The Insider

Kansas lawmakers are asking Defense Secretary Chuck Hagel to provide "a thorough, compelling explanation" for the Defense Department's decision to award a multimillion-dollar contract to build aircraft for the Afghan military to a foreign bidder at a higher price than its domestic competitor offered during a time when financial restraint "is mandatory" for DOD.

In a March 8 letter, Kansas Sens. Pat Roberts (R), Jerry Moran (R) and Rep. Mike Pompeo (R) told Hagel that they had "significant concerns" about the $427.5 million the Air Force awarded to Sierra Nevada Corp. and Brazil's Embraer last month. That contract would provide 20 light-attack aircraft to the Afghanistan air force as part of the Light Air Support program, with the first plane delivery scheduled for the summer of 2014. Pompeo told Inside the Air Force on Friday that the Kansas congressional delegation became concerned about the contract award after they discovered that Beechcraft Corp., which competed for and lost the contract, had offered to produce the planes at a vastly reduced price.

Beechcraft placed a bid on the contract that was about 30 percent less than the one the Air Force accepted from Sierra Nevada and Embraer, Pompeo said.

"We learned this week that America didn't have enough money to keep the White House open for tours, and yet it's got enough money to pay one-third more for an airplane? That's befuddling to me," he said.

Also on Friday, Beechcraft -- which has a production facility in Kansas -- announced that it planned to formally protest the Air Force's decision through the Government Accountability Office. The company offered to provide its AT-6 aircraft to Afghanistan while its competitors, Sierra Nevada and Embraer, offered to provide Afghanistan the A-29 Super Tucano aircraft.

Beechcraft Corp. announced this morning the company would formally protest the Air Force's award of the Light Air Support contract to its Brazilian competitor, Embraer.

In a statement, Beechcraft -- which used to be known as Hawker Beechcraft -- said:

"Following our debrief with the Air Force earlier this week, we are very perplexed by this decision," said Bill Boisture, CEO, Beechcraft. "Our belief that we have the best aircraft was confirmed by the Air Force rating our aircraft 'exceptional' and the fact that we are the lower cost solution was confirmed by the USAF’s public award announcement."

Last year, an Air Force investigation found evidence of bias toward Brazil-based Embraer and its Nevada-based partner, Sierra Nevada (SNC), which led to the decision to restart the competition. Although SNC later sued the Air Force attempting to enforce the biased decision, U.S. Court of Federal Claims Judge Christine O.C. Miller wrote in her Nov. 1, 2012, opinion that based on the investigation's evidence of bias "the Air Force's decision to cancel the contract award to SNC and re-solicit proposals was reasonable and rational and should stand."

"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. "Given our experience of last year and our continued strong concern that there are again significant errors in the process and evaluation in this competition, we are left with no recourse other than to file a protest with the GAO. The Air Force needs to make the right decision for the nation and our future allies."

Approximately 1,400 jobs in Kansas and other states are at risk as a result of the Air Force decision, according to Beechcraft's statement.

Check out Inside the Air Force's recent coverage of the LAS issue:

Sierra Nevada Wins Hotly Contested LAS Contract For Afghan Aircraft

Hawker Beechcraft Emerges From Bankruptcy, Prepares For LAS Contract

Hawker Focuses On Smart Weapons, Sees Light Attack Industry Growth

USAF Spokeswoman Says LAS CDI Results Show A Need For Improvement

House Staffers To Get Briefing On Light Air Support Requirements

Michigan -- and the Senate Armed Services Committee -- is going to need a new senator in 2014.

Sen. Carl Levin (D-MI), chairman of the committee, announced this afternoon that he would not run for re-election in 2014.

In a statement, Levin said as he and his wife "struggled with the question of whether I should run again, we focused on our belief that our country is at a crossroads that will determine our economic health and security for decades to come. We decided that I can best serve my state and nation by concentrating in the next two years on the challenging issues before us that I am in a position to help address; in other words, by doing my job without the distraction of campaigning for re-election."

One of those issues is defense-related:

Finally, the next two years will also be important in dealing with fiscal pressures on our military readiness. As Chairman of the Senate Armed Services Committee, I am determined to do all I can to address that issue. I also believe we need to pursue the rapid transfer of responsibility for Afghan security to the Afghans. And, as our troops come home, we must do a better job of caring for those who bear both the visible and invisible wounds of war.

The House this afternoon passed an omnibus spending package that includes a fiscal year 2013 defense spending bill agreed to by House and Senate defense appropriators, which would fund the military through September and grant the Pentagon authority to proceed with key elements of its weapons modernization program.

The spending levels in the bill would be subjected to cuts required by sequestration, triggered on March 1 and projected to reduce Pentagon spending by $43 billion through September if not replaced by a broad deficit-reduction plan.

House Armed Services Committee Ranking Member Adam Smith (D-WA) wasn't too thrilled about the legislation. In a statement released this afternoon, he said:

While this bill does allow the Department of Defense some discretion in implementing the across-the-board spending cuts through sequestration, it is a missed opportunity to remove these cuts all together and address our budget in a balanced way. Additionally, this bill fails to address the impact of sequestration on other important programs such as education, transportation, and scientific research.

We should be squarely focused on removing cuts through sequestration, not implementing them. Regardless of how the cuts are implemented, they will still be extremely damaging. The deep, indiscriminate cuts threaten jobs, our economy, and our national security. We must repeal sequestration.  This spending bill fails to end these devastating cuts and essentially locks them in for the remainder of the fiscal year without giving any department or agency, with the exception of the Department of Defense and Veterans Affairs, the ability to manage their budgets given our current budget situation.

It is my hope that the Senate will be able to pass a balanced approach that removes sequestration and provides our economy with some certainty.  Congress has a responsibility to the American people to address our fiscal issues in a balanced and effective way. Over the last ten years, we have dramatically cut taxes and increased spending. This is unsustainable. We need to take steps to address our long-term budget problems, but this bill is the wrong way to achieve that goal.

House Appropriations Committee Chairman Hal Rogers (R-KY) introduced the bill on March 4. It would appropriate $528.7 billion in base budget funding for the Defense Department and allow DOD to sign multiyear procurement contracts, increase production rates and launch new starts. As InsideDefense.com reported that day:

The Defense Department, along with the rest of the federal government, has operated since the start of the fiscal year under a stopgap spending measure -- due to expire on March 27 -- that includes standard provisions restricting the expansion of modernization efforts. The proposed spending bill would mark a step in the direction of normal budget order by funding the Pentagon for the balance of the year through a defense appropriations bill.

The proposed legislation includes $170 billion for Pentagon modernization accounts, of which $100 billion is slated for procurement and $70 billion is set for research and development. The procurement funding is $1.3 billion, or 1 percent, below the Obama administration's FY-13 request; the research and development request is $521 million higher than the amount the Pentagon originally requested.

These spending levels would be subjected to cuts required by sequestration, triggered on March 1 and projected to reduce Pentagon spending by $43 billion through September if not replaced by a broad deficit reduction plan.

The bill would also provide $86.9 billion to pay for overseas contingency operations, including $8.9 billion for war-related weapons procurement.

Read the full story (which has more details on funding for the Army, Navy, Air Force and Missile Defense Agency).

Pentagon acquisition chief Frank Kendall told the National Defense Industrial Association yesterday that due to sequestration kicking in the Defense Department will likely be buying less equipment and signing fewer service contracts through the end of fiscal year 2013.

"To the extent we can continue operations while delaying and deferring new obligations until the uncertainty is resolved, we will do so," Kendall said in a letter to retired Air Force Lt. Gen. Lawrence Farrell, the president of NDIA.

Kendall said the funding reductions the department will absorb "will affect the full range of the Department's planned contract and grants and adversely affect the efficiency with which we acquire goods and services."

NDIA's member companies can expect to be contacted by DOD officials about specific decisions, according to Kendall.

"Now, more than ever, the Department and industry need to work together to identify courses of actions that will minimize the negative impacts that will inevitably result from sequestration and, wherever possible to preserve options should sequestration be reversed or modified," he added.

Pentagon Comptroller Robert Hale said today that the Defense Department probably will have to create "a new strategy" to replace the Defense Strategic Guidance that was released by President Obama a year ago, but when pressed afterward he clarified that he believes officials will revise the 2012 guidance, not rewrite it from scratch.

During an Aviation Week conference, Hale told the audience that formal work on creating the new strategy has not yet begun. He said it could be created in the context of the Quadrennial Defense Review process, but added that the strategy would be needed before the QDR process culminates in the release of a report to Congress early next year. As he was leaving the event, however, he told reporters he believes the Defense Strategic Guidance will be revised, not tossed out and replaced with something entirely new.

"I think we're going to have to revise it if we see these kinds of cuts," Hale said. Asked how extensive the revisions might be, he added, "I don't know. I'm not the strategy guy. I'm the budget guy." On Monday, Maj. Gen. Kenneth McKenzie, the Marine Corps' lead officer for the QDR, said the review should be steered by an up-front assessment of how diminishing resources might force the Obama administration to revise or rewrite its defense strategy. The QDR will help DOD assess the affordability of the Defense Strategic Guidance, but it will not be the means of devising a new strategy if one is needed, McKenzie said.