File this story under: Opportunity -- lost.
Earlier this week, the website DefenseNews.com reported that the nation of Peru has just ordered a pair of C-27J "Spartan" tactical transport aircraft to be built for it by Alenia Aermacchi, a division of Italian defense giant Finmeccanica (NASDAQOTH: FINMY). Peru will be paying approximately $136 million for the planes.
Ordinarily, of course, this would be a minor news item and of little interest to U.S. investors, or taxpayers -- except for one small point. Here in the States, we've also been buying a lot of C-27J Spartans. So far, the Pentagon has spent $567 million to purchase 21 C-27J Spartans. Legislators have talked about buying 42 more, tripling the size, and cost of the fleet to nearly $2 billion.
Problem is, the actual U.S. military -- the U.S. Air Force -- doesn't want any of these planes. Complaining that Alenia's aircraft costs nearly 50% more to operate than comparable Lockheed Martin (NYSE: LMT) C-130s, USAF has been refusing to fly the planes, sending Spartans directly into storage as soon as they arrive from Alenia. Already, a dozen Spartans have been mothballed at Davis-Monthan Air Force Base in Tucson, Ariz.
The U.S. Special Operations Command has offered to take seven Spartans to prevent their suffering a similar fate, and it's possible that other U.S. agencies -- the Coast Guard and/or the U.S. Forestry Service -- will ultimately be able to put the remainder to use.
Five more planes, already on order, may go straight to this airplane "boneyard" upon their delivery in 2014 as well.This fact alone is a tragedy verging on scandal -- an egregious waste of taxpayer dollars. It's especially unforgiveable in light of the serious concerns Pentagon officials have raised about the military's lack of funds for essential operations. And that isn't the worst of it.
What's wrong with a win-win?
Knowing that there are buyers out there who, like Peru, appear to actually like and want the Spartan, and knowing that we've got a dozen of the birds in "like new" condition, stranded out in the Arizona desert, suggests a pretty obvious solution. Had Congress and the Pentagon acted quickly, we could have offered to sell Peru our unwanted Spartans for a cheaper price than Alenia charged them.
President Obama calls Peru "one of our strongest and most reliable partners in the hemisphere," a potential counterweight to less friendly regimes in Bolivia and Venezuela. Giving Peru a cut-rate price to upgrade its military could have helped out an ally, won us some goodwill in Lima, and recouped a few wasted dollars for U.S. taxpayers all at the same time.
You know, they say that "military intelligence" is a contradiction in terms. Failures of imagination like this one tend to support that thesis.
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Editor's Note: the following statement was added after the article was published, "The U.S. Special Operations Command has offered to take seven Spartans to prevent their suffering a similar fate, and it's possible that other U.S. agencies -- the Coast Guard and/or the U.S. Forestry Service -- will ultimately be able to put the remainder to use."