FMTV: How The Army Erred

InsideDefense.com reported on November 2 that the program executive officer for the Mine Resistant Ambush Protected (MRAP) program had cast doubt on part of an issue brief I wrote concerning a recent Army truck award. The offending passage was actually part of a single sentence, and not central to my main thesis: that the Army performed an incomplete and amateurish evaluation of bids when it awarded a contract under the Family of Medium Tactical Vehicles (FMTV) program to the Oshkosh Corporation. I predicted the Government Accountability Office would agree with protests lodged by losing bidders BAE Systems and Navistar, forcing a new competition.

Let’s revisit what happened in that competition, and ask whether a protest seems warranted. After buying tens of thousands of FMTV vehicles from BAE Systems over an 18-year period, the Army elected to award the next increment to Oshkosh, a specialty truck manufacturer that had not previously built FMTV trucks. It made the award after concluding that incumbent BAE Systems and Oshkosh were essentially equal in all non-cost selection criteria, but that Oshkosh offered a more attractive price. While that sounds quite straightforward, in fact the logic leading to the award defies common sense. Consider a few basic facts.

On price, the Army accepted a bid from Oshkosh that is 30% below the price BAE Systems is currently charging for the vehicle — even though Oshkosh, with no direct experience in manufacturing the product, must turn out a vehicle with the same performance specifications and features, using many of the same suppliers. When challengers to an established producer offer such huge price reductions to win a contract, it is standard procedure to conduct a rigorous analysis of how realistic the challenger’s price is. Yet there is little evidence the Army made any such effort. Instead, it simply accepted the Oshkosh price and ended up making it the sole factor determining who won the contract.

On performance, the Army determined that all three competitors were “excellent/very low risk” in manufacturing facilities, tooling, workforce and other relevant items. It was this leveling of non-cost factors that allowed the source-selection authority to make a “best value” award solely on the basis of price. But unlike BAE, Oshkosh did not have all production facilities or tooling in place; its workforce was not experienced in building FMTV trucks; it did not have established relationships with all suppliers; and it did not have a validated design for the required armored cab in the vehicle. So to say the rivals represented equivalent risk is simply not believable — especially given the very aggressive price targets Oshkosh’s bid required it to meet. GAO will see this award for what it was, and act accordingly.