American Elephants

USAF Selects Brazilian Company, Excludes American Company and 1400 Jobs! by The Elephant's Child

The United States Air Force has notified Hawker Beechcraft Corporation that its Beechcraft AT-6 has been excluded from the competition to build a light attack aircraft — a contract that is worth nearly  $1 billion, the company said.

The company has hoped that its AT-6, which is an armed version of its T-6 trainer, would be chosen for the Light Air Support Counter-Insurgency aircraft for the Afghanistan National Army Corps.  The successful aircraft would be used also as a light attack armed reconnaissance aircraft for the U.S. Air Force. The plane is designed for counterinsurgency, close air support and for homeland security.

Company officials said in a news release that they were “confounded and troubled” by the Air Force decision.  The company is asking the Air Force for an explanation. They  have been working with the Air Force for two years, and had invested more than $100 million to meet the military’s requirements in a demonstration program by the Air National Guard.

The USAF has apparently chosen the Embraer Super Tucano to meet the Light Air Support requirement.  No official announcement has been made, but Hawker Beechcraft has received a letter that excluded the AT-6 from the hotly contested competition.  The Pentagon has thus limited the competition to one Brazilian plane.

Hawker Beechcraft has said that they believe they have submitted the most capable, affordable and sustainable light attack aircraft.  Winning the competition would have kept about 1,400 employees in 20 states employed on the plane.

Embraer is a company controlled by the Brazilian government. and has close ties to the government of Iran. In 1989, Brazil sold Tucanos, Embraer’s basic military aircraft to Iran.  The Islamic Revolutionary Guard Corps Air Force operates around 40 Embraer T-27 Tucanos.

It seems odd that the government would favor a Brazilian company over an American company and American jobs — all things being equal.  The law requires the government to buy American” so Embraer has teamed up with  Sparks, Nevada Sierra Nevada Corp. and says they will assemble the plane in Jacksonville, Florida.  The Brazilian company is under investigation by the U.S. Securities and Exchange Commission for corruption related to possible violations of the US Foreign Corrupt Practices Act.

Sierra Nevada Corp. has reached Phase 2 of NASA’s Commercial Crew Development Program — designed to find a successor to the space shuttle’s role of bringing astronauts to space.  Boeing and SpaceX are both developing capsules as opposed to Sierra Nevada’s winged space plane design of the Dream Chaser, which has already received $100 million from NASA for making it to Round 2.  The Dream Chaser is based on a NASA design which Sierra Nevada bought after budget cuts ended that program.  A company will own and operate the vehicle, and NASA will pay to use the service.

All a very interesting peek into government contracting, with too much information missing.  I first saw two rather indignant articles demanding to know why the US government was favoring a Brazilian company over an American company with lots of American jobs.  But it appears that the story is much more complicated, and adding on the story of Sierra Nevada’s Dream Chaser makes it even more curious.  I, perhaps, have been reading too many thrillers late at night, but throw in some imaginary bribes, a few spies, pressure from various governments,  Obama administration funny business and the imagination can construct another splendid thriller.  I hasten to add that this latter is entirelyl imaginary. This may be the cleanest government contract in history, but it’s fun imagine a thriller in your head..

The Stimulus? Cost More, Accomplished Less! by The Elephant's Child

The day before Thanksgiving, the Congressional Budget Office quietly revised their quarterly report on the economic effects of the Obama stimulus.  It cost more than advertised, did a lot less to boost growth and in the long run will hurt the economy more than it will help.

The original price tag was $787 billion.  The CBO has now raised that to $825 billion, a 5% increase.  The new analysis says that the stimulus, at its peak spending, may have only added 0.7 % to GDP growth.  The extra infrastructure money didn’t boost growth as much as claimed, because states reacted by spending less of their own budgets on highways. So the CBO now says that the stimulus had no meaningful effect on growth or employment in spite of its huge price tag.

And as always, there are consequences.  The stimulus is apt to hurt economic growth in the long run because of  “the resulting increase in government debt.  Each dollar of additional debt, the CBO reports “crowds out about a third of a dollar’s worth of private domestic capital.”

The Investors editorial suggests that “the CBO’s downgraded estimates are too high, because they’re still based entirely on Keynesian economic models that simply assume extra government spending results  in added economic growth.”

You must remember that Obama simply does not change his mind. He still wants to do it again, which is why Harry Reid is cooking up more spending bills.

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