Embraer and Sierra Nevada Win $950 Million Afghan Air Force Contract

On Wednesday, the Department of Defense announced it has awarded privately held Embraer (NYSE: ERJ  ) partner Sierra Nevada a firm-fixed-price, indefinite-delivery/indefinite-quantity contract for the provision of advanced aircrew trainers and light air support aircraft "to establish air combat capability for allied countries under the Building Partnership Capacity program."

The first order under this contract, for $427.5 million, calls for Sierra Nevada to supply 20 Light Air Support Aircraft, with accompanying training devices, spare parts, and related equipment. The size of the order appears to be scalable, however, as the DOD announcement specifies that the order value can be increased as high as $950 million. Performance on the first order of this contract is due by April 2015, but the full contract runs through Feb. 26, 2019.

The planes in question, modified versions of the Embraer Super Tucano fighter, were originally selected by the Air Force to begin outfitting the new Afghan Air Force in 2011. A protest at that time by Goldman Sachs (NYSE: GS  ) subsidiary Hawker Beechcraft, however, scuttled the order and forced the Air Force to reset its bidding process. Today's award shows that Sierra Nevada and Embraer have definitively won the bidding war, however.

According to the U.S. Air Force's official website, the planes will begin arriving in Afghanistan this summer, at the rate of two aircraft per month.


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