NC company carved out of $418M contract for warplane; U.S. Rep. Ted Budd tries to halt sale after firm not selected

Winston-Salem Journal bgutierrez

f t # e
Washington, DC, February 19, 2017 | Bertrand Gutierrez | comments

IOMAX USA Inc., based in Mooresville, modifies crop dusters into surveillance planes fortified with such weapons as Hellfire missiles. The United Arab Emirates, Jordan, Egypt and Saudi Arabia use them to protect their borders. Now Kenya wants to buy some.

Buyer’s budget: $418 million.

But, somehow, IOMAX, which is the only company that has a record of making and selling the weaponized plane, has not been selected as the seller. Rather, L3 Technologies, a large defense contractor based in New York with annual sales of $10 billion, got selected.

As things stand, Kenya is prepared to pay $418 million for L3 to make 12 border-patrol aircraft, two trainer aircraft and provide the weapons package, technical support and program management, according to the U.S. State Department’s Defense Security Cooperation Agency, or DSCA.

IOMAX could do the same for $180 million — a 56 percent discount.

Ron Howard, a U.S. Army veteran who started IOMAX in 2001, wants to know why his company was not selected.

His best guess: The playing field is tilted.

“It’s not a defense-contractor squabble. This is the acquisition law as written to protect large defense contractors,” Howard said.

Such orders usually go through the DSCA and U.S. Air Force. Each has a role in overseeing the transaction. The State Department, for example, ensures that the product complies with U.S. foreign policy, and the Air Force chooses the maker.

In this case, the Air Force matched Kenya with L3, a company with no record of making the weaponized crop duster.

Efforts to contact L3 officials by phone were unsuccessful.

Like Howard, U.S. Rep. Ted Budd, R-13th, wants to know why IOMAX was not chosen. Last week, Budd introduced a joint resolution in the House aimed at halting the sale until members of Congress get answers.

U.S. Reps. Mark Meadows, R-11th, and Walter Jones, R-3rd, have signed on as co-sponsors as well. as Republican U.S. Reps. Duncan Hunter of California, Doug LaMalfa of California, Gary Palmer of Alabama, Jeff Duncan of South Carolina and Ileana Ros-Lehtinen of Florida.

U.S. Sen. Richard Burr, R-N.C., also has played a role in finding out what’s going on.

According to Howard, Burr had discussions with Air Force officials.

In the end, Burr was apparently told the Air Force chose L3 because of its ability to have its planes certified — even though the company has never made and sold a weaponized version of the crop duster like IOMAX’s.

A request for Burr to comment went unanswered by his aides.

The Kenyan sale is not the first time that IOMAX has been kept out of a contract to sell a warplane it makes. Similar scenarios happened with Yemen and Jordan, according to Budd. In his view, there are “credible allegations of faulty contracting practices, fraud, and unfair treatment surrounding this sale.”

“Given that this proposed contract was decided without competition to a company that has no experience or track record producing this kind of aircraft, and for a price that is more than double what a contractor in our district has quoted, further investigation is definitely in order,” Budd said in an email.

His resolution has been referred to the House Committee on Foreign Affairs.

“We need to ensure that Kenya, a longtime ally, is getting a fair deal, and that veteran-owned small businesses in our state aren’t getting shut out of competition because of government favoritism toward giant contractors,” Budd said.

f t # e

Stay Connected

Use the form below to sign up for my newsletter and get the latest news and updates directly to your inbox.

Office Locations