WASHINGTON Days after the US Army awarded a major contract to Oshkosh for the Humvee replacement, defense titan Lockheed Martin and Humvee manufacturer AM General have not ruled out formal protests against the decision.
At stake is the Army's largest acquisition program in recent memory, as the Joint Light Tactical Vehicle (JLTV) business is estimated to be worth $30 billion. Even if a protest fails to overturn the award, it would trigger a 100-day suspension to probe the program, just as it is revving up.
Oshkosh won a $6.7 billion low rate initial contract, a base contract with options to procure the first 16,901 vehicles for the Army and Marine Corps. All told, the Army-led program will provide 49,100 vehicles for the Army and 5,500 for the Marine Corps.
The fate of the Humvee in the services' fleets, of great importance to AM General, is not entirely settled. The Marines plan to operate and sustain its 13,000 Humvees after replacing 5,500 with the JLTV, and the Army plans to study in the next six months how many of its 120,000 Humvees will be replaced, sustained or modernized, as it decides the vehicle mix in its fleet. As yet there are no plans for the Army National Guard to adopt the JLTV to replace its Humvees, which AM General is contracted to recapitalize.
While the Army's lead acquisitions official for the JLTV, Scott Davis, has said publicly he does not expect a protest, spokespeople for Lockheed and AM General each say the option remains open. Oshkosh senior vice president of defense programs, John Bryant, said the Army's selection process was fair and analytical, but he would not be surprised if a protest was filed, given the stakes.
"On the one hand, I know that there's an incentive to protest," Bryant said, "but on the other, it would be really tough because the government did it right."
Army and Marine Corps procurement officials held a Pentagon press briefing at 5:15 p.m. on Aug. 25 to announce the contract award, unusual for its timing late in the day and because, tellingly, officials declined to explain why Oshkosh was their choice.
Asked whether the Army would provide its rationale after the protest window closes, Davis said, "If you're talking about a comparison, I don't know if that will ever happen, but certainly the details of the winner is probably something that will be available to folks."
Lockheed and AM General declined to discuss what they knew of the government's rationale in the selection, as did Oshkosh. Bryant said the company planned to request a debrief from the Army but it had not yet been told its ranking among the competitors or what source selection factors it satisfied.
"We have not seen that, but I know from a very high level this program was set up to provide the best light tactical vehicle that ever existed on the face of the Earth for a really great cost, and Oshkosh's JLTV did exactly that," Bryant said. "Although it sounds very trite, I believe Oshkosh was simply the best value JLTV solution."
Officials said the average unit cost, with full kit, is less than $400,000 and declined to provide a more precise estimate while an analysis was ongoing. The target cost for a base vehicle was $250,000.
According to analyst Brad Curran, of Frost & Sullivan, Oshkosh likely had a winning edge as a commercial vehicle producer, able to provide the Army in the future with advances in fuel economy, power distribution and computer integration from the civilian vehicles market.
In the wake of the Army's colossal, ambitious and ultimately failed Future Combat Systems program, "I think what they're thinking is the civilian world can help us reach our goals, and we can leverage their research and successful technologies," Curran said. "That's definitely an Army goal."
Meanwhile, the specter of a protest will hang over the program into September. The competitors have a 10-day window from the award date to protest to the Government Accountability Office, or they may request a detailed briefing from the government within three days. That sets off an alternate timeline that gives the government five more days to hold the debrief, and the companies would have a seven-day window after that to file a protest.
Lockheed said its JLTV team was "disappointed to learn that the US Army and Marine Corps did not select our JLTV. We believe we presented a very strong solution and await the customers' debrief to hear more detail regarding the reasons behind this selection before making a decision about a potential protest."
AM General said in a statement Aug. 27, "We are disappointed with the government's decision and continue to believe that AM General and our BRV-O vehicle are the right choice for the JLTV program." As of that date, the company was "reviewing the government's decision and are considering all available option."
Previous contract awards from the Pentagon, such as the Air Force's KC-X tanker program and its Light Air Support contract, saw heavy political pressure from state representatives of where the losing companies were based.
So the language used in a statement by Sen. Tom Cotton, R-Ark., a member of the Senate Armed Services Committee, is notable.
Cotton, who represents the Camden location where Lockheed would have produced the JLTV, said he was "disappointed" in the decision and indicated a willingness to use political pressure to wrestle the award away if Lockheed seeks to protest it.
"I am confident the work and infrastructure Lockheed Martin put in place to bid on this project will bring other economic benefits" he said in a statement. "And as Lockheed Martin explores their next steps, we stand ready to assist them however we can."
For now, the chance of a protest is not slowing down Oshkosh. Bryant said the company plans to fine-tune its production line and supply chain, and is making other preparations with the government to start building JLTVs.
"If there was a protest that was filed in time to cause a suspension of performance, then Oshkosh would obey the suspension," Bryant said. "We would continue to lean forward in those key areas that would allow us to hit the ground running as soon as the protest is done."
The award caps an engineering and manufacturing development period in which the three companies delivered 22 prototype vehicles.
JLTV will be manufactured in Oshkosh, Wisconsin, with deliveries beginning 10 months after award. A full-rate production decision is expected in fiscal 2018.
The first Army unit will be equipped with the vehicles in fiscal 2018, and its acquisition will be complete in 2040. The Marine Corps will begin its buy at the start of production and finish in fiscal 2022.
The Marine Corps' 5,500 JLTVs will replace 69 of the 74 Humvees in each of its active infantry battalions, which covers its expeditionary missions. Additional Humvees will be scattered around support organizations while so-called soft-skinned Humvees will provide support behind the forward deployed Marine Expeditionary Unit.
The Humvee will not vanish from the Army's fleet overnight. The JLTV is not a one-to-one replacement for the Humvee, and even replacing half the Army's Humvees at the expected rate of production would take 25 years, according to Kevin Fahey, director of system of systems engineering and integration in the Office of the Assistant Secretary of the Army for Acquisition, Logistics and Technology.
If the Army chooses to upgrade its Humvees, it would do well to set the cost at an affordable $100,000 per vehicle and put it out to competitive bid, Fahey said. How the Army will find funding in the tight budget environment to sustain, much less upgrade, its Humvees remains an open question for Army officials.
"There is a decision point where we have to make a decision about Humvees soon," Fahey said. "The challenge is, what do you want? It could be expensive or just overhaul what you've got."
With the JLTV, the Army and Marine Corps intend to restore flexibility and expeditionary capability lost when roadside bombs in Iraq forced the military to move from the lightweight Humvee to up-armored variants and heavily armored mine resistant ambush protected (MRAP) trucks, officials said.
The Army said the JLTV offers underbody and side-armor protection similar to Oshkosh's M-ATV, an MRAP, at about two-thirds of the weight, with a larger payload and greater reliability than a Humvee. It could be carried by a CH-47 Chinook, CH-53 heavy-lift helicopter and by amphibious vessels — a near impossible proposition for an MRAP.
"Really, the program has always been focused on restoring a baseline level of performance, protection, mobility and transportability," said Army Col. Shane Fullmer, JLTV project manager.
Staff Writer Aaron Mehta contributed to this report
Joe Gould is the Congress and industry reporter at Defense News, covering defense budget and policy matters on Capitol Hill as well as industry news.