Once a U.S. Air Force castoff, the C-27J tactical airlifter has become a hot commodity in the U.S. government's aircraft fleet.

The USAF's decision early this year to mothball its 21 brand-new, twin-engine C-27Js—labeling the Alenia Aermacchi transports a niche capability too expensive to sustain alongside its other airlifters—triggered an interagency squabble between the U.S. Forest Service, bent on using them as much-needed firefighting tankers, and the U.S. Coast Guard, which was intent on employing them to plug a gap in maritime patrol capability.

Seven of those aircraft have already been spoken for, as Deputy Defense Secretary Ashton Carter on Oct. 25 signed orders to dedicate them to Army Special Operations Command (Socom) for use in parachute-aided free-fall training, replacing aging CASA C212s.

With the Coast Guard seeking 14 aircraft and the Forest Service seven, officials at the Pentagon, the Homeland Security Department and the Agriculture Department were left haggling over the allocation. Some experts suggest federal regulations on the transfer of excess defense hardware give priority to military departments over other government agencies, bolstering the case made by the Coast Guard.

But Sens. John McCain (R-Ariz.) and Dianne Feinstein (D-Calif.) have drafted an amendment to the fiscal 2014 defense authorization bill that could resolve the dispute.

Coast Guard Commandant Adm. R.J. Papp says transfer of the remaining 14 C-27Js to his service would allow for cost avoidance of at least $1.3 billion for its maritime patrol mission and fill its operational need eight years faster than current plans. “The receipt of 14 or more C-27Js would allow the Coast Guard to return (maritime patrol aircraft/medium-range surveillance) capability to the West Coast,” and outfit three units, Papp says in an Aug. 13 memo to lawmakers. Maritime patrol is currently handled by the aging Lockheed Martin HC-130H and HC-144 (a missionized EADS CASA CN235). Papp says the C-27J can provide “approximately three-quarters of the capability at half the operating cost” of the HC-130H.

But the Forest Service, which has pushed its own case for converting the small airlifters to fire tankers , has been backed by McCain, a powerful voice on Capitol Hill, making some in the Pentagon concerned the transfer will get mired in further wrangling over a deal. McCain is known for digging in his heels, especially when Pentagon force structure and management issues are involved.

Romania conducted a test of using bladders on a G.222—an early generation version of the C-27J—for aerial water tanker needs, reinforcing McCain's case for a firefighting capability. “The C-130J has consistently performed as an outstanding air tanker, and we believe the C-27J has the potential to perform as an excellent air tanker as well,” says Thomas Vilsak, secretary of the Agriculture Department, which oversees the Forest Service.

McCain's compromise amendment would satisfy the Forest Service's needs for aircraft by transferring seven old Coast Guard HC-130Hs to the Forest Service for conversion to tankers, while the C-27Js would go to the Coast Guard. The tricky part was figuring out how to pay for much-needed structural improvements to the center wing boxes for the HC-130H aircraft.

The amendment would direct the Defense Department to transfer the aircraft from the Coast Guard to the Forest Service and to pay for the repairs. The funding could be reprogrammed from previously unobligated C-27J accounts, according to a congressional aide. The amendment includes a forcing mechanism, stipulating that the Coast Guard cannot receive C-27J aircraft unless enough funding has been set aside for the HC-130Hs to be modified as “large air tanker wildfire suppression aircraft.”

Coast Guard officials did not return calls for comment on the issue.

“With their greater lifting capacity, C-130Js could be a better fit for firefighting than C-27Js. At the same time, C-27Js are well suited for long-distance maritime patrols, and share avionics and engines with the Coast Guard C-130J fleet,” says Sen. Mark Begich (D-Alaska), who has two Coast Guard air stations in his state. “I'm hopeful we can find a way for the Forest Service to get refurbished Coast Guard C-130Hs, clearing the way for the Coast Guard to get the 14 C-27Js. A deal like that would allow both agencies to get what they need, but as always, the devil is in the details.”

Prior to the transfer of seven C-27Js to Socom, the Coast Guard argued that taking over all 21 aircraft from the Air Force would allow it to retire its HC-144A fleet; ownership of 14 would require the service to maintain a mixed fleet.

This bickering over the aircraft is the latest chapter in its inglorious introduction into U.S. government service. After beating the EADS CASA C295 in a hard-fought competition in 2007 for the U.S. Army—staunch backers of the need for an aircraft smaller than the C-130 for direct delivery of troops and supplies on the battlefield—the Pentagon abruptly agreed in 2009 to shift control of the fleet to the Air Force.

That shift to the Air Force, parochial backers of the C-130 family, was the beginning of the end of the program at the Pentagon. The Army's requirement was once at least 54 aircraft, and the Air Force reduced it to 38 but eventually only bought 21 before terminating the program and grounding the aircraft.

Alenia was once teamed with Lockheed Martin, which agreed to provide marketing support for the twin-engine “mini-C-130,” as some call it in the U.S. Sensing a potential threat, however, the U.S. defense giant eventually walked away from the agreement, leaving Alenia to handle its own sales to the Pentagon.

For now, Lockheed's lobbying and sales efforts stateside have stunted the C-27J's once-promising push into the largest defense market on the globe. However, Alenia could see positive results for sales campaigns abroad from successfully gaining a U.S. government customer—such as the Forest Service or Coast Guard—that actually wants the aircraft, unlike the Air Force.