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LAS Controversies Continue

In this time of Continuing Resolution the U.S. Air Force’s Light Air Support (LAS) contract is one of the few major new programs to begin in FY13. The second attempt to conduct the contest led to same result as the first. Sierra Nevada (SNC) using a airframe from Brazil’s Embraer was selected and Beechcraft’s T-6 based proposal was rejected. As with the first attempt Beechcraft has filed a GAO protest.

The Air Force has announced that using available policy they will override the stop work that normally happens for 100 days while the GAO works out the protest. This has been done in the “best interests of the United States or unusual and compelling circumstances.” Due to the first protest and the do over on the contest it is already a year behind schedule. This new one could also cause several months delay.

The protest and the award remained tied up in politics and concerns about loss of work to a U.S. company. Sierra Nevada had originally planned to have a facility in Florida to do some of the work finishing the aircraft but they would be assembled in Brazil. The company is now looking at ways to increase the amount of jobs created by the contract through “in-sourcing” the work.

The loss of the contract to the U.S. company has been a further blow to the Kansas military aviation industry. Boeing (BA) has moved their work from the Wichita facility to Washington for the new KC-46A tanker. Beechcraft had planned to build their AT-6 in the state. As such it is attracting the interest of Kansas’ Congressional delegation.

With so few major programs and contracts predicted for the near future fights like this over awards will continue. Each company has a lot to gain by winning the work and as the defense budget declines there will be less contracts available.

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Beechcraft to Protest U.S. Air Force Decision — Press Release

WICHITA, Kan., March 8, 2013 /PRNewswire-USNewswire/ — Beechcraft Corporation today announced that it will formally protest to the U.S. Government Accountability Office (GAO) the U.S. Air Force’s (USAF) recent award of the Light Air Support contract to its Brazilian competitor, Embraer. An estimated 1400 jobs in Kansas and other states are in jeopardy as a result of the Air Force decision.

“Following our debrief with the Air Force earlier this week, we are very perplexed by this decision,” said Bill Boisture, CEO, Beechcraft. “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.”

Last year, an Air Force investigation found evidence of bias toward Brazil-based Embraer and its Nevada-based partner, Sierra Nevada (SNC), which led to the decision to restart the competition. Although SNC later sued the Air Force attempting to enforce the biased decision, U.S. Court of Federal Claims Judge Christine O.C. Miller wrote in her Nov. 1, 2012, opinion that based on the investigation’s evidence of bias “the Air Force’s decision to cancel the contract award to SNC and re-solicit proposals was reasonable and rational and should stand.”

“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 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.”

About Beechcraft Corporation

Beechcraft Corporation designs, builds and supports versatile and globally renowned aircraft, including the King Air turboprops, piston-engine Baron and Bonanza, and the T-6 trainer and AT-6 light attack military aircraft. Its 5,400 highly skilled employees are focused on continuously improving the company’s products and services which are sold to individuals, businesses and governments worldwide. In business since 1932, Beechcraft has built more than 54,000 aircraft and more than 36,000 continue flying today. It leads the industry with a global network of more than 90 factory-owned and authorized service centers. The company’s headquarters and major manufacturing facilities are located in Wichita, Kan. For more information, visit beechcraft.com or follow us on Twitter @Beechcraft.

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Air Force to Try Again with LAS Contract and Sierra Nevada

In a blow to the newly reorganized Hawker Beechcraft the U.S. Air Force after conducting a second source selection due to that company’s protest again selected Sierra Nevada for the Light Air Support (LAS) contract. That U.S. company will team with Brazil’s Embraer to provide the Afghan Air Force several modified turboprop aircraft. The initial contract is worth $950 million.

If all goes well there may be other customers for the system optimized for use in counter insurgency and non-conventional warfare. There were only two bidders with Hawker utilizing a version of their T-6 trainer already in use by the U.S. military.

An earlier attempt to award the contract late last year to Sierra Nevada was halted on Hawker’s protest which was upheld by the General Accountability Office (GAO). This led to a re-evaluation of the proposals submitted with Sierra Nevada being selected a second time.

As with the first attempt there is nothing to stop Hawker from protesting if they believe the source selection was conducted unfairly.

The selection of a non-U.S. aircraft has already received some criticism from Congress.

The Air Force has struggled the last decade to conduct these large aircraft source selections. The KC-X new aerial tanker program took 3 tries before Boeing (BA) won with a version of their 767 airliner. The CSAR-X combat rescue helicopter was ended after 2 rounds of bids and protests and the Air Force is yet to buy a replacement for their current fleet of MH-60 aircraft.

If Hawker does not protest this will actually be a victory for recent Air Force acquisitions as it only took 2 tries and was awarded fairly quickly. Deliver of the first aircraft, though, is reportedly delayed a full year.

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Air Force Will Attempt Second Contest for Light Air Support Aircraft

Following up on its decision to cancel the initial contract to Sierra Nevada and Brazil’s Embraer for the initial order of Light Air Support (LAS) aircraft for use by the Afghan military the U.S. Air Force now plans a new contest. The contract was protested by Hawker Beechcraft whose T-6 based proposal was removed from the competition. After the start of an investigation into the source selection which continues the service’s leadership decided to end the first attempt and begin again.

The Air Force investigation found that there was not sufficient justification for the decisions to remove Hawker and award the $300 million contract to Sierra Nevada. This company teamed with Embraer which would see their Tucano based system assembled in Florida.

Now it is expected that an amended Request for Proposals will be issued in the near future allowing the two companies to compete again.

If the program goes as planned it could be worth up to $1 billion in orders.

With the new proposal process it is hoped that a decision will be made next year.

Hawker is struggling and may face bankruptcy in the near future and the LAS win would be a major boon for the company. Brazil is looking at buying a new fighter and Boeing’s (BA) F/A-18 is one of the major contenders and a win for Embraer is believed to be helpful for that contest.

The Air Force has struggled over the last decade with awarding new contracts. There was the long running KC-X tanker program which took three attempts to award finally to Boeing. The new combat rescue helicopter, CSAR-X, went through two iterations but is now currently on hold. The cornerstone of the new Air Force, Lockheed’s (LMT) Joint Strike Fighter, is facing cost and schedule problems. The Light Air Support program seems to continue that trend.

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New Light Air Support Contest for Sierra Nevada and Hawker Beechcraft?

Late last year the U.S. Air Force awarded a contract to a team of Sierra Nevada and Brazil’s Embraer to provide light attack aircraft for use by the Afghan military. The contract also had the potential for further orders to support the U.S. military and other potential foreign customers. The only other company to submit a bid was Hawker Beechcraft.

The award was controversial as the Air Force eliminated Hawker’s bid for not being in the competitive range as well as denied their attempts to protest the decision. Hawker sued in Federal Court and it came out that the contract had already been awarded to Sierra Nevada. After reviewing the process the decision was made four weeks ago to cancel the contract and begin an investigation into the contracting process.

The Air Force has stated that the investigation will conclude next week and that it focused on documentation of the decision and not the actions of either contractor. Based on the data gathered so far the Air Force has decided to reinstate Hawker, allow new proposals and may conduct another evaluation. The service also may reserve the right to conduct a whole new competition with a new request for proposals and new bids.

At the same time there are reports that Hawker may have to file for bankruptcy due to its current debt load. If that is true then the Light Air Support contract may be key to keeping the company viable.

The Air Force has struggled over the last decade with evaluating bids and awarding contracts for new aircraft. The KC-X aerial tanker took three tries before Boeing (BA) won it with a version of their 767 airliner over Europe’s EADS. The CSAR-X rescue helicopter had two different competitions with no satisfactory result and the program ended up being cancelled. This contract follows in a similar vein.

The review seems to indicate that the Air Force found enough issues with the source selection process to warrant a new competition. Hopefully this one when it is completed will be conducted in such a way to avoid protest and strife and the service can move out with buying the aircraft.

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Sierra Nevada and Embraer’s Light Attack Contract Canceled by Air Force

Late yesterday the U.S. Air Force announced that it had canceled the contract signed in December with Sierra Nevada and Embraer to provide Light Attack aircraft for use by the Afghan military. The contract was in dispute by Hawker Beechcraft whose own proposal had been eliminated by the Air Force prior to source selection even taking place and no work was being done by the winners.

Hawker was in the process of suing in Federal court to get the decision to award to the winning team overturned. Earlier it had been denied a chance to protest as the Government Accountability Office (GAO) ruled it did not file in time. During one of the first court hearings about the case the Air Force admitted that they had gone ahead and given the contract to Sierra Nevada who was going to use aircraft manufactured by Brazil’s Embraer SA. Sierra Nevada had established a plant in Jacksonville for this effort.

Not only did the Air Force cancel the existing contract they announced that they will conduct an investigation of the process used to select the winners. There was no discussion of whether there would be a new requirement and contest.

Hawker had bid a version of their T-6 trainer used by the Air Force and Navy currently while Sierra Nevada was going to use a variant of Embraer’s Tucano aircraft which is in use by several countries. The initial contract would provide systems for use by the Afghans with the potential for further sales to the U.S. or other customers.

This is the third major acquisition in the last ten years that the Air Force has struggled to award. The KC-X tanker took three tries before Boeing (BA) won it. The CSAR-X new rescue helicopter never was completed despite two tries and multiple protests. This means that the LAS contract will have to be begun again or a new requirement created.

Hawker Beechcraft has had its struggles over the recent years due to the general downturn in aviation. Facing a rougher future with the proposed cuts in the U.S. defense budget it had been reported that the company had recently engaged a law firm known for its work in bankruptcy or restructuring. The decision by the Air Force will only be good if a decision is made to have another contest which there is no guarantee that Hawker will win.

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