GAO Details Army FMTV Fail

Updated: With comments from Oshkosh Defense VP Andy Hove.

Here is the latest on the ongoing saga that is the Army’s effort to buy a truck. The Government Accountability Office (GAO) released its full finding on what it says was a flawed competition for the Army’s Family of Medium Tactical Vehicles (FMTV) that awarded the $3 billion contract to Oshkosh over competitors BAE and Navistar.

GAO says the Army made two mistakes. First, that Oshkosh does not have all the needed tooling and equipment, such as welding robots and big machines to stamp metal parts, to fashion the truck’s components. The Army claims their understanding of the contract language was that the builders didn’t have to have all the machinery currently installed in their factories, rather that they just had to demonstrate they could buy what they didn’t already have. GAO says: “Oshkosh’s proposal identified more than 100 items of key tooling and equipment that were not on hand.”

The second flaw, GAO says, was that the Army evaluated Navistar’s past production performance as good/low risk instead of excellent/very low risk; although both Oshkosh and BAE got the same rating as Navistar in that category. GAO says the Army’s documents fail to provide any evidence why Navistar should have been given a lower rating.

GAO said the Army should reevaluate whether all three competitors meet the “key tolling and equipment element in a manner consistent with the terms of the solicitation.” And, that it should conduct a new evaluation of Navistar’s past performance. Following this reevaluation, GAO says the Army should make a new selection decision.

For its part, Oshkosh claims the GAO’s findings actually support the Army’s decision to award it the FMTV contract because GAO didn’t challenge Oshkosh’s proposed price, which is $440 million lower over the life of the contract than that of BAE, nor did it challenge Oshkosh’s capability and experience to build the trucks. Oshkosh contends that its lower price offering should be given greater weight than many other factors; indeed the Army’s solicitation said price was as important as the capability to build the trucks in determining the eventual outcome.

Updated:

DOD Buzz spoke with Andy Hove, vice president of Oshkosh Defense about GAO’s findings. We asked Hove how Oshkosh was able to come up with a bid that was $440 million less than competitor BAE. “The army felt that we could have a lower price because we took a more aggressive approach to manufacturing much more material in house than the other competitors. They had much more sub-subcontracting of simple automotive components that we did.” When you can build every individual piece or component, Hove said, “it puts you in a significantly different negotiating position than when your only other alternative is to go out and buy it.”

On the lack of needed tooling and equipment: “It was an inaccurate statement to state that we had all of the tooling, which we didn’t and we never claimed to.” GAO was right to say that the Army should correct that part of its assessment, he said. Since the contract was awarded, Oshkosh has acquired much of the needed tooling and can readily acquire what it does not have.

Even if the Army changes its evaluation of Oshkosh, by lowering its evaluation of tooling and equipment in the assessment matrix contained in GAO’s report, the company still comes out equal to BAE in capability, Hove said. Oshkosh still beats BAE on price, by $440 million. “Would you as a taxpayer want the re-evaluation of those two very narrow issues to result in the taxpayers having to pay over $400 million for the same truck?”

On the claims that Oshkosh lacks the means to design the FMTV’s armored cab, a counterclaim which GAO threw out: “We build armored cabs for all of our military products. We build over a dozen different armored cabs. And by the way have designed them in much shorter time frames than we did for the FMTV.”