U.S. Air Force Preps a Controversial No-Bid Purchase of Spy Planes

Last year, the U.S. Air Force tried to retire most of its EC-130 Compass Call spy planes, worn from years of flying over Iraq and Afghanistan. Now service officials say replacements are needed urgently — so urgently that they must write a no-bid contract for 10 aircraft whose price tag could top $1.6 billion.

Not so fast, says Congress.

“[T]he Air Force’s proposal to recapitalize the EC-130H Compass Call aircraft using a sole source purchase of ten business class aircraft would not give us any confidence that the Air Force is achieving the maximum value for the American taxpayer,” reads a Senate Armed Services Committee report on the 2017 defense authorization bill.

Built in the 1980s, the 14 Compass Call aircraft are Lockheed Martin C-130 cargo planes packed with special computer equipment and a spiderweb-like antenna that allows the crew to eavesdrop on and attack enemy communications. The planes have been heavily used in the post-9/11 counterinsurgency campaigns.

But instead of replacing the Compass Calls with new C-130s, the Air Force wants to take a different approach: installing the special electronics on a Gulfstream G550 business jet, according to Pentagon sources and congressional documents. The service would call this new spy plane the EC-37B.

It’s unclear whether the EC-130’s 13-member crew and electronic suite would fit inside the smaller Gulfstream. But more immediately disturbing to lawmakers is the Air Force’s plan to offer a no-bid, sole-source contract to an EC-37B team that includes Gulfstream, which makes the jets, and BAE Systems, which handles the electronic gear.

Air Force officials told lawmakers that the Gulfstream is the “only option that does not require development and/or certification work,” according to a House report on the 2017 defense authorization bill.

Officials also said the shift from C-130 to G550 is driven by unspecified foreign threats, and the increased cost of maintaining old aircraft.

“The threat has evolved and we need to get started to be able to provide that capability, which is critical to the combatant commanders,” Lt. Gen. Arnold Bunch, the Air Force’s military deputy for acquisition, said at an Air Force Association conference outside Washington last week. “We actually have letters of support from two of the combatant commanders showing how critical this capability is, and we need to do it expeditiously.”

The Air Force has asked Congress for $165.7 million to buy and convert a Gulfstream G550 into a Compass Call starting in 2017. (The service already has a small fleet of G550 business jets to fly senior Pentagon officials around the globe.) The request was not included in the Air Force’s 2017 budget request to Congress in February, but was submitted to lawmakers separately in a “technical adjustment” letter, according to a House report.

A new, unmodified Gulfstream G550 costs just over $61 million, according to Aviation Week, which means the 10-aircraft purchase would send more than $600 million to Gulfstream, the business jet arm of General Dynamics. Gulfstream has built special intelligence versions of the G550 for foreign governments, including Israel.

Even more money, about $100 million per plane, would go to BAE Systems, which would install specialized electronics equipment designed for the C-130 into the smaller Gulfstream.

General Dynamics is “aggressively lobbying” for about 14 new EC-37B aircraft to extend G550 production, defense consultant Jim McAleese wrote in an Aug. 24 note to investors.

Some lawmakers, as well as officials with competing defense companies, say that buying Gulfstream G550 aircraft through a no-bid contract will prejudice future competitions. The Air Force is looking to modernize other fleets of intelligence planes, based on Boeing 707 jetliners built in the 1960s and 1970s.

“[A]llowing this sole source award to proceed could potentially prejudice source selections for other Air Force recapitalization programs, such as the program to replace the Joint Surveillance and Target Attack Radar System (JSTARS) aircraft,” the Senate report reads.

Northrop Grumman, which made the current E-8C JSTARS planes, is working with Gulfstream to offer a new JSTARS aircraft based on a G550. Boeing has offered a larger 737 and Lockheed Martin has teamed up with business jet-maker Bombardier.

At the Air Force Association conference last week, Boeing showed off a model of its Compass Call version of the 737 commercial jetliner. Company executives point out that a G550 cannot refuel in flight, as do the EC-130H and the P-8, a submarine-hunting 737 flown by the Navy.

Some experts argue the Air Force needs a comprehensive plan to buy new intelligence planes — like the RC-135 Rivet Joint and E-3 AWACS — before rushing to start the Compass Call shift to a Gulfstream.

Despite its purported urgency, the Air Force plan would implement the Compass Call replacement much more slowly than projects of similar importance. The Air Force wants to buy one new G550 from Gulfstream annually for a decade, using money currently slated for EC-130H maintenance and upgrades, Bunch said.

When the Air Force has an urgent operational need, it typically works to buy equipment through a secretive acquisition office known as Big Safari. When the service raced to get a fleet of small intelligence planes into battle in 2008, Big Safari purchased a handful of used and new King Air 350 turboprops. The planes reached the battlefield in less than a year, a remarkable feat for a Pentagon acquisition system that sometimes takes decades.

“Almost any time that you can do a competition, we really think that the military ends up getting better weapon systems,” Mandy Smithberger, director of the Straus Military Reform Project at the Project On Government Oversight, said of the Compass Call plan. “We always think that you have to be very cautious when you’re going to waive those kinds of requirements, particularly it’s not very expeditious to fulfill the requirement over 10 years.”

This isn’t the first time the Air Force has taken fire for looking to no-bid contracts in an attempt to circumvent the slow Pentagon acquisition process. In 2010, it wanted to buy 93 Black Hawk helicopters, valued at about $1 billion from Sikorsky to replace old UH-1 Huey helicopters that patrol far-flung ICBM bases. The move was eventually quashed in favor of competition, but the Air Force has yet to buy new helicopters.

For now, the Compass Call project is in a holding pattern, as the Air Force waits for lawmakers in the House and Senate to iron out a unified version of the 2017 National Defense Authorization Act. Bunch said the Air Force is waiting for lawmakers to provide direction before proceeding.

“What I really want as the military acquisition individual is give me the max flexibility that I can to use the acquisition authorities that we have whether that is full-and-open competition or that is less-than full-and-open competition so that we can do this in an expeditious manner,” Bunch said.

The Senate version of the authorization bill restricts funding for the effort while the House version encourage the Air Force speed up plans to shift to the Gulfstream aircraft.

The White House has backed the Air Force plan, arguing that the “Air Force requires the flexibility to employ appropriate contracting authorities as allowed by law, including the exemptions to full and open competition in order to efficiently and effectively execute” the shift to move from the EC-130H to the EC-37B.