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Actually, IMHO, this report does not speak to the real issues for the C-27 removal. it really had nothing to do with the shutdown and their placement in the boneyard was not a result of it. In fact, it predates it significantly.

Here is a short history of the C-27 bid and how it came to be.

In 2005 the U.S. Army had identified the need to replace the C-23 Sherpa medium lift aircraft. That aircraft’s performance was simply not suited for the hot, high terrain of Southwest Asia. Alenia Aeronautica offered the C-27 into the resulting competition to address this issue.

Lockheed Martin chose to offer the C-130J in 2006 as a contender in the same U.S. Army and U.S. Air Force Joint Cargo Aircraft (JCA) competition. Alenia Aeronautica first paired with L-3 Communications to form the Global Military Aircraft Systems (GMAS) joint venture to market the C-27. Later, Boeing joined Alenia and L-3 Communications as a GMAS team member.

The C-27 completed the U.S. Department of Defense’s Early User Survey evaluations by November 2006, flying 26 hours and surpassing all the JCA program requirements. The GMAS team announced that the C-27 would be assembled at a facility at Cecil Field, Duval County, Florida.

The final selection of the JCA came on 13 June 2007, when the Pentagon selected the C-27 as its Joint Cargo Aircraft. A contract worth US$2.04 billion was awarded to the L-3 Communications team for 78 C-27s along with training and support on 13 June 2007. At that time, the U.S. Army had requirement for up to 75 aircraft in the Army National Guard; the Air Force had a requirement for up to 70 aircraft in the Air Force Special Operations Command and the Air National Guard.

On 22 June 2007, the award of the JCA contract to the Alenia C-27 was formally protested. On 27 September 2007, the GAO announced that it had denied the protest, thereby allowing the Pentagon to go ahead with the C-27 procurement. The first flight of a U.S. C-27 occurred on 17 June 2008. The United States military officially received its first C-27 on 25 September 2008...over five years ago. In September 2008 L-3 Link officially began classes at the Georgia Army National Guard Flight Facility, Robins Air Force Base, Georgia for C-27 training. In April 2009, the U.S. Army had accepted deliveries of two aircraft and had 11 more on order. A proposal in May 2009 was made to have the U.S. Army/Army National Guard relinquish all of its aircraft to the U.S. Air Force, primarily the Air National Guard, with a reduction to 38 aircraft. This led the DoD to give total control of the US’s C-27Js to the USAF in December 2009.

By July 2010, the U.S. Air National Guard had received four C-27s and began using them for testing and training. The purchase of all 38 Spartans was anticipated with initial operational capability expected by October 2010. The U.S. Air Force planned the C-27’s first combat deployment for summer 2011.

In August 2011, two C-27 aircraft flown by Air National Guard personnel began operations at Kandahar Air Field, Afghanistan. From August to December 2011, the C-27s of the 179th Airlift Wing transported some 400 tons of cargo, and over 6,900 passengers in more than 900 missions.

However, and nonetheless, by early 2012, the USAF moved to cancel the program entirely. On 26 January 2012, the U.S. Department of Defense announced plans to remove all 38 C-27s on order from the U.S. Air Force’s inventory because it was determined that over the long haul, their niche capabilities would too expensive. It was announced that the C-27’s duties were to be taken by the U.S. Air Force’s C-130s.

In February 2012, Alenia warned that it would not provide support for C-27s resold by the United States.

Then, in March 2012, it was reported that the U.S. Coast Guard was considering taking over the aircraft from the U.S. Air Force.

On 23 March 2012, the U.S. Air Force announced that it would cut all C-27s from its inventory in fiscal year 2013 after determining that its per-aircraft lifecycle costs are higher than those of C-130J aircraft performing the same combat resupply mission. In July 2012 the entire fleet was grounded due to a flight control system failure.

By early 2013, the USAF was continuing to shut down the program. At that time, over 9 months ago, newly built C-27Js were being sent directly to the Davis–Monthan Air Force Base boneyard. This was to make room for C-130s. The Coast Guard and other civil, or allied services will be able to bid on and take up these aircraft as desired.

So, the shutdown had nothing to do with this...it had been started almost a year ago for the reasons listed. Overall life time costs, maintenance costs, the C-130J being able to do the mission, etc. Now the C-27s are available for other departments (like the Coast Guard) or allies to pick them up and use them.