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Beechcraft Moves LAS Fight to Courts, Congress

Mar. 21, 2013 - 03:49PM   |  
By AARON MEHTA   |   Comments
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WASHINGTON — Beechcraft has escalated its challenge over the U.S. Air Force’s light air support contract, both in the federal court system and on Capitol Hill.

“Beechcraft Corporation has filed suit in the Court of Federal Claims to contest the U.S. Air Force’s decision to lift the stay of performance on the Light Air Support (LAS) contract while the Government Accountability Office (GAO) continues to review Beechcraft’s protest of the award to Embraer/Sierra Nevada,” the company announced in a statement Thursday. “A GAO ruling on Beechcraft’s protest of this procurement is expected within 90 days.”

The move represents another back and forth in what is becoming a very public fight between Beechcraft, which recently emerged from bankruptcy, and the Air Force, which has twice selected the competitor A-29 Super Tucano, a joint project between Sierra Nevada Corp. (SNC) and Brazil’s Embraer. The Super Tucano is a single-engine turboprop plane designed for air-to-ground combat.

The LAS contract is designed to supply Afghanistan’s military with 20 planes, which should ensure air superiority in the country after the majority of U.S. forces leave. The cost is relatively small by U.S. Defense Department standards, just $427,459,708, with a maximum amount of $950 million over the life of the contract. But both challengers view the award as vital for their businesses moving forward.

For Beechcraft, which officially emerged from bankruptcy in February, the award would represent a victorious return to the defense sector that could potentially jump-start international interest in its AT-6 fighter, also a single-engine turboprop. For Embraer, the award represents a way into the American market and a reputation as a growing global player in the defense industry.

The USAF Decision

Last year, the Air Force selected the Super Tucano as the best fit for the program. Beechcraft challenged the decision, both with the GAO and in court, and the Air Force decided to recompete before either case was completed. This led to a new competition, during which USAF officials were directed to ignore all testing and information provided in the original competition. In the end, the Air Force once again selected the Super Tucano on Feb. 27.

During the recompete, officials from both sides praised the Air Force for how it was handling the situation.

The second competition “proceeded with a great deal of urgency, and yet care,” Bill Boisture, Beechcraft’s CEO, told Defense News in a February interview. “Our interactions with the Air Force on this round of competition have been very professional.”

That tone changed dramatically after SNC/Embraer was named the victor for a second time. Beechcraft filed a new challenge with the GAO March 8, demanding an investigation into why the service decided to pick the more expensive Super Tucano.

“We simply don’t understand how the Air Force can justify spending over 40 percent more — over $125 million more — for what we consider to be less capable aircraft,” Boisture wrote in a statement at the time. “Given our experience of last year and our continued strong concern that there are again significant errors in the process and evaluation in this competition, we are left with no recourse other than to file a protest with the GAO. The Air Force needs to make the right decision for the nation and our future allies.”

The challenge triggered an automatic stop-work order on the contract while GAO entered into a 100-day evaluation period ending June 7. But on March 15, the Air Force announced it would be overriding the freeze “in order to honor a critical and time-sensitive U.S. commitment to provide air support capability to the Afghanistan Air Force (AAF).”

In an emailed response to the announcement, Beechcraft hit back at the service in unusually strong language.

“When it comes to producing aircraft that will help Americans come home from Afghanistan, the U.S. Air Force today concluded that America’s “best interest” now rests “on the shoulders of Brazil,” the company said in a statement. “This decision is very misguided. It will lead to the loss of American jobs and substantially higher costs to American taxpayers.

“By invoking this override procedure to outsource American defense jobs, the definitions of national security and the protection of the U.S. aerospace industrial base have been turned upside down,” the statement continued. “Beechcraft will review its options, with the goal of helping protect U.S. best interests and the Afghanistan Air Force, to reverse this misguided action.”

Those options apparently include legal action to put the stop-work order back into effect, which could have long-term consequences on when the Afghan forces can take possession of their desperately needed aircraft.

It also could have short-term consequences for Embraer. Hours after the Air Force unfroze the contract, the Brazil-based company announced it had signed a 10-year lease on a 40,000-square-foot hangar at Jacksonville International Airport in Florida, the future location of the facility that will assemble the LAS-related Super Tucanos.

“SNC and Embraer are excited to move forward in putting Americans to work and getting the LAS aircraft into the hands of our warfighters and partners on the ground in Afghanistan,” SNC said in a company statement Thursday. “We fully understand the urgency of this mission and intend to provide a superior product right on schedule. The signing of the lease on the facility in Jacksonville where the A-29 will be produced was an important step toward fulfilling the LAS contract and further developing the U.S. aviation industrial base.”

“The Air Force understands that Beechcraft Corporation has filed suit in the Court of Federal Claims to contest the decision to override the stay of performance on the Light Air Support (LAS) contract,” Ed Gulick, Air Force spokesman, wrote in an email. ”The Air Force is confident in the LAS acquisition processes. In accordance with the protest process, the override to the stay of performance was issued to honor a critical and time-sensitive U.S. commitment to provide air support capability to the Afghanistan Air Force. Nevada-based Sierra Nevada Corporation will continue work on the LAS contract pending any further direction from the Court.”

“We are continuing to move forward with our contractual obligations to support the LAS (Light Air Support) program,” Embraer wrote in a company statement Thursday night. “The A-29 Super Tucano – which was selected by the U.S. Air Force on February 27 – will be produced by American workers in Jacksonville, Florida, and will support more than 1,400 jobs across the U.S. We are proud to support the U.S. and its partner nations in this very important and critical mission.”

Capitol Allies

While the battle over the Las award works its way through the GAO and the courts, a more subtle battle is being waged on Capitol Hill, with both sides lining up their allies.

It is a classic congressional story. At stake are an estimated 1,400 jobs across the country, but the majority of those will come to whichever state lands the contract.

Siding with the Kansas-based Beechcraft are members of that state’s delegation. Sens. Pat Roberts and Jerry Moran joined Rep. Mike Pompeo, all Republicans, in writing a March 15 letter to Defense Secretary Chuck Hagel demanding that the stop-work order be put back into place.

“To proceed with a contract that may not stand up before the GAO is a waste of taxpayer dollars and an affront to good governance,” the trio wrote. “Furthermore, to spend money in a foreign country on a product that the Air Force may ultimately be unable to procure is foolish — especially at a time when DoD is struggling to fund vital programs and adequately equip the warfighter. In these austere financial times, this behavior is simply unacceptable.”

That same day, a bipartisan delegation from Florida made up of Sens. Bill Nelson and Marco Rubio, and Reps. Ander Crenshaw and Corrine Brown, supported the USAF decision to unfreeze the stop-work order. Crenshaw and Brown jointly represent Jacksonville, where Embraer plans to open its plant.

“It is essential that we enable the Afghans to mount an indigenous air force to aid in the defense against the Taliban and other extremist organizations,” they wrote in a letter addressed to Secretary Hagel.

“The safety of our men and women on the ground today and the future security of our nation depend on that,” they said. “Unfortunately, the road to providing U.S. commanders in Afghanistan with the light air support capability they requested long ago has been paved with numerous unnecessary and costly delays. Now the window for providing this resource and training in time to make a difference is quickly closing.

“We know that you understand the urgency of this situation, and we applaud the determination of the Air Force to move forward with this program despite numerous delays.”

Beechcraft’s allies also include the International Association of Machinists and Aerospace Workers (IAM), which on March 8 sent out a blistering statement decrying the Air Force for selecting an international company for the contract.

“I don’t know why the U.S. government is bending over backwards to accommodate Brazil in the midst of sequestration, but this is a real blow to American workers and taxpayers,” IAM President Tom Buffenbarger wrote in the statement. “The claim by Embraer that most of their plane would be ‘built in the USA’ adds insult to the injury of the 1,400 jobs that will be destroyed here at home.”

Although SNC is the prime contractor on the contract, Beechcraft and its allies have focused on the involvement of Embraer as a foreign company. The Super Tucano team has claimed it will support 100 suppliers across 20 states and create roughly 1,400 American jobs.

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