WASHINGTON (Reuters) – The United States has fretted for years that its ties to Pakistan and past sanctions against India would harm its efforts to win arms deals such as the $11 billion fighter order that slipped away from two U.S. suppliers this week, a U.S. diplomatic cable showed.

“Our ability to seize the opportunities presented by this newly improved environment is limited by the commonly held view that the U.S. will not prove to be a reliable supplier of defense equipment,” Timothy Roemer, the U.S. ambassador to India, said in an October 29, 2009, cable to Michele Flournoy, a top Pentagon official then about to visit India.

U.S. officials from President Barack Obama down subsequently pushed hard to sell U.S. fighter jets to India to crown expanding security ties. The United States also is eyeing tens of billions of dollars in other potential arms deals with India, the cable showed.

In the end, India shortlisted two European aircraft over Boeing Co’s (BA.N: Quote, Profile, Research, Stock Buzz) F/A-18 SuperHornet and Lockheed Martin Corp’s (LMT.N: Quote, Profile, Research, Stock Buzz) F-16, company officials said on Thursday.

Lockheed and Boeing are the Pentagon’s No. 1 and No. 2 supplier, respectively. Each is pressing to boost sales in India, which plans to spend about $50 billion in the next five years to modernize old Soviet-era weapons and technology.

Roemer announced Thursday he was leaving his post for professional and family reasons. “The new environment” reference in his 2009 cable concerned the emergence of Prime Minister Manmohan Singh’s government with “a clear mandate not beholden to coalition partners” for the first time since post-Cold War U.S.-Indian strategic ties took shape.

U.S. competitors use the economic sanctions imposed by Washington after Indian nuclear tests in 1998 to try to harm U.S. sales prospects, the cable said.

WASHINGTON (Reuters) – The United States has fretted for years that its ties to Pakistan and past sanctions against India would harm its efforts to win arms deals such as the $11 billion fighter order that slipped away from two U.S. suppliers this week, a U.S. diplomatic cable showed.

“Our ability to seize the opportunities presented by this newly improved environment is limited by the commonly held view that the U.S. will not prove to be a reliable supplier of defense equipment,” Timothy Roemer, the U.S. ambassador to India, said in an October 29, 2009, cable to Michele Flournoy, a top Pentagon official then about to visit India.

U.S. officials from President Barack Obama down subsequently pushed hard to sell U.S. fighter jets to India to crown expanding security ties. The United States also is eyeing tens of billions of dollars in other potential arms deals with India, the cable showed.

In the end, India shortlisted two European aircraft over Boeing Co’s F/A-18 SuperHornet and Lockheed Martin Corp’s F-16, company officials said on Thursday.

Lockheed and Boeing are the Pentagon’s No. 1 and No. 2 supplier, respectively. Each is pressing to boost sales in India, which plans to spend about $50 billion in the next five years to modernize old Soviet-era weapons and technology.

Roemer announced Thursday he was leaving his post for professional and family reasons. “The new environment” reference in his 2009 cable concerned the emergence of Prime Minister Manmohan Singh’s government with “a clear mandate not beholden to coalition partners” for the first time since post-Cold War U.S.-Indian strategic ties took shape.

U.S. competitors use the economic sanctions imposed by Washington after Indian nuclear tests in 1998 to try to harm U.S. sales prospects, the cable said.

WASHINGTON (Reuters) – India’s choice of European warplanes in an $11 billion competition to update its combat fleet was a setback for U.S. aerospace companies, but it is not game over for the Americans.

U.S. arms makers are still jockeying for billions of dollars in sales to India, which plans to modernize its old, Soviet-era military equipment and technology.

Joel Johnson, an international aerospace trade expert, said India may have opted for a European fighter because of a history of U.S. sanctions tied to its nuclear program and because of technology transfer constraints.

“U.S. contractors may get defeated by politics, but not by quality,” he said. “India is likely to turn to the U.S. again for unique know-how and products.”

U.S. contractors are increasingly pinning their hopes on overseas markets for revenue growth to help offset a projected slowing of Pentagon demand due to U.S. fiscal belt-tightening.

Eliminated from the multi-role fighter race were Chicago-based Boeing Co’s F/A-18 SuperHornet and Bethesda, Maryland-based Lockheed Martin Corp’s F-16.

They had been vying with European and Russian rivals to supply 126 fighters to India. A deal would have capped closer ties between the U.S. and Indian militaries.

WASHINGTON (Reuters) – Leon Panetta, a Democratic party insider with budgets as his background, would oversee steady declines in Pentagon spending and divert weapons dollars to the Treasury Department to help reduce the U.S. deficit.

President Barack Obama on Thursday will nominate Panetta to replace Robert Gates as U.S. defense secretary, and that spells a heightened focus on military costs and cuts at the White House, according to administration officials and analysts.

A senior Obama administration official said that finding more places to cut the budget would be one of the top items on Panetta’s agenda when he arrives at the Pentagon on July 1 after expected Senate confirmation.

Loren Thompson, a prominent industry consultant with close ties to the Pentagon, said substituting Panetta “would undoubedtly result in a faster pace of cuts to the defense budget in future years.”

Outgoing Pentagon chief Gates, the sole cabinet holdover from the Republican Bush administration, has seen through Obama’s first effort to rein in core Pentagon budgets that have nearly doubled since the Sept. 11, 2001, attacks on New York and Washington. But Gates resisted deep cuts and argued for letting the armed services keep their savings from an “efficiency” drive for re-investment in arms programs and forces in the field.

Panetta — former House of Representatives’ budget committee chairman, White House budget director and chief of staff to former President Bill Clinton — is being asked to undertake broader cuts.

For U.S. arms makers, this could mean, among other things, a stepped-up focus on foreign sales.

WASHINGTON (Reuters) – Leon Panetta, a Democratic party insider with budgets as his background, would oversee steady declines in Pentagon spending and divert weapons dollars to the Treasury Department to help reduce the U.S. deficit.

President Barack Obama on Thursday will nominate Panetta to replace Robert Gates as U.S. defense secretary, and that spells a heightened focus on military costs and cuts at the White House, according to administration officials and analysts.

A senior Obama administration official said that finding more places to cut the budget would be one of the top items on Panetta’s agenda when he arrives at the Pentagon on July 1 after expected Senate confirmation.

Loren Thompson, a prominent industry consultant with close ties to the Pentagon, said substituting Panetta “would undoubtedly result in a faster pace of cuts to the defense budget in future years.”

Outgoing Pentagon chief Gates, the sole cabinet holdover from the Republican Bush administration, has seen through Obama’s first effort to rein in core Pentagon budgets that have nearly doubled since the September 11, 2001, attacks on New York and Washington. But Gates resisted deep cuts and argued for letting the armed services keep their savings from an “efficiency” drive for re-investment in arms programs and forces in the field.

Panetta — former House of Representatives’ budget committee chairman, White House budget director and chief of staff to former President Bill Clinton — is being asked to undertake broader cuts.

For U.S. arms makers, this could mean, among other things, a stepped-up focus on foreign sales.

WASHINGTON (Reuters) – The U.S. Defense Department ended a contract with General Electric Co and Rolls-Royce Group Plc on Monday for an alternate engine for the F-35 Joint Strike Fighter.

The Pentagon for five years argued the second engine was an unnecessary expense while supporters in Congress kept funding the project, maintaining that competition with an engine built by United Technologies Corp unit Pratt & Whitney would ultimately produce savings for taxpayers.

But lawmakers earlier this month omitted funds for the alternative engine in an agreement on a budget to cover U.S. government spending for the remainder of fiscal 2011 that ends September 30.

GE and Rolls-Royce vowed to press for funding to be restored in fiscal 2012, so that the engine can be completed and compete for orders. They estimate taxpayers have spent roughly $3 billion on the project so far.

“I can assure you we are not giving up,” GE Chief Executive Jeff Immelt said in a letter to employees released on Monday.

“We continue to be encouraged by the bi-partisan support for the engine on the merits of its performance and value,” the companies added in a statement after the termination announcement.

At stake is potential engine business for the F-35 that the Government Accountability Office, Congress’s audit arm, put at $62 billion in 2002 dollars.

WASHINGTON (Reuters) – The Pentagon’s top arms buyer on Wednesday predicted more scrapping of big-ticket arms programs starting as soon as the 2013 fiscal year due to tightening U.S. defense budgets.

“There undoubtedly will be more cancellations of that kind,” Ashton Carter, undersecretary of defense for acquisition, told an audience at the Heritage Foundation, a conservative research group in Washington.

Carter made the comment after referring to a Pentagon decision announced in February to kill a roughly $13 billion Expeditionary Fighting Vehicle, a hybrid landing craft and battle truck being developed by General Dynamics Corp, as well as other big programs that have been cut, curtailed or capped in the last couple of years.

“Yes, for sure, as we prepare the fiscal year 2013 budget,” he replied, when asked if the projected cancellations, that he did not specify, might occur that soon. The Pentagon is already working on its spending request for fiscal 2013, which starts October 1, 2012.

President Barack Obama last week called for shaving $400 billion from U.S. security-related spending, starting in fiscal 2013 through the 2023 fiscal year, as part of a $4 trillion push to trim the U.S. deficit. Overall, the United States is projected to spend as much as $7.5 trillion on military outlays during this period.

The Pentagon’s biggest arms suppliers include Lockheed Martin Corp, Boeing Co, Northrop Grumman Corp, General Dynamics, BAE Systems Plc and Raytheon Co.

Carter, in his remarks, said the Defense Department would seek greater buying power for all items — not just arms purchases — in its roughly $530 billion core budget.

WASHINGTON, April 20 (Reuters) – The Pentagon’s top arms buyer on Wednesday predicted more scrapping of big-ticket arms programs starting as soon as the 2013 fiscal year amid tightening U.S. defense budgets.

“There undoubtedly will be more cancellations of that kind,” Ashton Carter, undersecretary of defense for acquisition, told an audience at the Heritage Foundation, a conservative research group in Washington.

Carter made the comment after referring to a Pentagon decision announced in February to kill a roughly $13 billion Expeditionary Fighting Vehicle, a hybrid landing craft and battle truck being developed by General Dynamics Corp (GD.N: Quote, Profile, Research, Stock Buzz), as well as other big programs that have been cut, curtailed or capped in the last couple of years.

“Yes, for sure, as we prepare the fiscal year 2013 budget,” he said when asked if the projected cancellations that he did not specify might occur that soon. The Pentagon is already working on its spending request for fiscal 2013, which starts Oct. 1, 2012.

President Barack Obama last week called for shaving $400 billion from U.S. security-related spending, starting in fiscal 2013 through the 2023 fiscal year, as part of a push to trim the U.S. deficit $4 trillion by then.

The Pentagon’s biggest arms suppliers include Lockheed Martin Corp (LMT.N: Quote, Profile, Research, Stock Buzz), Boeing Co (BA.N: Quote, Profile, Research, Stock Buzz), Northrop Grumman Corp (NOC.N: Quote, Profile, Research, Stock Buzz), General Dynamics, BAE Systems Plc (BAES.L: Quote, Profile, Research, Stock Buzz) and Raytheon Co (RTN.N: Quote, Profile, Research, Stock Buzz).

Carter, in his remarks, said the Defense Department would seek greater buying power for all items — not just arms purchases — in its roughly $530 billion core budget.

WASHINGTON, April 15 (Reuters) – The total projected cost of 95 major U.S. arms programs had risen 4 percent, or about $64 billion, from previous estimates as of the end of last year, the U.S. Defense Department told Congress Friday even as President Barack Obama seeks a tighter Pentagon budget.

The department said the average cost of Northrop Grumman Corp (NOC.N: Quote, Profile, Research, Stock Buzz)’s high-flying Global Hawk reconnaissance drone had risen more than 25 percent, mainly due to “changing the mix” of aircraft to a larger percentage of a pricier model as well as a slow-down in planned purchases.

Global Hawks are now being used over Japan in disaster recovery efforts, over Libya in the NATO-led enforcement of a no-fly zone and over the Gulf.

Overall, the 95 programs are together projected to cost about $1.7 trillion, including research and development, procurement, military construction, and acquisition-related operation and maintenance.

The totals reflect anticipated costs as well as those to date, plus allowances for inflation.

The projected $64 billion increase came chiefly from six programs whose cost overruns date to the 2009 reporting period, the Pentagon said.

Their breaches of threshholds set by the so-called Nunn-McCurdy law already had been sent to Congress, the department said in an overview of its December 2010 “Selected Acquisition Reports,” a mandated update for lawmakers.

WASHINGTON, April 15 (Reuters) – The U.S. military said it had successfully completed its “most challenging” missile intercept test yet, using Lockheed Martin Corp (LMT.N: Quote, Profile, Research, Stock Buzz) and Raytheon Co (RTN.N: Quote, Profile, Research, Stock Buzz) hardware to shoot down an intermediate-range ballistic target over the Pacific.

The test, which took place Friday west of Hawaii, validated the capability of the first phase of President Barack Obama’s revamped approach to defending Europe and U.S. forces deployed there, the Pentagon’s Missile Defense Agency, or MDA, said in a statement.

The Obama administration is racing this year to complete the initial phase of a layered, multibillion-dollar antimissile bulwark in Europe. U.S. officials describe it as a hedge against missiles that could be fired by Iran and perhaps tipped with chemical, biological or nuclear warheads.

Obama’s so-called Phased Adaptive Approach is also designed to boost defenses against North Korea, another focus of U.S. antimissile efforts, and ultimately to add to the existing ground-based defenses of U.S. soil as the technology improves.

The event was “the most challenging test to date,” marking the first intercept of a shipboard Aegis combat system built by Lockheed against a target with a range greater than 3,000 kilometers (1,864 miles), the MDA said.

In addition, it was the first such Aegis test to rely on missile tracking data gathered by another, remote, radar station, the MDA said.

“The ability to use remote radar data to engage a ballistic missile threat greatly increases the battle space and defended area of the SM-3 missile” built by Raytheon and used to destroy the target, the statement said.