A Pentagon contract turns into a global dogfight

Who will build 20 air-support planes is pitting Beechcraft against Brazil's Embraer in a bitter war of words.

By Bruce Kennedy Mar 12, 2013 9:18AM

Image: The Pentagon -- Digital Vision., Photodisc, Getty ImagesShould the U.S. award defense contracts to non-U.S. companies? That question has both geopolitical and economic implications, especially in a world where globalization and multinational companies are becoming the norm. Usually the shoe is on the other foot, with U.S. defense companies selling their guns, aircraft, tanks and other armaments to friendly nations around the world.


But a dispute between Beechcraft, known as Hawker Beechcraft until it emerged from bankruptcy last month, and one of its competitors -- which has an overseas partner -- is sparking some new debate on the issue.


Late last week, Beechcraft announced it was formally filing a protest with the federal Government Accountability Office regarding the U.S. Air Force's recent awarding of a contract to build its Light Air Support (LAS) aircraft to Brazil's Embraer (ERJ) and its American partner, Sierra Nevada, based in Sparks, Nev.


Beechcraft, which is based in Wichita, Kan., is pitting its AT-6 aircraft -- an attack version of its T-6 trainer -- against the Embraer/Sierra Nevada A-29 Super Tucano.


The initial contract would purchase 20 planes for use by Afghanistan's military and is reportedly worth $427 million. But the Wichita Business Journal says the LAS contract could eventually be worth $950 million.


Beechcraft CEO Bill Boisture said his company was "very perplexed" by the decision, which would reportedly jeopardize about 1,400 jobs in Kansas and other states.


"Our belief that we have the best aircraft was confirmed by the Air Force rating our aircraft 'exceptional,'" he said in a press statement, "and the fact that we are the lower cost solution was confirmed by the USAF's public award announcement."


Boisture also noted a 2012 Air Force investigation found "evidence of bias" toward Embraer and Sierra Nevada, which prompted a do-over of the competition for the LAS contract.


"We simply don’t understand how the Air Force can justify spending over 40% more -- over $125 million more -- for what we consider to be less capable aircraft," Boisture added. "The Air Force needs to make the right decision for the nation and our future allies."


Sierra Nevada and Embraer returned fire in a joint press statement saying that their A-29 Super Tucano will be built in Jacksonville, Fla., and that the LAS award will support more than 1,400 jobs. The release said Embraer will create high-tech jobs at the Jacksonville facility, "adding to the 1,200 people Embraer currently employs in the United States, and new jobs at (Sierra Nevada) will add to its U.S. workforce of 2,500 people."


"The A-29 Super Tucano is the right choice for the mission, the warfighter, the U.S. taxpayer, the American workers and our partner nations," the statement added, while calling the Beechcraft protest "unfortunate."


According to Sierra Nevada's website for the A-29, Embraer was founded by the Brazilian government in the 1960s and privatized in 1994. More than half of its stock trades on the New York Stock Exchange. Embraer currently vies with Canada's Bombardier (BDRBF) for the title of world's third-largest commercial aircraft maker, after Boeing (BA) and Europe's Airbus (EADSY).


According to the Financial Times, Embraer hopes its Tucano LAS contract will pave the way for "its more ambitious KC-390 project," a jet-engine transport Embraer is reportedly developing with cooperation from Boeing.


More on moneyNOW

10Comments
Mar 12, 2013 10:26AM
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Somebody please tell me why in the hell WE are buying Afghanistan an air force?  Our state
department and military have lost their minds!!!
Mar 12, 2013 1:39PM
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All defense related industries should be required to us only 100% American made content.

Defense in wartime could eliminate any foreign suppliers.  Regardless of cost, wartime material will be needed and we will require the tooling and know how to make it.

This is one of the few cases where Made in the USA should be required.  Providing for the common defense is one of governments ONLY required functions.


Mar 12, 2013 2:57PM
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Follow the money folks. There is a kickback in there somewhere.
Mar 12, 2013 6:16PM
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Ever wonder where all the high level military / civilians, that make this type of decisions, and retire are working now?
Mar 12, 2013 2:48PM
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What are they trying to do give war a bad name?
Mar 13, 2013 9:15AM
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Just what the hell are they doing? Letting other countries bid on pentagon contracts - what idiots!!
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Afghanistan has some of the richest PGM sites in the world. 
Mar 12, 2013 11:24PM
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Sounds as if MUCH of this work will be done in the U.S. ??

Yes we have sold Military Weapondry throughout the World built here, some had their factories too.

 

There is always kick backs, when dealing in this Malaise..

Many of those retired military, become "Consultants" or Lobbyist for the Biz...Conflict anyone??

They are getting "huge pensions" from the Pentagon also..Indirectly maybe?

 

Yes Afghanistan, is very Rich in many Resources....One of the Main reasons it became a Viet-Nam for the Russians, it broke their Armies....And we supplied many weapons to their Enemy to defeat them.

Cold War anyone.?

Mar 13, 2013 1:08PM
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Why this administration & President Obama are letting other people from other countries get involved in U.S. government contracts? That means less workers in the U.S. obtaining a job some medical benefits and not asking for government handouts (welfare, food stamps or even medicaid) benefits. Where is their patriotism? You sworn into office to obey and go by the U.S. Constitution, please we need more jobs in the U.S. not outside of this country.
Mar 12, 2013 2:42PM
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Not mentioned was the fact that tanks costs over $900,000,bombs costs over $1 million

each,choppers cost $17 million each.The far right always says we can afford this but

schools,SS,medicare, well,we can`t afford that.

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