US military funding plans in disarray after JCA legal challenge

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One week after selecting the L-3 Communications/Alenia C-27J Spartan for the pivotal Joint Cargo Aircraft (JCA) award, the US military's funding plans appear to be in flux and its selection process faces a potential legal challenge from the losing competitor.

Confusing the programme's status are conflicting reports by the US Army, the US Air Force and the prime contractor about acquisition and funding plans for the C-27J.

On 13 June, the army claimed the contract amount for $2.04 billion would purchase up to 78 aircraft. The next day, L-3 Communications Integrated Systems told Flight International that the $2.04 billion is actually for purchasing 55 aircraft over the next five years, including 54 for the army and one for the air force.

However, the air force is now challenging both sets of numbers, claiming in a statement released in response to questions submitted by Flight that the information in the army's contract announcement was a "misprint".

"The $2.04 billion cited in the press release was a misprint. The current contract represents a planned procurement of 40 aircraft [32 army/eight air force) from fiscal year 2007 to FY2011. This contract is anticipated to be worth up to $1.5 billion during the five-year period of performance," air force spokeswoman Capt Anna Carpenter said in an email.

Sources in industry say the confusion may be due to the unusual financing approach on the programme. The joint programme office awarded an indefinite delivery/indefinite quantity contract for a five-year period, meaning the number of aircraft can be adjusted each year from zero to a large quantity. The contractor has to guarantee the price for each aircraft up front, no matter how many aircraft are actually purchased.

The Raytheon/EADS CASA North America team offering the losing bid based on the EADS Casa C-295 has the legal right to challenge the contract selection. After receiving a debriefing on the government's selection process, Raytheon officials are understood to be surprised that the C-27J won despite a large difference in price. Raytheon confirms that it is continuing to review its options.

The status of the air force's participation in the programme also appears uncertain. Carpenter said the air force's current plan is to buy 24 aircraft from FY2010 to FY2013 to deliver to the Air National Guard, but that requirement may be still be changed based on the results of an overall review of airlift requirements.

"The air force is conducting an Intra-Theater Fleet Mix Analysis that is scheduled for completion in December 2007," she wrote. "This analysis will determine the right mix of intra-theater airlift required to meet current and emerging missions. With regards to JCA, this analysis will update the number of JCAs required by the air force."

Air force officials have previously said that they envisage a niche requirement for a JCA fleet amounting to about 50 Lockheed Martin C-130 equivalents. Those officials also said that number could be filled by as many as 100 C-27Js, 50 C-130Js or a mix of the two. "Clearly, the C-130J continues to be in the sweetspot of the requirement," says Jim Grant, Lockheed's vice-president of business development for mobility and special operations.

However, Alenia scored a victory last we in a separate competition involving the C-27J. The company won a legal battle in the Romanian courts over the nation's planned procurement of seven C-27Js. Chief executive Giovanni Bertolone says a contract will be signed within the next few weeks, with pricing and delivery arrangements having been agreed before an earlier appeal into the C-27Js selection by EADS CASA, which unsuccessfully bid the C-295.


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