The Pentagon (search) is scrapping plans to terminate a contract for the C-130J Hercules cargo and personnel transport aircraft because of new information about the costs, according to a letter received Wednesday by U.S. lawmakers.
Secretary of Defense Donald H. Rumsfeld (search), who had previously told lawmakers he was rethinking the Hercules cut, put it in writing for the first time in Tuesday's letter to Rep. Bill Young, R-Fla., chairman of a defense spending panel.
"New information has become available regarding the contract termination costs," Rumsfeld wrote. But canceling the rest of the contract would cost up to $1.6 billion — far more than projected.
The decision to back away from the cut is huge news for the Lockheed-Martin (search) plant in Marietta, Ga., which makes the C-130J and F/A-22 Raptor — another program targeted for cuts. Sen. Saxby Chambliss, R-Ga., said saving the programs has been a top priority for the state's congressional delegation.
"I am particularly pleased they listened to us, agreed with us and have committed to keep the multiyear procurement contract on schedule," Chambliss said. "The C-130J is an important aircraft to our troops and is playing an important role right now in the War on Terror."
Still, the C-130J has its critics — at the Pentagon and on Capitol Hill. Sen. John McCain, R-Ariz., has criticized escalating costs of the $4.1 billion contract. The Air Force has been paying $66.5 million for each of 62 planes, although almost half of that money remains unspent.