*Update: Hawker-Beechcraft sues to block Embraer’s Air Force Contract
By Gary P Jackson
Here’s a little something that caught my eye today. It seems after investing around $100 million in this project, Hawker-Beechcraft has been excluded from a contract, worth almost $1 billion, to build a new light air support plane.
What intrigues me is the Brazilian company Embraer, the likely contract winner, is currently under investigation by the U.S. Securities and Exchange Commission, and the Justice Department, for possible violations of the US Foreign Corrupt Practices Act.
According to Financial Times, Embraer is “venturing into the defense industry” and “is one of a select few Brazilian companies that has managed to break out of the Latin American market and compete on a global scale”
You can read more about the corruption investigation here.
Here’s what the Wichita Eagle is reporting:
Hawker Beechcraft Corp. says the Air Force has informed the company that it lost out on a military contract worth nearly $1 billion.
The company had hoped to win the Light Air Support contract with its AT-6, an armed version of its T-6 trainer. But on Friday, the company said it received a letter from the Air Force saying the AT-6 had been excluded from the competition. The company wants an explanation.
According to the company’s news release: “The letter provides no basis for the exclusion. We are both confounded and troubled by this decision, as we have been working closely with the Air Force for two years and, with our partners Lockheed Martin, CMC Esterline, Pratt & Whitney Canada, L-3 WESCAM and CAE, have invested more than $100 million preparing to meet the Air Force’s specific requirements.”
The piston planes are designed for counterinsurgency, close air support, armed overwatch and homeland security.
Hawker Beechcraft said it continues to believe the AT-6 is the most capable, affordable and sustainable aircraft in the competition based on the Air Force’s specifications. The company has said that winning the award would have kept its T-6 production line running after 2015. The company has said that 1,400 employees in 20 states – including 800 at Hawker Beechcraft in Wichita – work on the AT-6 and T-6 programs at the company and its U.S. suppliers and partners.
The company said Friday that it had no further comment, for now.
The decision appears to leave the field open to the Super Tucano built by Brazil’s Embraer for the initial contract to supply 35 with the potential for 55 aircraft worth up to $950 million. And that doesn’t include foreign sales.
The Air Force’s move surprised aircraft industry analyst Richard Aboulafia of the Teal Group.
“They seemed to be the front runner for the contract,” he said of Hawker. “They had the most infrastructure spread over the most states and the most political support.”
He said the loss is not critical to the company’s survival, but it would have been a great boost to maintaining work and workers as the company’s T-6 contract runs down.
“The challenge is to build for the military market until the civil market comes back,” Aboulafia said. “And nobody knows when the civil market will come back, probably some time next year, but there’s no guarantee.”
Analyst Wayne Plucker, industry manager for aerospace at Frost & Sullivan, downplayed the importance of the contract to the company.
“It might lead to more layoffs and other adjustments internally, but I don’t think it significantly affects them as a going concern,” he said. “They just need to find another product niche.”
He said the Super Tucano was built specifically for this kind of mission, while the AT-6 is an adaption that wasn’t perfect. Embraer has struggled to sell enough of the planes so it has priced them very aggressively.
U.S. Rep. Mike Pompeo, R-Wichita, said in an e-mailed statement that he was disappointed by the decision..
“I have already demanded answers from the Pentagon on why they made this very unfortunate decision, and will continue to do so,” he wrote. “This contract is critical both to our nation’s security and to jobs in Wichita, Kansas.”
The Obama regime sure seems to favor Brazil for some reason. It may be the fact Obama’s boss, George Soros, has many investments there. As we know, Obama gave the Soros owned Brazilian oil giant Petrobas $10 billion a couple years back, just days after Soros bought controlling interest in the company.
Whitney Pitcher found more about the connection between Petrobas, and Obama’s repeated efforts to stifle American oil exploration. Obama has told the Brazilian leaders he wants America to be their best customer for oil.
Doing some research it seems George Soros has a connection to Embraer through Harbin-Embraer Aircraft a Chinese-Brazilian joint venture, and Hainan Airlines, which Soros owns a significant stake in.
Not sure what to make of this.
By all accounts, both Hawker-Beechcraft and Embraer have a great aircraft that would fit the requirements for the mission. The Hawker is a converted trainer, while Embraer is mission specific, and already in service in Latin America.
The purpose-built aspect vs an older, reconfigured design may have been the deciding factor, with nothing sinister going on behind the scenes.
It’s troubling, however, that Hawker-Beechcraft was given no real explanation for this decision. It’s also troubling we’d buy a military aircraft from a foreign manufacturer, under any circumstances. As bad as Americans need jobs, it doesn’t make a lot of sense. Never mind the national security factor.
This may be a legit deal, but Congress needs to look into this, especially since Embraer is already under investigation for corrupt practices, likely pay-offs and bribes. [Though I am only speculating here.]
Hopefully this will be examined further, and before any money changes hands.