Pentagon sets up panel to study electronic warfare requirements

(Adds quotes from Pentagon chief arms buyer)

By Andrea Shalal

WASHINGTON, March 17 (Reuters) - The U.S. Defense Department has set up a new panel to study electronic warfare needs across the U.S. military and make recommendations to ensure the United States retains its competitive edge, a top Pentagon official said on Tuesday.

Pentagon acquisition chief Frank Kendall and Admiral James Winnefeld, vice chairman of the Joint Chiefs of Staff, will chair the panel, Deputy Secretary Robert Work told a conference hosted by McAleese & Associates and Credit Suisse (NYSE: CS - news) .

Work said the United States still had greater capabilities in the electromagnetic spectrum than potential adversaries, but other countries were investing heavily.

"We still have a lead, but I think that lead is diminishing rapidly," Work told the conference. He said he signed a memo creating the new electronic warfare programs council on Tuesday.

The move could spell good news for Boeing Co (NYSE: BA - news) , which builds electronic attack jets for the Navy, but may open opportunities for U.S. rivals such as Raytheon Co and Northrop Grumman Corp as well as Britain's BAE Systems (LSE: BA.L - news) Plc.

Kendall told reporters the new council's review would help shape the Pentagon budget process, but it was unlikely to get the full $2 billion in extra funding for electronic warfare equipment recommended by the Defense Science Board last year.

He told the conference that he did not favor designating one service to manage all electronic warfares needs for the entire military, noting that he believed each of the services had its own needs and capabilities.

The Navy is nearing the end of a separate study of electronic warfare requirements across the military services. A top admiral last week said the study would probably point to the need for more Boeing EA-18G electronic attack jets, but Boeing needed orders in fiscal 2016 to preserve the option of building more EA-18Gs in coming years.

Asked about the importance of extending the Boeing production line to maintain the option of buying more Growlers, Kendall said: "I'm more concerned about getting to the next-generation capability than buying the current version."

He said he recognized Boeing's interest in maintaining the production line, but its closure was inevitable.

"The problem is that even if Boeing gets another foreign sale," he said, "at some point in the next few years for sure they're going to have to shut down the line." (Reporting by Andrea Shalal; Editing by Dan Grebler and Lisa Von Ahn)