"After a good deal of consideration, I've decided to terminate the Crusader program," Defense Secretary Donald H. Rumsfeld told a Pentagon news conference.
It marked the first cancellation of a major weapons program by Rumsfeld, although some others, including the Marine Corps' V-22 Osprey hybrid helicopter-airplane, are said to be in jeopardy.
Some in Congress have vowed to fight for Crusader. Lawmakers could block the administration from removing Crusader funds from the defense budget, but it's not clear that will happen.
Rumsfeld had made clear last week that he intended to cancel Crusader and he asked the Army to suggest other ways the project's money could be spent on more advanced weapons technologies.
The Crusader is a 40-ton, (36 metric tons) self-propelled, rapid-fire cannon that was to have entered service by 2008. The Army argued that it was badly needed to replace the existing Paladin artillery system, which is more than 40 years old and is inferior to heavy artillery used by China, North Korea and others.
The debate over Crusader is emblematic of tensions between the military and their civilian overseers on the difficult question of how, and in what form, U.S. armed forces should adapt to meet post-Cold War challenges. The military is wary of giving up too much in near-term modernization for the sake of investing in technologies that may not become available for a decade or more.
"This is a good choice," Rumsfeld said. "We will see it through to the end."
The battle over Crusader is a test of Rumsfeld's ability to push through reforms he thinks are needed to "transform" the U.S. military for new threats such as terrorism and cyber-war. Future conflicts loom over how many fighter jets and warships to buy.
Shares of United Defense Industries Inc., which is controlled by the Carlyle Group, an investment firm, have tumbled on the news. They fell again in trading on the New York Stock Exchange Wednesday, dropping $.43 to $21.07, down from its 12-month high of $29.85.
Wednesday's announcement brought to a climax an unusually public battle between the Army and Rumsfeld's office, which earlier this week appeared to put Army Secretary Thomas White in jeopardy of being fired.
Some in Congress whose states stand to benefit from Crusader funds have vowed to fight Rumsfeld's decision to cancel, but many private analysts believe Rumsfeld stands a good chance of prevailing.
House Republican Conference Chairman J.C. Watts of Oklahoma, where the Crusader is assembled by United Defense Industries Inc., said he would fight the decision "every step of the way."
"I think this has been handled totally unprofessionally," Watts said he told Deputy Defense Secretary Paul Wolfowitz. He compared it to not inviting Sen. James Jeffords of Vermont to a White House event on an — education bill, which helped trigger Jeffords' defection to the Democrats and gave the Democrats control of the Senate.
The Army has spent about $2 billion so far on Crusader; the $9 billion in unspent funds will be used for other weapons projects.