Marine Corps leaders told a crowd of defense industry officials under a tent at Modern Day Marine here to change the way they do business or take it elsewhere.

To no one’s surprise, the shrinking defense budget has forced the Corps’ hand. A panel that included the heads of Combat Development Command and Systems Command, the program executive officer for Land Systems and the deputy commandant for programs and resources explained during the Modern Day Marine Report to Industry how programs force out inefficiencies when no program is immune to the budget ax.

Uncertainty hangs over the Marine Corps as members of Congress argue over just how deep to cut the military’s budget. The worst-case scenario is a $1 trillion cut to overall defense spending over the next decade, which Lt. Gen. John Wissler, the deputy commandant for programs and resources, called “fiscal Armageddon” that would fundamentally change U.S. national defense.

The Marine Corps will have to make hard choices on how it replaces vehicles worn out from 10 years of war in Iraq and Afghanistan, said Lt. Gen. Richard P. Mills, head of Marine Corps Combat Development Command. Corps officials must weigh whether the service can afford to buy new vehicles or settle on resetting the old ones.

William Taylor, PEO Land Systems, suggested the Marine Corps might have to combine its modernization programs with the forthcoming servicewide reset.

Fewer budget dollars might make “large development programs” impossible to launch, forcing leaders to “sneak in some incremental capability improvements as a function of reset,” Taylor said.

Years when the Pentagon operated with bloated budgets are over, said Brig. Gen. Frank Kelley, head of Marine Corps Systems Command. He said he’s tired of hearing from large defense corporations that the Corps can’t speak directly to their subcontractors on programs.

“[Large defense contractors have] got to stop suppressing your subs,” Kelley said. “I want access to your subs. I want that to be loud and clear.”

Congress has yet to pass the 2012 budget, and Marine leaders are watching. However, Wissler said the Corps could benefit if Congress relies on a continuing resolution for next year, meaning 2011 budget figures would apply to the 2012 fiscal year.

“If we keep ’11 going into ’12, we’ll be in a better situation,” Wissler said.

No matter when the budget is passed, cuts sit squarely on the horizon which will force the Marine Corps and defense industry to “focus on driving out program inefficiencies and driving down costs,” Taylor said.

He described how he plans to reorganize his PEO to account for different-size vehicle portfolios in order to conserve personnel and save money by helping the Corps make more informed acquisition decisions.

“We’re focusing on prudent program realignments to target better domain logic, synergy between similar and related programs and a pursuit of greater organization efficiency within the process,” Taylor said.

He suggested the PEO would break into mini portfolios to include light trucks, medium trucks, heavy trucks and amphibious vehicles.

“We could logically align similar programs in terms of weight categories and capabilities under the same management structure to free up personnel resources to apply elsewhere in the command because we have some vacancies,” Taylor said to reporters after the panel.