Beechcraft to protest Embraer win of U.S. Air Force deal

Fri Mar 8, 2013 1:14pm EST

(Reuters) - Beechcraft Corp said on Friday it will formally protest the U.S. Air Force's decision to award a $428 million contract for light attack planes for the Afghan military to Brazil's Embraer SA (EMBR3.SA).

After a politically charged bidding process, Embraer and its U.S.-based partner, Sierra Nevada, won the deal on February 27 to supply 20 light attack planes to be used in Afghanistan counterinsurgency missions.

Beechcraft, formerly known as Hawker Beechcraft, emerged from Chapter 11 bankruptcy last month. The aircraft maker said in a statement that the Air Force decision puts 1,400 jobs in jeopardy in Kansas, where it is based, and other states.

Representatives for Embraer and Sierra Nevada could not immediately be reached for comment.

In a statement, Beechcraft Chief Executive Bill Boisture said his company was "very perplexed" by the Air Force decision and would file a protest with the U.S. Government Accountability Office (GAO) based on concerns that there were mistakes in the selection process.

"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.

Beechcraft said it decided to launch a formal protest after a debriefing with the Air Force earlier this week.

Embraer and Sierra Nevada won an initial $355 million contract in December 2011, but that deal was scrapped after a challenge from Hawker Beechcraft, the losing bidder.

The competition has had political overtones. Brazilian officials expressed dismay last year when the original award to Embraer was withdrawn, and political fallout from Beechcraft losing out to the Brazilian company seeped into the U.S. presidential election campaign.

On Friday, the International Association of Machinists and Aerospace Workers union, which represents more than 3,000 active and laid-off workers at Beechcraft, called on the Air Force to reverse the award to Embraer.

The union said the selection process was facing scrutiny because the Air Force chose a more costly plane amid the U.S. sequestration process that calls for big spending cuts, including in defense.

"We should be very concerned whenever U.S. taxpayer dollars are used to create hundreds of jobs in any foreign country," union President Tom Buffenbarger said in a statement. He called the Air Force decision a "real blow to American workers and taxpayers."

Embraer said its plane in the competition, the single-engine turboprop Super Tucano, supports more than 1,400 U.S. jobs.

Sierra Nevada has 2,500 U.S. workers and Embraer has 1,200 U.S. employees.

(Reporting by Karen Jacobs in Atlanta and Ritika Rai in Bangalore; additional by Brad Haynes in Sao Paulo; Editing by Roshni Menon and John Wallace)

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