The PJ Tatler

American Taxpayers Deserve Transparency on Air Force Procurement Debacle

The most basic obligation of the federal government is to defend America’s economic and national security interests at home, and abroad.

As president of Frontiers of Freedom, I have long called for President Barack Obama to demonstrate his commitment to government transparency by publicly explaining why his Administration abruptly disqualified a proven American manufacturer from competing for a major U.S. military contract, and awarded a no-bid, $1 billion military defense contract to Embraer, a foreign aerospace giant partially controlled by the government of Brazil.

That’s why, after months of silence, our organization was gratified to hear the stunning announcement by the U.S. Air Force that its contract award to Embraer would be reversed, and that its contract process would be fully investigated in what a senior official described as a major “embarrassment.”

Unfortunately, an even greater embarrassment is this: less than 48 hours after the administration’s appropriate reversal of Embraer’s contract, a top U.S. State Department official quietly travelled to Brazil, and seemingly apologized to the Brazilian government for its decision.  No such apology was ever issued to Hawker Beechcraft, the Wichita-based manufacturer it abruptly disqualified last fall.

Worse, the administration’s inexplicable move came after the Brazilian government issued a brazen warning to the United States, declaring that its decision to rescind the contract was not “conducive to strengthening relations between the two countries on defense affairs.”

At best, this episode serves as an example of government ineptitude, and a lack of transparency on the part of an administration whose actions have fallen short it’s rhetoric.  At worst, this episode highlights a dangerous foreign policy that appeases foreign governments hostile to our national interests – despite our economic and national security needs here at home.

All of this began with a bid by two aerospace manufacturers, American company Hawker Beechcraft and Brazil’s Embraer, for a major U.S. Air Force contract to build aircraft for its Light Air Support (LAS) program to assist in the training of Afghan pilots.

Last fall, the Air Force abruptly, and without explanation, excluded Hawker Beechcraft from the competition.  Only after Hawker Beechcraft filed suit with the Court of Federal Claims did the company, and American taxpayers, learn that the Air Force had quietly handed the almost one billion dollar contract – and almost fifteen hundred manufacturing jobs associated with it – to Brazil’s Embraer.

The planes are similar, but that is where the similarities between the two companies end.

Hawker Beechcraft has successfully delivered for the U.S. military, including its construction of aircraft used to train virtually every U.S. military pilot.

Embraer is controlled by the Brazilian government through its ownership of a “golden share,” a clause giving the Brazilian government veto rights over the creation and alteration of military programs, regardless of its impact on Brazilian affairs.

This means that if the Department of Defense were to award this contract to Embraer, the Brazilian government, which has a notably strained and inconsistent relationship with the United States, would have the power to shut down production or maintenance of American defense aircraft at any time, with no notice.

The Brazilian government has repeatedly sidestepped and circumnavigated U.N. trade sanctions against Iran, has embraced Iranian-president Mahmoud Ahmadinejad, and has refused to pursue anti-terror policies within its own borders. Further, Brazil has been a long and vocal critic of the our. War on Terror.

Finally, Embraer was awarded the no-bid contract despite the fact that the US Security and Exchange Commission is investigating the company for potential violation of the U.S. Foreign Corrupt Practices Act, which prohibits companies from making illegal payments to obtain government contracts.

Outsourcing important defense programs through no-bid contracts to foreign countries like Brazil is a threat not only to the American economy, but also to our national security.  That is, however, effectively what the Obama administration did.

This is likely the reason for the administration’s subsequent reversal of the contract, and its investigation into the entire matter.  Still, Frontiers of Freedom believes that any goodwill the administration may have earned by admitting its procurement mistake, and rescinding its award to Embraer has now been lost amidst its apology tour Brazil.

Americans are right to ask why the federal government is bending over backwards to appease a foreign country, and a corporation it partly owns.

Contradictory statements from Embraer’s partner in the contract bid, Sierra Nevada Corp, are raising new questions about the Brazilian government’s apparent interest in the contract.

Taco Gilbert, Ret. USAF Brigadier General, and a Vice President with Sierra Nevada Corp., is fond of repeating his company’s contention that its aircraft would be made in the U.S., and that “no new jobs are being created in Brazil as a result of this contract.” This contention is at odds with the facts. Sierra Nevada has been forced to admit that only fifty new American jobs would be created under the terms of its contract award.

Americans are also waiting for Gilbert to explain Sierra’s questionable history regarding crony capitalism, pay-to-play, and close ties to scandal-plagued politicians. (Chuck Neubauer, “E-Mails Lay Bare Firms’ Pay-To-Play Links To Lawmaker,” The Washington Times, 6/22/10)

We can only hope the administration’s inexplicable placating of the Brazilian government is not about its retaliatory fears over the potential loss of an order for Boeing Corporation to build a series of jets for Brazil’s Air Force.

According to Reuters, “The cancellation of the Embraer deal caused some senior figures within President Dilma Rousseff’s administration to wonder if it was retaliation for Boeing reportedly falling out of favor, officials told Reuters this week.”

If past is prologue, American taxpayers may never know the answers to these puzzling questions.  But, as long as the economic and national security of the American people are stake, Frontiers of Freedom will keep asking.

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