Beechcraft protesting Air Force decision to award light air support contract to competitor

WICHITA, Kan. - Airplane maker Beechcraft said Friday it will formally protest an Air Force decision to award a competitor a contract worth more than $427 million, claiming the decision puts an estimated 1,400 jobs in Kansas and other states in jeopardy.

The announcement is the latest development in a bitter, high-stakes competition that has taken nearly three years with legal challenges from both sides. The contract could be worth as much as $1 billion, depending on future orders.

The loss deals a major blow to Wichita, Kan.-based Beechcraft as it emerges from bankruptcy protection.

Beechcraft's move to file a protest with the U.S. Government Accountability Office comes two weeks after the Air Force awarded Sierra Nevada, based in Sparks, Nev., a contract to build 20 light air support planes for use in Afghanistan. Sierra Nevada, in a partnership with Brazil's Embraer, will make the planes in Jacksonville, Fla.

The light air support aircraft aims to give Afghan forces a fixed-wing strike capability that is a vital part of the U.S. withdrawal from Afghanistan.

Beechcraft, formerly known as Hawker Beechcraft, developed the AT-6 attack aircraft for the project. The plane is a version of its T-6 trainer. Sierra Nevada and Embraer are offering Embraer's combat-proven A-29 Super Tucano.

Beechcraft CEO Bill Boisture said in a statement that the company was debriefed by the Air Force about its decision and is "very perplexed."

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

Sierra Nevada and Embraer issued a joint statement late Friday saying the Air Force looked at three criteria, in priority order: mission capability, past performance and pricing to determine the best overall value.

It noted the A-20 Tucano received an exceptional rating on technical capability and low-risk in all other categories.

"Only the A-29 Super Tucano is operational and performing light air support missions today. Its capabilities and long track record are fully known and demonstrated," the companies said. "The past performances of SNC and Embraer are equally strong and proven. Based on these factors we are confident the Air Force selected the A-29 as the lowest risk solution for the U.S. and its partner nations and overall best value."

Sierra Nevada and Embraer also said that they are moving forward and preparing to begin operations in Jacksonville.

"We simply don't understand how the Air Force can justify spending over 40 per cent more — over $125 million more — for what we consider to be a less capable aircraft," Boisture said. "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."

Sierra Nevada has long touted the A-29 Super Tucano as a proven, reliable plane already in use with nine air forces around the world. Sierra Nevada also said that its win of the contract would support more than 1,400 American jobs, noting that more than 100 companies will supply parts and services to build the plane.

The Machinists union on Friday issued a news release backing Beechcraft in the dispute and arguing the Air Force decision failed to consider the impact on U.S. workers, the U.S. industrial base and U.S. national security concerns.

"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," Machinists president Tom Buffenbarger said. "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."

U.S. Rep. Mike Pompeo, a Republican whose district includes the Beechcraft plant, said the GAO has 60 days to issue its initial response to the protest. He and the state's two Republican senators sent a letter to the Defence Department asking to discuss the contract outcome.

Their letter noted that the Air Force's rejection of the Beechcraft bid was largely premised on whether the AT-6 could receive certification, but they argued that was an unreasonable concern given the history of aircraft certification.

Beechcraft's offer was below the initial estimated contract cost, while the competition's offer was above it, Pompeo said in a phone interview. He added that Beechcraft's plane also apparently was evaluated as better in almost all contract criteria.

"So you had a less expensive product that met more of the capability and yet they didn't choose it —and that is to say befuddling to me," Pompeo said.

In March 2012 the Air Force cancelled the first contract it had awarded Sierra Nevada and launched an investigation after Beechcraft said it had been wrongly excluded from the bidding process. The Air Force began the process again, re-soliciting proposals.

Sierra Nevada sued in June for the reinstatement of the initial contract, contending that the revised bid proposal was tilted in favour of Beechcraft. The U.S. Court of Federal Claims ruled in November that the Air Force's decision to solicit proposals again was reasonable and rational.