The Air Force is allowing its G222 contract with Alenia Aermacchi North America to expire in March because the program’s ongoing deficiencies, past performance and the timing of the contract’s end made it the taxpayers’ best interests to do so, according to a service spokesman.
The G222 program is an Air Force effort to provide 20 of Alenia’s refurbished C-27J military transport aircraft to Afghanistan’s nascent air force. The Air Force already spent $549 million when the decision was made on the G222 program to overhaul aircraft engines and propellers, buy ground support equipment, spare parts and training devices, among others, to help supply Afghanistan with a fleet of vehicles for effective airlift capability. The Air Force said the decision came after “failed attempts” by the contractor to generate a “sufficient number” of fully mission capable aircraft.
Air Force spokesman Ed Gulick said despite the funds spent, it was better to part ways now.
“Though the Air Force assisted Alenia throughout the program in an effort to help the program succeed, Alenia struggled to consistently achieve key contractual requirements,” Gulick said Monday in an email.
Alenia Aermacchi NA, a subsidiary of Italy’s Finmecannica, said it was informed of the decision in a Dec. 28 email. The Air Force said it told Alenia Dec. 18 of its decision. News of the cancellation was first reported by the Wall Street Journal.
“We stand behind the G222 airplane, arguably one of the safest, most durable cargo aircraft in history, well-suited for the mission,” an Alenia spokesman said Wednesday in a statement. “The company is weighing its options and plans to meet with stakeholders to discuss the status of the program as well as the investment and progress made to date.”
A source close to the program said Wednesday Alenia is weighing its legal options after claiming the company spent between $25 million and $30 million of its own funds to sustain the G222 program between contracts, only to have the Air Force tell the company it wouldn’t renew their contract in March.
The source said the G222 program contained three contractual periods, with the first one expiring in March 2012. While waiting for the Air Force to award its second contract for the continuation of the program, which arrived in September, Alenia spent its own money regenerating the aircraft, making sure the components and parts were “zero-timed” and on the right aircraft to ensure no time was lost when the contract did arrive, according to the source.
“We could have said we’re not going to do any of this. We’re not under contract,” the source said. “It wouldn’t have been our issue.”
But the Air Force Friday denied that claim, saying Alenia and the service agreed last March to an undefinitized contract action (UCA) that enabled uninterrupted support for the G222 fleet and program. A UCA is any contract action for which contract terms, specifications or price are not agreed upon before performance begins under the action.
Gulick said the Air Force considered this UCA a binding agreement and expected Alenia to comply with performance requirements contained in the agreement. Gulick added the Air Force and Alenia fully definitized the UCA on Sept. 12, 2012, providing for a period of performance through March 28.
The source said he was confused why the Air Force would wait until now to end the program when it could have prevented all parties involved from investing more time, effort and money by canceling the contract in early 2012. The source also estimated it would be more expensive for the Air Force to close out the contract and dispose of the planes than to finish the contract, saying it would likely cost $60 million to finish the contract. Gulick said the Air Force anticipates no additional costs for closing out the contract beyond potential aircraft and equipment disposition costs.
“At this time, we are still developing our disposition plan, so we have yet to estimate these costs,” Gulick said.
The source said a key disagreement between the two parties is how the Air Force handled its Cure notice and Show Cause letters and if the service even intended to give Alenia a chance to address its issues. The source said Alenia was issued a Cure notice last August and a Show Cause notice last October and the company responded “very thoroughly,” providing very detailed plans and repairing what the Air Force said needed to be fixed, but never heard back from the Air Force. The source said the Cure notice is what the Air Force wants fixed and the Show Cause notice is the service asking for answers on why certain things weren’t fixed.
Gulick said prior to the Air Force issuing the Cure Notice on Aug. 15, the service evaluated a number of aircraft performance and sustainability issues that had challenged the program for a considerable period.
“These actions were subsequent to numerous, less formal efforts undertaken in 2011-2012 to encourage improved contract performance,” Gulick said Friday.
Gulick said deferred questions to Afghan officials when asked if the Air Force would go with Lockheed Martin’s [LMT] C-130J cargo aircraft in place of the refurbished C-27Js.