WASHINGTON, July 5 (Reuters) - The cost of an Air Force

program to replace aging nuclear missiles has ballooned to about

$160 billion from $95.8 billion, three people familiar with the

matter said, threatening to slash funding for other key

modernization plans.

The project, now named the Sentinel intercontinental

ballistic missile (ICBM) program, is designed and managed by

Northrop Grumman Corp ( NOC ) and aims to replace aging

Minuteman III missiles.

Its latest price tag has risen by around $65 billion since a

2020 cost estimate, according to a U.S. official, an industry

executive and a hill aide briefed on the matter. This may force

the Pentagon to scale back the project's scope or time frame, a

second industry executive said.

Bloomberg reported earlier on Friday that the new price tag

was around $141 billion with the Pentagon assessing

modifications of construction and schedule.

Northrop Grumman ( NOC ) declined to comment. The Pentagon did not

comment on the figure, but said it expects to give a new cost

estimate around Tuesday.

The new Sentinel cost estimate eclipses an increase to "at

least" $131 billion that the Air Force made public in January.

That triggered the Nunn-McCurdy Act, a 1982 law that

requires the Pentagon to formally justify to Congress the

importance of a program whose unit acquisition costs have risen

more than 25% above a baseline.

Secretary of Defense Lloyd Austin is expected to deliver

that notification next week.

Though Air Force leaders argue that Sentinel is crucial for

maintaining America's nuclear deterrent, the Pentagon asked

industry to provide cost estimates on a service life extension

program for the existing inventory of Minuteman III missiles,

according to documents seen by Reuters.

Increased cost estimates are putting pressure on other Air

Force priorities like the Next Generation Air Dominance fighter

jet program, according to two of the sources.

Other programs potentially at risk include hypersonic

weapons development, the B-21 bomber, and various space

initiatives.