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Cessna fights $27 million ruling involving parts supplier

11-12-2012

Cessna is appealing an arbitration panel’s finding that the company owes a Canadian parts supplier $27.4 million for breaching its contract and making some of the parts itself.  Between 2001 and 2011, Avcorp made more than 4,600 wing spar and empennage assemblies for Cessna’s Sovereign and CJ3 business jets, among other parts. But the company  averaged about two problems per subassembly and was late in delivering parts two-thirds of the time, Cessna said in a filing. So it switched to other parts suppliers and started making some of the parts itself. In 2011, Avcorp went after Cessna, saying that the companies had a “sole-source” agreement that Cessna breached. The arbitration panel last month found that the contract was unclear on that point and sided with Avcorp. Cessna said that Kansas public policy doesn’t leave room for an implied “sole-source” relationship in contracts; that language must be explicitly spelled out in contracts.

http://www.kansas.com/2012/12/10/2598829/cessna-challenges-arbitration.html

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