Outsourcing Defense Contracts to Unfriendly Governments
The debt deal that President Obama signed on August 2 has sparked an important conversation about aggressive spending cuts in order to avoid a financial crisis. As part of that debt deal, Congress has formed the super committee to make recommendations to cut spending. The Department of Defense will surely have many decisions ahead of them as they are faced with the likely reality that defense programs may be subject to significant cuts from the committee.
Recognizing the need for light air support, the Department is expected to soon announce its decision on an aircraft to meet its light air support needs. This procurement decision is a case study in what the Department of Defense should do to protect taxpayer dollars. Two competitors have bid on the plane: Embraer, based in Brazil; and Hawker Beechcraft, based in Kansas.
Embraer is a Brazilian company with a strong history of opposing international security efforts by the United States. If Embraer is selected, there is a strong likelihood that taxpayer dollars will be put at risk. Normally the Taxpayers Protection Alliance (TPA) would not take up the issue of a defense procurement project based upon the country in which an aircraft is being built, but considering the unique nature of the arrangement Embraer has with the Brazilian government, a much closer look is warranted.
The Brazilian government has a “golden share” in Embraer, which gives the government a majority share of the company. This allows the Brazilian government to make decisions for the company that cannot be stopped by other shareholders. The golden share also allows the Brazilian government to stop, slow, or alter production of the company’s products. While Embraer claims that the government cannot interfere in business decisions, history shows that as far back as World War II, other foreign governments that have not agreed with U.S. policy have interfered with products being built for American defense machinery.
As the U.S. works towards defeating its enemies abroad, we need to be aware of those who seek to profit from America’s defense. Overdependence on nations that spend significant political capital opposing American foreign policy and national security is counterintuitive -- and dangerous.
If the Department of Defense selects the Embraer plane in the coming weeks, taxpayers will be giving more than $150 million to a foreign government at a time when there are no resources to spare. Awarding this contract to Hawker Beechcraft would keep $5 billion in the American economy.
The right decision for taxpayers and for our national security is Beechcraft. Their aircraft appears to be less risky, a superior product that will meet the light air support requirements. And it can never potentially have production stopped or stalled because of international disputes.
Taxpayers understand that it is necessary to spend money to defend the country. What they don’t understand is why the Department of Defense would put tax dollars and national security at risk by choosing a foreign contractor that could threaten both our physical and fiscal well-being.
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