UPDATE 2-US Air Force extends probe of Afghan plane deal

Fri, Mar 23 21:02 PM EDT

* Officials had hoped to wrap up investigation quickly

* Acquisition mistake seen as embarrassing

* No comment on reason for extension

By Andrea Shalal-Esa

WASHINGTON, March 23 (Reuters) - The U.S. Air Force on Friday said it was extending an investigation into an embarrassing mistake that prompted it to cancel a contract, valued at up to $1 billion, to sell Brazilian light attack planes to the Afghan government.

Air Force General Donald Hoffman, commander of Air Force Materiel Command, granted investigators more time to look into the issue, said spokeswoman Jennifer Cassidy. She said a decision was now expected in coming weeks.

The Air Force had no immediate comment on why it decided to extend the investigation, which is being conducted by Air Force legal officials along with some representatives of the Pentagon's chief weapons buyer, Frank Kendall.

The problem began in January, when privately held U.S. defense contractor Sierra Nevada Corp and Brazilian planemaker Embraer SA beat out Hawker Beechcraft to win an order for 20 light attack planes. The U.S. Air Force was procuring the planes behalf of the Afghanistan government.

That contract was quickly challenged by Hawker.

The incident has generated headlines in Brazil, where government officials were caught off guard by the U.S. military's cancellation of the plane order, and have said it would not be helpful to bilateral defense relations. The issue may come up when Brazilian President Dilma Rousseff visits Washington next week.

While preparing for the Hawker lawsuit, the Air Force discovered that its decision had been inadequately documented, prompting Air Force Secretary Michael Donley to scrap the contract, which had an initial value of $355 million to Sierra Nevada and its subcontractor Embraer.

Air Force officials have described the incident as embarrassing and disappointing, especially given a series of other acquisition problems over the last decade. They had hoped to investigate the matter quickly and move forward with a new competition to ensure that the Afghan government could still receive the initial order of 20 light attack planes soon.

David Van Buren, the acting assistant secretary for acquisition who is retiring this month, told Reuters earlier this month that he did not believe the case revealed a systemic problem with the Air Force acquisition process.

Sierra Nevada is pressing the Air Force to redo the contest quickly, without lowering the requirements set for the original competition, from which the Hawker AT-6 plane was disqualified. Sierra says the Embraer Super Tucano is in use by six militaries around the globe.

Hawker insists that its AT-6 plane is the most capable, affordable and sustainable light attack aircraft on the market. The company is urging the Air Force to revise its requirements for the light attack planes, arguing that not even front-line U.S. fighter jets could meet the requirements as written.

On Friday, Hawker said it was pleased that the Air Force was taking more time to investigate. "This critical contract deserves to be fully, fairly and transparently vetted prior to being awarded," said Hawker spokeswoman Nicole Alexander.

Van Buren earlier this month said he was not aware of any plans to revise the requirements for the plane, which Afghanistan needs to provide close air support for its army and as a turbo-prop training plane.

The cancellation of the Super Tucano contract is one of several U.S. orders Embraer has lost over the last 20 years. In the 1990s, the Super Tucano and Embraer in partnership with U.S.-based Northrop Grumman lost out as the joint fighter training aircraft for NATO after heavy lobbying from U.S. competitors.

In the mid-2000s, the Air Force also canceled a contract with Lockheed Martin Corp for an aerial reconnaissance plane that was to be based on the Embraer ERJ-145 regional jet.