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Nasty Battle Deepens Over Air Force Super Tucano Deal; Foreigners, Buy American, George Soros All In Play

Posted by Sydney J. Freedberg Jr. on

If you thought the Republican primaries had turned ugly, wait till you see what it takes to win an Air Force contract nowadays. The feud between Hawker Beechcraft and Sierra Nevada Corporation over the Light Air Support contract has escalated from the usual appeals to the GAO up to a lawsuit, a freeze on the program, an online battle between the competitors websites, a write-your-Congressman campaign, all of it leavened lately by online conspiracy theories involving international financier George Soros.

At stake? A $355 million contract for 20 small planes, with options for 15 more. The U.S. is buying the planes to train and equip the infant Afghan Air Force with a rugged, easy-to-operate ground attack plane to use against the Taliban, Haqqani Network and any other insurgents they might encounter. While puny by Pentagon standards, the Light Air Support program has always attracted outsize attention as a litmus test for the Air Force’s willingness to invest in counterinsurgency. Now it’s rapidly becoming a case study in the larger dysfunctions of defense procurement.

Powering the passions is the fact that the Air Force chose a Brazilian plane, the Embraer Super Tucano. As usual, when a foreign arms makers sells to the U.S., Embraer is offering its plane through a U.S. partner, Sierra Nevada Corp., which says that while it will follow the Brazilian blueprints, it will put the planes together at a new facility in Jacksonville, Fla., with 88 percent (by value) U.S. parts. But the prospect of sending any taxpayer dollars abroad is attracting considerable negative comment, not surprising during a recession. So Hawker Beechcraft has set up a website touting the all-American-ness of its airplane, complete with a “take action” tab where you can click to send a pre-written letter of protest to your congressman. Sierra Nevada countered Thursday with a point-by-point rebuttal that counter-slams Hawker Beechcraft as insufficiently American for, among other things, moving jobs to Mexico and being co-owned by Canadians and the much-reviled Goldman Sachs. It is a rich stew of xenophobia and raw populism.

This is where George Soros comes in — or rather the specter of George Soros as he is imagined in certain circles. The Hungarian-born Jewish billionaire, Democratic donor, and Obama supporter happens to be a big investor in Brazil, with a $1 billion stake in the government-owned oil company Petrobras, which Glenn Beck accused Obama of favoring as a pay-off to Soros — a charge refuted by none other than Forbes, hardly a liberal-loving publication. Soros also owns stock in Chinaís Hainan Airlines Group, which bought airliners from Embraer, which is enough of a connection for the online rumor mill to recycle the Glenn Beck accusation with a different Brazilian beneficiary. As far as anyone can tell, however, Soros has no stake in Embraer itself, and Hawker Beechcraft’s hometown paper, the Wichita Eagle, has dismissed the rumor.

Setting aside any imaginary Elders of Zion, the real issue here is how broken the military procurement system has become. The Air Force has run aground before on a contract dispute with protectionist overtones, namely the KC-46 tanker program that ultimately went to Boeing. Another dispute claimed the Air Force Combat Search and Rescue helicopter contract. More recently, the Army’s Ground Combat Vehicle program was delayed a year to deal with protests by a rejected bidder. But those are all much bigger programs. If even modest military procurements can turn this ugly, can anyone get anything done?

What do you think?