Another Procurement Fiasco at the Pentagon

The Department of Defense has struggled with awarding procurement contracts for many years.  The poster child for what can go wrong was the Air Force’s procurement for refueling-tankers (it took the Pentagon three attempts and eight years to get it right).  On February 28, 2012, the Air Force was once again in the middle of another procurement controversy when it admitted mistakes in awarding a contract for the Light Air Support aircraft to Embraer.  According to Reuters, “The U.S. Air Force on Tuesday abruptly canceled a $355 million contract awarded to Sierra Nevada Corp and Brazil’s Embraer for 20 light-support aircraft, citing problems with documents used to make the decision.”  The Taxpayers Protection Alliance (TPA) was critical of the decision by the Pentagon to exclude American aircraft manufacturing company Hawker Beechcraft from competing for the project. In a baffling decision, Hawker’s award winning AT-6 was disqualified from the Air Force Light Air Support (LAS) competition with no explanation, leaving only Embraer, a Brazilian company, as the sole-source winner. This exposed millions of tax dollars to waste, fraud, and abuse.  Now, it appears that TPA’s concerns were well founded (read full press release here).

On Friday November 18, 2011, the Obama Administration and the Pentagon made a decision to ship jobs overseas and put a critical defense project at risk by disqualifying aircraft manufacturer Hawker Beechcraft from the Light Air Support and Light Attack and Armed Reconnaissance (LAS/LAAR) procurement competition.  That left only one company left to fulfill the order, the Brazilian company Embraer.  Hawker Beechcraft challenged the award in federal claims court in December, 2011.  This week, in admitting their mistake, the Air Force said that, “’While we pursue perfection, we sometimes fall short, and when we do we will take corrective action,’ Air Force Secretary Michael Donley said in a statement. ‘Since the acquisition is still in litigation, I can only say that the Air Force Senior Acquisition Executive, David Van Buren, is not satisfied with the quality of the documentation supporting the award decision.’”

Besides the non-competitive nature of the award, a major concern with Embraer is that the Brazilian government has a “golden share” in Embraer.   This “golden share” essentially translates into operational control of the company.  Not only does this put tax dollars at risk with the Brazilian company, but also could threaten US national security.  This essentially gives the Brazilian government the ability to make decisions, including slowing or shutting down production for the company that cannot be stopped by other shareholders.

Taxpayers should be happy that the Pentagon has admitted their mistake.  TPA will be monitoring the award to make sure that the program is competitively awarded and that Hawker Beechcraft is given every opportunity in the next procurement competition.  Regardless of the outcome of the next competition, taxpayers still deserve answers as to what went wrong and how to fix the problems.