WASHINGTON — As the Army readies to take the next step in its priority effort to replace its infantry fighting vehicle, an ongoing court battle is shedding new light on the challenges faced by non-traditional contractors.

The lawsuit is between Keshik Mobile Power Systems, a subcontractor, and Point Blank, a prime contractor pursuing the Army’s Optionally Manned Fighting Vehicle. Earlier this year, a Florida court issued a decision that appears to have pushed Keshik out of the competition for good. While Keshik is appealing, the window to submit a bid for the next two phases has closed.

The Army has put special attention on drawing competition to OMFV, which was halted in early 2020 after only one bidder — defense behemoth General Dynamics Land Systems — offered a prototype. The service then reworked the solicitation in a bid to lower barriers to entry and draw more participants.

In testimony presented during the trial, Keshik asserted the Army was pleased by its offering, telling the company its technology was spurring new innovation. (The Army told Defense News it does not comment on prime-subcontractor relationships and could not comment on pending litigation).

But the company and Point Blank sparred over funding to advance its technology, according to court testimony, and the fight ultimately ended with Point Blank suing Keshik, accusing the subcontractor of attempting to break their contract and compete against Point Blank.

In August, a judge in Florida’s 17th Judicial Circuit Court approved an injunction against the company, ordering Keshik to stay out of the OMFV competition unless it teamed with Point Blank and blocking it from hiring any of Point Blank’s remaining subcontractors.

The Army is now moving forward with Phase 3 and Phase 4, covering detailed design and a vehicle prototyping effort respectively. The bidders are primarily well-known defense contractors, including BAE Systems, General Dynamics Land Systems and Oshkosh Defense along with leading German combat vehicle-maker Rheinmetall.

The service plans to select in the spring three winning teams, which will each get $900 million to cover the design and prototype of vehicles.

Breaking into the business

In 2016, Patrick Maloney, a retired Army lieutenant colonel injured in a Bradley while serving, and Franklin Jones, a seasoned engineer, met and started an effort focused on a safer fighting vehicle, Jones testified in an Aug. 12 hearing.

The two focused on a power control technology that allows dissimilar power producers and power consumers to connect and work together, a Keshik official, who asked not to be named because of the pending court case, told Defense News.

When the Army in 2020 announced it would reboot the OMFV program after only receiving one bid, Jones testified that the duo saw a new opportunity and formed Keshik — named after the imperial bodyguards of Mongolian leader Genghis Khan.

The original OMFV competition required a physical bid sample, a tough requirement for a new company like Keshik. Jones testified that high-fidelity, model-based systems engineering had given him confidence in the company’s technology, but the business hadn’t yet built it.

Jones said Keshik sought to team with a prime contractor to compete in the concept design phase; the Army planned to select five teams to develop digital design concepts.

Keshik also needed a partner because bidders were required to have facility-level clearance — the ability to handle classified material — and cash on hand to start work before receiving a contract, Jones testified. “Keshik is a company that had never had a penny of revenue and had no paid employees at the time,” he added.

The company initially teamed with large defense contractor SAIC, but SAIC dropped out in January 2021.

“Keshik had the concepts that the Army wanted,” Jones said in testimony, “so we set out to find a suitable prime contractor that could act essentially as a passenger, so that Keshik and its team could perform this job.”

According to Jones, Keshik’s Maloney met Point Blank executive vice president Mark Edwards through a mutual acquaintance. Point Blank was primarily known for producing body armor and protective gear.

Executives at Point Blank and Keshik convened in February 2021, roughly four months before bids were due for Phase 2, Jones and Edwards confirmed in court testimony.

The contract opportunity “was unique in the sense that usually the way the government would solicit it, it would be limited to really companies with the manufacturing capability already installed,” Edwards testified. “The government really wanted innovation, so they really opened the aperture for non-traditional companies.”

Keshik and Point Blank quickly teamed up.

Jones said in court that Keshik executives thought their company would have “full design control and would manage its team of subcontractors and execute the job.”

Edwards backed Jones’ characterization of the relationship. “Not only did [Keshik] provide the drivetrain, but they were also the design lead,” he testified. “They would give work out to subcontractors … and we would give them purchase orders to support that work.”

The relationship sours

The companies’ relationship deteriorated soon after the team won one of the five contracts awarded by the Army to work on design concepts, according to Jones’ testimony.

They began arguing over money, according to Jones. Keshik needed cash right away to get to work, but the government payments weren’t expected for several months and Point Blank wanted to wait, Jones testified.

Edwards testified that the Keshik team told Point Blank it needed $8 million to get started. “I about fell out of my seat because we had a lot of conversations, especially when they came in and pitched the idea to us, and that was never included in there,” he said.

Company representatives also described a discrepancy in the type of agreement that was anticipated. While Jones said Keshik expected to sign a teaming agreement, Edwards indicated in his testimony that Point Blank didn’t intend to move beyond a subcontractor arrangement.

Tensions continued throughout the first year, typically over payments. Jones testified that Point Blank had, in some cases, paid subcontractors more than 90 days late, but Edwards testified that payments were only ever a few days late.

Even so, Jones testified the Army was pleased with the team during a systems requirements review in January 2022.

“We were being far more responsive to the Army’s requirement than any other team and helping them define what was possible,” he said in court. “They have had difficulty getting the established primes to change their ways, but by having the Point Blank-Keshik team in the midst, they’ve actually been able to move the primes into the future.”

RELATED

Yet the design still needed work. The Keshik-Point Blank team told the Army during a May review the vehicle was turning out to be too heavy and underpowered and would require design adjustments, Jones testified.

The next month, Point Blank issued an “operational pause,” freezing the design six months before the period of performance was set to end, according to both Edwards and Jones’ testimony.

“We’re competing against giants,” Edwards testified. “So I needed to get the team better organized because the way we had managed Phase 2 had to be completely overhauled leading into Phase 3.”

Jones said in court that Keshik “objected strenuously” to the pause, and on July 8, Keshik asked to be released from its subcontract agreement. Days later, a Keshik executive sent an email, later presented in court, to subcontractors on the project, letting them know Keshik would no longer be a part of the team.

Edwards testified that he saw that communication as indicating Keshik was attempting to take subcontractors with it.

The fallout

Later that month, Point Blank filed suit against Keshik, arguing in its complaint the company breached the loyalty clause in its contract by planning to directly compete against it in the next phase of the OMFV program.

“Keshik is actively soliciting other subcontractors to breach their own contractual obligations to Point Blank and join Keshik’s illegally competing venture instead,” the complaint states.

In August, the court ordered that Keshik could not compete directly or indirectly against Point Blank in the OMFV program or solicit subcontractors to work on any proposal for future OMFV work.

The court found Keshik’s actions from July 2022 onward “have disrupted Point Blank’s relationship with other subcontractors, as well as with the federal government.”

“Keshik must be prevented from taking actions that are materially adverse to Point Blank — and in particular from continuing to solicit other subcontractors to support a competing proposal for Phases 3 and 4 of the OMFV program,” the court’s order stated.

In its initial complaint, Point Blank said it no longer had enough time to find replacements for Keshik or any other subcontractors that might depart, making it hard to meet the Army’s Nov. 1 deadline for bids to compete in the subsequent phases of the program.

But in fact, by the August hearing date, Point Blank had already replaced Keshik, according to Edwards’ testimony. Edwards told Defense News in a recent interview it replaced Keshik with RENK America, which will provide the drive train. He said all subcontractors aside from Keshik remained on the team.

Keshik confirmed to Defense News it was unable to bid due to the injunction. A Keshik official, who asked to speak anonymously due to the pending litigation, said almost all employees have been laid off except for executive staff.

Keshik appealed the injunction and is waiting for an appellate court’s decision.

Jen Judson is an award-winning journalist covering land warfare for Defense News. She has also worked for Politico and Inside Defense. She holds a Master of Science degree in journalism from Boston University and a Bachelor of Arts degree from Kenyon College.

Share:
More In Land