicles.

Shyu said she was working to safeguard the Army's multiyearprocurement agreements, including one signed in June for newCH-47 helicopters built by Boeing, but they might have to bebroken or renegotiated if sequestration cuts continued throughfiscal year 2017.