In face of budget cuts, Gates still wants $35B Air Force tankers

Pentagon has begun a review of all spending, officials say.

The Pentagon has barely begun a comprehensive review to find $400 billion in security savings over the next 12 years, but Defense Secretary Robert Gates on Thursday said he remains committed to the Air Force's new refueling tanker and many other high-priced programs.

But Gates also suggested the review, which will look at the military's force structure and missions, could force the Pentagon to reconsider the numbers of certain systems -- such as ships -- that the military plans to buy.

Gates said he has had only one meeting on the deficit-reduction effort announced by Obama last week. The Pentagon has not yet settled on the specifics of the review process, which department planners expect to affect the fiscal 2013 budget request due on Capitol Hill in February 2012.

But the review will not be merely a "math exercise," Gates stressed, adding that any proposal to cut force structure, missions, and funding for weapons programs will carefully consider the risks involved."What I hope to do is frame this in a way that says, if you want to cut this number of dollars, here are the consequences for force structure," Gates said. "Here are your choices in terms of capabilities that will be reduced or investments that are not made. And here are the consequences of this."

Gates, who has already proposed cutting $78 billion from the Pentagon's budget over the next five years, said he wants to make sure the strategic and national security consequences of any decisions are fully understood.

"This needs to be a process that's driven by the analysis," he told reporters. "The worst of all possible worlds, in my view, is to give the entire Department of Defense a haircut, basically says everybody is going to cut X percent."

It appears that analysis could yield some significant changes for military planners. Both Gates and Gen. James Cartwright, the vice chairman of the Joint Chiefs, said they plan to review whether the military needs to maintain its ability to fight two major wars at the same time, which has helped form the basis of U.S. strategic policy for decades.

Regardless of possible changes to the military's missions, Gates remains committed to the effort to replace the Air Force's Eisenhower-era refueling tankers-a hard-fought $35 billion deal that domestic aerospace giant Boeing won in February. The Air Force has long made buying new tankers its leading procurement priority.

Among Gates' other top funding priorities are buying new surface ships and modernizing the nuclear triad, which includes a multi-billion-dollar effort to replace the aging Ohio-class ballistic missile submarine.

But if the Pentagon scales back its missions and reduces its force structure, the military would need fewer aircraft and ships to meet its operational needs and training demands. That could cut into profits for Boeing and other top defense firms that have been bolstered by the last decade of ever-increasing defense spending.

Still, industry officials concerned about a sequel to the widespread program cancellations Gates proposed in April 2009 should breathe a bit easier. The secretary's comments Thursday seem to reflect a growing consensus in the department that the Pentagon will find the savings using an ax rather than a scalpel-a potentially less painful exercise for defense firms, whose stocks dipped after the White House proposed the security cuts.

Frank Kendall, the Pentagon's No. 2 acquisition official, on Wednesday said he is reluctant to cancel weapons systems, signaling that the Pentagon is more likely to scale back or tweak individual programs.

"I'm not looking to kill programs," Kendall said. "We're not out there to kill programs."