[Updated] Pentagon to Buy More High-End Ships

On Wednesday, U.S. Defense Secretary Ash Carter said the U.S. Navy would buy more high-end submarines, destroyers, fighter jets and unmanned underwater vehicles in coming years, using $8 billion saved by scaling back orders for smaller, less capable Littoral Combat Ships.

Carter said the Pentagon's five-year budget plan also included $2.9 billion to modify Raytheon Co's new SM-6 missiles for use as powerful anti-ship weapons and buy 625 more of the weapons, which are now used for missile defense.

In fiscal 2017, the Navy would spend $587 million to buy 125 SM-6 missiles, according to a senior defense official.

Secret testing last month had proven the Navy's ability to use the new Raytheon missiles as offensive anti-ship weapons, Carter told sailors at the Navy's massive San Diego base.

The move will dramatically bolster the military capabilities of the U.S. warships that carry them at a time when China and other countries are rapidly developing anti-ship weapons.

Carter embarked on a three-day tour of U.S. military bases on Tuesday after providing a preview of the Obama administration's $582.7 billion fiscal 2017 defense budget ahead of the formal rollout next week.

The Pentagon's budget reshapes spending priorities to reflect a new strategic environment marked by a return to greater power competition from Russia and China, and other threats such as Iran, North Korea and Islamic States.

Carter said the Pentagon's five-year plan would fund nine Virginia-class submarines and 10 DDG-51 destroyers over the next five years. Both ships are built by Huntington Ingalls and General Dynamics Corp.

He said the Navy would also buy 13 more Lockheed Martin Corp F-35 fighter jets than planned over the next five years - 10 for the Navy and three for the Marine Corps - as well as 16 more Boeing Co F/A-18E/F fighters.

It would also spend $600 million over the next five years to buy variable-size payload unmanned underwater vehicles.

Carter defended his plan to truncate orders of the two-model Littoral Ship program at 40 ships instead of 52, saying the current security environment demanded more sophisticated capabilities. Navy Secretary Ray Mabus had argued forcefully for the larger fleet of LCS ships, which are designed for surface and anti-submarine warfare, as well as mine-hunting missions.

U.S. officials said the Navy would buy two LCS ships in fiscal 2017, with orders dropping to one a year in subsequent years. Lockheed and Australia's Austal build two different models of the LCS ships.

EFENSE BUDGET

On Tuesday, Carter said the Pentagon would seek a $582.7 billion defense budget next year and reshape spending priorities to reflect a new strategic environment marked by Russian assertiveness and the rise of Islamic State.

Carter, speaking to the Economic Club of Washington, said the funding request was in line with last year's congressional budget deal, with a clear focus on five big challenges facing the U.S. military: Russia, China, North Korea, Iran and Islamic State.

"Today's security environment is dramatically different than the one we've been engaged with for the last 25 years and it requires new ways of thinking and new ways of acting," he said.

Carter's remarks came a week ahead of the formal rollout of the administration's budget for the fiscal year that begins October 1, providing a preview of what remains by far the largest military budget in the world.

He told reporters during a visit to a California naval base that the budget plan focused on higher-end weapons spending to maintain the U.S. military's competitive edge over countries like Russia and China, which are expanding their militaries.

The proposal drew immediate fire from Republicans, who railed against President Barack Obama's failure to request more funding to defeat Islamic State.

Carter told reporters the administration had budgeted $7.5 billion for an accelerated fight against the militant group, 50 percent more than this year, and would seek further war funding later if needed.

He said the United States has used so many smart bombs and laser-guided rockets against the militants in Iraq and Syria that it is running low on the weapons and needs to invest $1.8 billion for 45,000 more.

EUROPEAN TRAINING

Carter said the Pentagon would ask for $3.4 billion to boost military training and exercises aimed at reassuring European countries concerned about Russia, which seized Ukraine's Crimean peninsula in 2014 and has worried NATO allies with its strategic bomber flights.

Obama said in a statement, the request, a four-fold increase from last year's $789 million, would enable the United States to strengthen the U.S. military posture in Europe. NATO Secretary-General Jens Stoltenberg called the move a "clear sign" of the U.S. commitment to European security.

Carter also voiced concern about China's military intentions. Beijing has been rapidly developing missiles and other weapons that could force the U.S. military to operate farther from shore in the case of a conflict.

"Key to our approach is being able to deter our most advanced competitors," he said. "We must have - and be seen to have - the ability to impose unacceptable costs on an advanced aggressor."

To build upon the U.S. military's technological superiority, Carter said the Defense Department planned to invest $71.4 billion next year in research and development, much of it aimed at boosting strategic capabilities.

The military has been developing drone aircraft and boats that are capable of swarming an adversary, preventing it from threatening U.S. warships and jets.

He said the Pentagon also would spend $8.1 billion on undersea warfare in fiscal 2017 and more than $40 billion in the next five years.

Carter later flew to Naval Air Weapons Station China Lake in California to get updates on new high-end weapons being developed and tested there, including precision Long Range Anti-Ship Missiles built by Lockheed Martin.

He said the department would spend nearly $1 billion over the next five years to buy the new missiles.

The Pentagon also plans to spend about $2 billion over the next five years to buy more Raytheon Tomahawk missiles and upgrade their capabilities, bringing the U.S. inventory of the missiles to above 4,000, Carter said.