Early in 1949, Temco's management received word that the United States Air Force (USAF) planned to hold a competition for a new primary/basic trainer. Temco built two additional prototypes for this competition, adding some minor improvements as time permitted. The three aircraft were designated the YT-35 by the Air Force. Temco was competing with two other training aircraft, namely the Fairchild XNQ-1/T-31 and the Beechcraft Model 45. On 24 February 1949, the Air Force trainer evaluation board chose the Beech Model 45 by a four-to-one vote with Temco's TE-1A a distant third. Due to budget cuts, the USAF program was ultimately cancelled that year.