The Army botched its plans to sole-source and field Mi-17s there. And the Air Force has yet to make good on a promise to field a light attack/armed reconnaissance aircraft for Afghanistan after a contractor protest waylaid its source selection process.

Meanwhile, Finmeccanica's hopes of establishing a stateside final assembly footprint in the near term are dashed. And it is nearly impossible for the company to meet its internal growth plans in the U.S. without these major contracts.

Unlike the C-27J program, which was outright terminated, the Air Force opted simply not to renew its contract with Alenia North America to support and induct the G222s, dubbed the C-27A by the service, into the Afghan Air Force.

The final decision was relayed by the Air Force in a Dec. 18 letter following two earlier warnings of dissatisfaction with Alenia's work.

The G222 program was Alenia's first as a prime contractor for the Pentagon. The Air Force paid Alenia $341 million to refurbish 20 aircraft—bringing five configurations of the G222 into a single C-27A variant—for the Afghan Air Force. USAF officials praised Alenia's performance, despite some early refurbishments requiring 50% more hours than planned, for which the company picked up the tab.

But major issues surfaced as Alenia moved forward in executing a second deal worth more than $600 million to train Afghan pilots and crews and support the fleet in Afghanistan.

The decision comes after what Air Force officials call “failed attempts” by Alenia to “generate a sufficient number of fully mission-capable aircraft for effective [Afghan] airlift capability.” According to Ed Gulick, a USAF spokesman, “though the Air Force assisted Alenia throughout the program in an effort to help the program succeed, Alenia struggled to consistently achieve key contractual requirements.”

An industry official says Alenia is exploring whether it has any recourse to the decision. As this is not a contract termination, there is little opportunity for significant termination liability costs to be reimbursed. And without a major U.S. prime contractor involved, the company does not have significant weight in Congress to seek political help outside the Pentagon.

Sixteen of the 20 aircraft have been delivered to Afghanistan—though not all are flyable. Four remain in Italy. Despite a deployed team of contractors, and a decision by Alenia to bring in DynCorp last March to help rectify the problems, the fleet has been temperamental and was grounded twice, once in December 2011 on airworthiness grounds and again last March because of safety issues that delayed the training of Afghan personnel.

While acknowledging problems with the aircraft's introduction, a company official says the fleet is now exceeding the requirements set by the U.S. Air Force. The industry official says Alenia was sent notices warning it of contract deficiencies but never received Air Force feedback on its responses. Alenia funded some contract activities, although terms were not fully ironed out.