OWEGO - Lockheed Martin had prepared for the worst, announcing plans to cut at least 225 jobs at its Owego plant. But that didn't make hearing the White House's call for an end to the presidential helicopter program any easier.

President Barack Obama on Thursday sent Congress a proposed defense budget for fiscal 2010 that would end the $13 billion VH-71 presidential helicopter program and Air Force CSAR-X combat search-and-rescue helicopter program - projects Lockheed has been working on for years.

Instead of continuing to pursue the current presidential helicopter program, "the administration proposes to cancel it, review requirements and establish a new program," the White House budget office said. "A new presidential helicopter replacement program will allow the administration to take advantage of new technologies and develop a helicopter that is fiscally responsible while still meeting the president's requirements."

The White House proposes spending $85 million on the program in 2010 to cover termination costs, government efforts to develop options for a replacement program and service life extensions for the current presidential helicopter fleet.

Industry groups, however, estimate that the full cost of terminating the program could run as high as $400 million to $600 million. Already, VH-71 has cost taxpayers at least $3.2 billion since the program was awarded to Lockheed in 2005.

"What this decision means is that President Obama and his successors will be more vulnerable and less capable while they're on the helicopter than they otherwise might have been," said defense analyst Loren Thompson of the Lexington Institute in Arlington, Va. "This is a bad decision that was made without much understanding of the operational consequences. (Defense Secretary Robert) Gates is a smart guy, but he doesn't have much background in rotorcraft."

About 800 of Lockheed's roughly 4,000 employees in Owego work on the VH-71 project. Lockheed spokesman Tom Greer said the company is not specifying how many employees work on the CSAR-X contract bid.

Lockheed has said that it will tell employees at the middle of this month who will be laid off as part of its 225 job-cut plan announced April 27. Greer said he could not provide additional information about the cutbacks at this time.

Thursday's announcement "didn't change anything regarding what we previously said," he added.

"During the next several months, as the budget process moves forward, we will refine our understanding of this action's impact on our business," Greer said. "We also will continue to support our customer and await direction on next steps for the program."

Other local impacts include potential negative effects on the Binghamton area's housing market, sales tax revenue and talent pool if laid-off Lockheed workers cannot find work in the region and must leave the area for job opportunities.

Termination of the presidential helicopter program could be reversed, however, if Congress orders continued funding in the 2010 defense appropriations bill later this year.

"The president's budget proposal is just a first step in a long process and no drastic decisions should be made at this point," U.S. Rep. Maurice Hinchey, D-Hurley, said.

Hinchey said he is urging the Defense Department to hold off on issuing a stop-work order on the project while he and others in Congress work to continue funding. Hinchey is a member of the House appropriations subcommittee that decides defense spending.

The five production and four test helicopters that make up Increment One, or the first phase, of the VH-71 program have been built, though systems integration and delivery of the aircraft will take about another two years to complete, Lockheed spokesman Troy Scully said.

The Navy owns those copters, Scully said. It would be up to the Navy to decide what to do with them.

A Navy spokesman did not immediately respond to a request for comment.

Increment Two of the program has been on a stop-work order since December 2007.

The program as a whole calls for 28 production helicopters to replace the aging fleet that currently transports the president, his family and other key officials.

The budget plan partly aims to fundamentally overhaul the Defense Department's approach to procurement, acquisition and contracting.

Reform involves "consistently demonstrating the commitment and leadership to cancel programs that significantly exceed their budget," according to an overview of the budget plan.

VH-71 is behind schedule and program costs have ballooned from an original $6.5 billion to more than $13 billion, the document said.

"Plans will proceed for an alternative solution in fiscal 2011," the report said.

Thompson said there is no better option than Lockheed's US101 offering based on the government's current performance requirements.

"If they pick any other helicopter, the president will be less served," Thompson said. "Maybe they can land a bigger helicopter on Pennsylvania Ave. or use a smaller helicopter that carries fewer people less distance, but that means a less capable helicopter.

"I think Lockheed is perplexed because they don't want to have an argument with the new administration, but they can't figure out what it intends to do besides buy US101. This has been a painful program for Lockheed, but they stuck with it because they knew they had the best helicopter for the mission."

CSAR-X is described in the budget plan as a program with a "troubled contracting history" and a single purpose.

The Boeing Co. originally won the $15 billion contract in 2006, but several protests later from the other contract bidders, Lockheed and Sikorsky Aircraft, led to the planned re-award of the contract expected sometime this spring.

"The department will review the CSAR mission in the context of multi-Service requirements," the budget document said.

Thompson said that indicates that the plan would be to "farm out search and rescue to each of the services."