Bloomberg News

Pentagon Clears Sierra Nevada-Embraer Work After Protest

March 15, 2013

The Pentagon today authorized Sierra Nevada Corp. and Embraer SA (ERJ) to resume work on a $427 million contract under protest, citing the need to equip the Afghan military.

Beechcraft Corp. on March 8 challenged the award with the Government Accountability Office, which arbitrates contract disputes. It was the second time the closely held company had lodged a protest over an award that has been delayed for more than a year.

While the complaint automatically triggered a stop-work order, the Air Force decided to override it because the turbo- prop planes are needed to arm Afghanistan’s military as the U.S. withdraws troops. The contract is valued at as much as $950 million over its lifetime.

The Air Force determined that “unusually and compelling circumstances that significantly affect the national security interests of the United States and its coalition partners will not permit waiting for a GAO decision,” Major General Wendy Masiello, an Air Force assistant secretary, wrote in a letter today to the GAO. A copy was obtained by Bloomberg.

The Pentagon called the contract a “critical and time- sensitive U.S. commitment to provide air support capability to the Afghanistan Air Force,” according to an e-mailed statement.

President Barack Obama has pledged to withdraw most U.S. troops from Afghanistan by the end of 2014.

Super Tucano

Sierra Nevada, a closely held company based in Sparks, Nevada, on Feb. 27 won the $427 million contract that initially calls for 20 light-attack planes, maintenance support and training. The A-29 Super Tucano aircraft will be built by Sao Jose dos Campos, Brazil-based Embraer.

The military’s override of the stop-work order doesn’t alter the 100-day period that the GAO has to make a decision on Beechcraft’s protest.

The contract was originally awarded to Sierra Nevada in December 2011. The Pentagon canceled the award about two months later after Wichita, Kansas-based Beechcraft, formerly Hawker Beechcraft Corp., sued the military over its exclusion. In February, Beechcraft lost for the second time.

‘Very Misguided’

Beechcraft called the Air Force’s decision “very misguided.”

“The Air Force’s decision to bypass the normal GAO review process deprives the American taxpayer of transparent answers to legitimate and well-documented questions to what has been a very opaque” contracting process, Nicole Alexander, a Beechcraft spokeswoman, said in an e-mailed statement.

Three Republican U.S. lawmakers from Kansas asked the Defense Department to reinstate the stop-work order until the GAO completes its review.

“To proceed with a contract that may not stand up before the GAO is a waste of taxpayer dollars and an affront to good governance,” Senators Pat Roberts and Jerry Moran and Representative Mike Pompeo wrote in a letter to Defense Secretary Chuck Hagel.

Spokesmen for Sierra Nevada and Embraer didn’t immediately comment.

To contact the reporter on this story: Danielle Ivory in Washington at divory@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net


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