Brazil highlights contract dispute during White House visit

This week’s visit to the White House by Brazilian President Dilma Rousseff presented an opportunity to lobby President Obama on a military contract dispute that’s become a sore spot for a company back home in the South American nation.

Brazil’s biggest aerospace firm, Embraer, won a $355 million U.S. Air Force contract in partnership with Sierra Nevada Corp. to provide 20 light attack aircraft to the Afghan army. But the contract was nullified in February after competitor Hawker Beechcraft sued, claiming it was unfairly disqualified.

{mosads}The Air Force says it canceled the Light Air Support contract due to internal documentation problems.

A senior Obama administration official told The Hill that Obama and Rousseff discussed the Light Air Support contract when the leaders met on Monday, although the official declined to elaborate on the details of the conversation.

If Embraer loses out on the contract, the repercussions could be felt by U.S. aerospace giant Boeing, which is competing for a contract to supply 36 F/A-18 Super Hornets to the Brazilian air force. The contract is worth between $4 billion and $7 billion.

“There’s a possibility that Boeing’s prospects would be hurt if the Air Force in the end doesn’t buy the Embraer plane,” said Loren Thompson, a defense analyst at the Lexington Institute. “However, there’s just no legal way that can be taken into account in making the award.”

A Brazilian government official said in March that the Embraer contract would “be taken into account” when Brazil makes a decision about the Air Force deal, AFP reported. The Brazilian air force is considering bids from Boeing, France’s Dassault and Sweden’s Saab.

Embraer President and Chief Executive Officer Frederico Curado was also in Washington as the presidential delegation visited. Curado said at a roundtable with reporters Tuesday that the Air Force contract was important for his company to get a foot in the door in the U.S. defense industry.

“Being able to supply products to the Department of Defense in the United States, it is something that has always been one of our most important strategic objectives,” Curado said at the roundtable, held by the U.S. Chamber of Commerce. “For us, it is an opportunity to develop a relationship.”

Curado said he had to trust that the process did not involve politics, and he believed his company would be selected once again so long as the specifications for the plane were not changed.

Embraer also announced a cooperation agreement with Boeing on Monday, but Curado said that had nothing to do with Boeing’s bid in Brazil.

Embraer’s A-29 Super Tacano was selected by the Air Force for the $355 million contract in December, after Hawker Beechcraft’s AT-6 was disqualified from the competition.

Hawker Beechcraft appealed the decision with the Government Accountability Office, but the Wichita, Kan., company’s complaint was tossed because it was filed too late in an apparent mail mix-up. Hawker Beechcraft then sued in the U.S. Court of Federal Claims.

The Air Force decided to stop work on the contract in January, and set it aside at the end of February. Air Force Secretary Michael Donley said at a reporters roundtable last week that the contract was tossed because officials “lacked confidence in the documentation” surrounding the bid, though the Air Force has not been willing to release further details.

The Kansas congressional delegation launched its own lobbying campaign after Hawker Beechcraft lost out on its bid, and homed in on Embraer being a foreign company. The lawmakers argue the American Hawker Beechcraft was unfairly disqualified.

“We believe it is important that the Air Force be abundantly transparent and forthright given that it has excluded an American company from a significant competition,” a group of 22 members led by Rep. Mike Pompeo (R-Kan.) wrote to Defense Secretary Leon Panetta in February.

Sen. Jerry Moran (R-Kan.) said in March that he would continue working to see that Hawker Beechcraft “gets fair treatment from the Air Force with the hope of more jobs for Kansas workers.”

Embraer and Sierra Nevada have said the “Buy American” claims are inaccurate since the Embraer planes would be built in Florida.

The Air Force has not said whether it will restart the competition for the contract or amend the current one. One of the biggest questions is whether the Air Force will change the requirements for the aircraft.

The contract dispute continues to attract attention in Congress. The Kansas delegation wrote to Donley in March urging the Air Force to halt any action on the contract until its investigation is completed. Donley said last week the findings in the review would be classified.

The planes were supposed to be delivered to Afghanistan by April 2013, in time for the fighting season, but Curado said the delays have already made it “feasibly impossible” to hit that date.

Carlo Munoz contributed to this report.