Exclusive: US Air Force to halt Northrop unmanned plane

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WASHINGTON (Reuters) - The U.S. Air Force has decided to scrap its Northrop Grumman Corp high-altitude unmanned surveillance plane program and keep its Cold War-vintage U-2 spy planes flying into the 2020s, according to a government official and a defense analyst.

Loren Thompson, chief operating officer of the Virginia-based Lexington Institute, said the Air Force decision was based on the cost of the RQ-4 Global Hawk unmanned planes, and said the service would investigate using a marine version with different sensors that Northrop is developing for the Navy.

The Navy is proceeding with its plans to buy 68 of that version of the plane, known as Broad Area Maritime Surveillance (BAMS), a source familiar with Navy plans told Reuters.

Officials have said they are pleased with progress on the Navy's unmanned plane, and a demonstration model has been used in recent weeks to monitor the Straits of Hormuz, after Iran threatened to block the world's most important oil export route.

Northrop's Global Hawk, which has been used for spy missions over Iraq, Afghanistan and most recently Libya, is one of dozens of arms programs facing cancellation or cutbacks in the Pentagon's fiscal 2013 budget and five-year plan.

Defense Secretary Leon Panetta is due to release highlights of the Pentagon's budget plan on Thursday, including the decision to truncate the Global Hawk program, which will begin to implement $487 billion in cuts required over the next decade.

A U.S. official, who was not authorized to speak on the record, said the Air Force's Block 30 model of the unmanned plane was being terminated in the budget request that will be sent to Congress in February.

If Congress approves the Air Force plan, the program would effectively be truncated at 21 planes, 10 fewer than currently planned, according to one source familiar with the program.

It was not immediately clear how much the move would save the Air Force. The planes sell for about $30 million each, but that does not include sensors and ground stations.

Northrop has already delivered 14 of the Global Hawk Block 30 drones, and is under contract for four additional planes, Three additional planes are already funded.

Congress could still reverse the decision, which raised eyebrows in Washington, especially given recent Pentagon statements underscoring the importance of unmanned planes.

DECISION QUESTIONED, GIVEN UNMANNED DRONE'S LONGER RANGE

Thompson said the Air Force's decision flew in the face of the Pentagon's newly announced strategy to focus more on the Asia Pacific region since the Global Hawk planes offered far longer range and endurance than the shorter-range U-2 planes.

He said the Air Force's cost calculation also appeared not to take into consideration the higher cost of maintaining the aging U-2s, or that cutting Global Hawk would increase the unit cost of the Navy version, due to lost economies of scale.

"They're counting the savings on paper, but the actual savings won't exist," Thompson said.

The Air Force declined to comment.

Northrop said it had not been notified about any change in its Global Hawk contract.

U.S. Air Force Chief of Staff General Norton Schwartz told Reuters earlier this month that the service's budget proposal for fiscal year 2013 would seek to terminate some programs.

He said there were still some questions about the "cost and effectiveness of the Global Hawk," but declined comment about the program's fate.

The Air Force would likely "end up doing what gives us the best capability for the least cost," he said.

""This is really a question of the cost of operations and relative reconnaissance and surveillance capability, and we'll make the prudent call."Remotely piloted Global Hawk surveillance planes fly at 60,000 feet and stay aloft for over 24 hours""This is really a question of the cost of operations and relative reconnaissance and surveillance capability, and we'll make the prudent call."

Remotely piloted Global Hawk surveillance planes fly at 60,000 feet and stay aloft for over 24 hours. Raytheon Co's optical, infrared and radar sensors let the planes scan large swaths of terrain and transmit images in near real-time.

Global Hawk was due to replace the manned U-2 spy plane in 2015, but those planes, built by Lockheed Martin Corp, would now be kept in service until 2023, the U.S. official said.

Defense officials remain in talks with South Korea, Australia, Japan and Singapore about possible sales, although such exports would require a waiver of the Missile Technology Control Regime, a voluntary arms control pact created in 1987.

In addition to its use as a military asset, Global Hawk was also used over Japan after the March earthquake and tsunami, flying from Andersen Air Force Base in Guam, and to track forest fires in California

(Reporting By Andrea Shalal-Esa; Editing by Gary Hill)

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