After conducting an internal investigation, bringing in senior staff
and briefing Congress, the U.S. Air Force expects this month to restart a
contentious competition to purchase single-engine turboprop attack
aircraft for Afghanistan that pits the Brazilian company Embraer and its
A-29 Super Tucano against Wichita, Kan.-based Hawker Beechcraft and its
AT-6.
Embraer, however, is concerned about getting a fair shake
in the new competition, the outcome of which will affect not only the
two companies, but also possibly the future of growing Brazil-U.S.
military cooperation as well as the prospects for U.S. defense companies
seeking to do business in Brazil.
In March the Air Force abruptly
canceled a $355 million contract it had just awarded Embraer to build
20 light air support aircraft for the Afghan air force after losing
bidder Hawker Beechcraft sued the Pentagon. A subsequent internal Air
Force investigation reportedly found internal administrative problems in
the procurement process. The contract was rebid, with the final
proposal due next Monday.
The U.S. Air Force expects to announce
the new winner early next year, but the aircraft haven't been requested
for delivery until 18 months after that - as U.S. troops are supposed to
be winding down their deployment in Afghanistan.
Unlike the
original competition, the new one lacks a flight evaluation, in which
the two planes would be flown under similar conditions. It also won't
accept data from the prior competition, a concern to Embraer. Hawker
Beechcraft's older planes, such as its T-6, are better known to U.S.
military.
"They think that they are at a significant disadvantage
because of a lack of a fly-off and use of prior data," a senior staffer
for a Florida member of Congress said, describing meetings with Embraer.
The staffer, like several people interviewed for this story, spoke only
on the condition of anonymity because of the sensitivity of the issue.
Officials
on both sides acknowledge that the handling of the contract has hurt a
bilateral defense relationship that "has advanced pretty dramatically,"
said the U.S. ambassador to Brazil, Thomas Shannon.
Brazil has
long harbored resentment over what it sees as slights in the way it is
treated in military matters. Past Brazilian officials thought the
country never got the recognition it deserved for sending troops to
fight alongside the Allies in World War II. Brazil also is still
smarting over its abandonment of its nuclear weapons program under U.S.
pressure, only to see India develop nuclear weapons and continue to
resist signing the Nuclear Non-Proliferation Treaty while still
receiving favorable treatment from Washington.
In recent years, U.S. officials have tried to improve defense
relations with Brazil, the largest country in South America and the
world's sixth largest economy. A 2010 agreement that originated in the
George W. Bush administration called for increased sharing of military
systems and equipment.
The chairman of the Joint Chiefs of Staff,
Army Gen. Martin Dempsey, visited the country in March and Defense
Secretary Leon Panetta visited in April, launching the U.S.-Brazil
Defense Cooperation Dialogue with Brazilian Defense Minister Celso
Amorim.
Marco Aurelio Garcia, a foreign policy adviser to
Brazilian President Dilma Rousseff, said: "We have a very good relation
with the U.S. and we want to continue to develop it. But a decision like
this creates problems not only in military relations but in economic
and commercial relations."
Embraer officials declined to comment.
The company's U.S. headquarters are in Florida, where the planes for
Afghanistan would be assembled.
Embraer still questions why it was
stripped of the contract in the first place, according to another
person who has direct knowledge of the company's deliberations on the
contract. If the problems were mainly administrative, rebidding the
contract "is disproportionate" as a resolution, the person said, adding
that suspicions in Brazil are high that the new competition "is tilted
in favor of Hawker Beechcraft."
Hawker Beechcraft hasn't objected
to the absence of a fly-off, but it has other concerns about the bidding
process. For one, it thinks the Pentagon has lowered the standards for
the aircraft's ejection-seat system, said Derek Hess, the company's vice
president for light attack programs. That shaves an edge, he said,
because Hawker Beechcraft seats accommodate a wider variety of pilots,
something the Air Force told congressional staffers in April was
unnecessary because only Afghans would pilot the planes.
On
Tuesday, Embraer's partner in the competition, Nevada-based Sierra
Nevada Corp., said it had sued the Air Force to have the original
contract reinstated. Observers described it as a significant move as the
U.S. government is a major Sierra Nevada customer, but the corporation
said it planned to continue the competition.
Taco Gilbert, a vice
president at Sierra Nevada Corp., said in a recent interview that, "We
remain concerned that there is no fly-off. All we have ever asked for is
integrity in the process and a fair and open competition."
Buying
planes for the U.S. military and the nascent Afghan air force has been
subject to political interference from the beginning. Embraer initially
had the support of Army Gen. Stanley McChrystal when he was the
commander of international forces in Afghanistan, according to a second
congressional staffer. But the program was killed in Congress under
pressure from Kansas legislators.
Brazilian politicians also are
concerned about the handling of the contract. In an interview at the
presidential palace in Brasilia, Garcia said he thought that the initial
award of the contract to Embraer "was made strictly under technical
criteria" but subsequent developments were the result of "political
interference" and "protectionist and political intervention."
Peter
Hakim, the president emeritus of the Inter-American Dialogue, a
Washington research center, was also critical. "Not only was it
insulting to cancel the contract at the last minute, but the explanation
was so thin," he said. "It made it look like the U.S. can act
arbitrarily."
Shannon, the U.S. ambassador, said that for Brazil,
the cancellation of the contract "provoked latent concerns about the
confidence we have in them and the confidence they have in us as a
long-term partner. So we have been trying to reassure them that we are
looking for a defense partnership that can be enduring."
The U.S.,
which for decades had assumed the sole responsibility for the Western
Hemisphere's defense, now wants Brazil to assume a greater share of the
burden. Brazil, where a military dictatorship reigned until the 1980s,
is modernizing its once-discredited military, a process that began
during the administration of President Luiz Inacio Lula da Silva.
That
modernization has potential benefits for American companies. Brazil
bought UH-60L Black Hawk helicopters from Sikorsky Aircraft Corp. of
Stratford, Conn. Esterline Corp. of Bellevue, Wash., has a contract to
provide equipment to Embraer's KC-390 military tankers.
While in
Rio de Janeiro, Panetta said the U.S. had approved nearly 4,000 licenses
a year to export technology to Brazil, "ranging from weapons and
aircraft to integrated combat systems for navy ships and submarines."
"This is on a par with the U.S. government's license approval rate for treaty allies, for our closest partners," he said.
A
U.S. concern is whether the outcome of the bidding for the Afghan
planes will affect a $4.4 billion contract to sell Brazil 36 fighter
jets. Boeing is competing with France's Dassault Aviation and Sweden's
Saab for the deal. It's unclear whether that contract could be affected
if Brazil continues to harbor doubts about the Pentagon's process for
deciding on the Super Tucano A-29 _ the pride of the Brazilian air force
_ for Afghanistan.
"They are humans with sentiments and they have
long memories," a Brazilian official said, referring to the Brazilian
military. "I recently met a military official complaining about some
slight from 15 years ago."