Embraer's spy plane plans on hold
LM offered Embraer ERJ 190, the Gulfstream 550,
the Bombardier Global Express and the Boeing 737

Tony Quesada

Embraer may have to wait until Dec. 14 to learn whether it's still part of the team that will build the next-generation military spy plane. The Army said it expects to decide by then how it will proceed with the multimillion-dollar Aerial Common Sensor program.

The Embraer ERJ 145 was part of Lockheed Martin's winning ACS proposal in August 2004. The jet was to be assembled at a yet-to-be-built plant in the Cecil Commerce Center. At the time company officials said the plant was expected to be operational in October 2005 and would generate about 200 high-paying jobs, but now the Brazilian jet maker's position on the ACS project is in doubt.

Lockheed Martin, the lead contractor for the program, was ordered by the Army to stop work on its plans after it was determined that the weight of the electronics was too much for the airframe. The Army gave Lockheed Martin 60 days to prepare new plans using a different airframe.

On Monday Lockheed Martin presented more than one plan to the Army, but neither the Army nor the company would say which airframes were involved.

An Embraer spokesman declined to comment on whether one of its other airframes was included, saying any questions should be directed to Lockheed Martin (NYSE: LMT).

Lockheed Martin spokeswoman Judy Gan would only confirm that the company presented multiple options involving different airframes to the Army.

"At this point, we're just trying to respect the integrity of the process," Gan said. "I can tell you that a couple of months ago, we disclosed that we were considering four airframes."

Those airframes were the Embraer ERJ 190, the Gulfstream 550, the Bombardier Global Express and the Boeing 737.

Gan said the Army's stop work order is still in effect until Dec. 14, so Lockheed's involvement in the ACS program until then will be to answer any questions from the Army as they arise.

Army spokesman Henry Kearney also declined to comment on the possibility of seeking a new lead contractor.

When the initial system development and demonstration contract was awarded in August 2004, it was announced to be for $879 million. Follow-on contracts with the Army for a total of 38 planes were expected to bring the total value to $7 billion, not including up to 19 planes the Navy may buy to replace its EP-3 aircraft. In all, officials said, the program could be worth about $10 billion over 20 years.

In September, the Army said it projects the program's schedule to slip by more than two years and its cost to increase significantly as a result of the problems.