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National Defense > Blog > Posts > Tactical vehicles stunner: Why BAE won, but lost, the FMTV protest

2/15/2010

Tactical vehicles stunner: Why BAE won, but lost, the FMTV protest
The Army announced Friday that it was upholding a $3 billion contract that it originally had awarded to Oshkosh Corp. in August to build 23,000 military trucks and trailers under the Family of Medium Tactical Vehicles (FMTV) program.

Oshkosh’s competitors – BAE Systems and Navistar – filed a protest in September. The Government Accountability Office ruled in December in favor of the protestors. The Army had to stop the work in order to re-evaluate the proposals and the way the selection was made.

Before Oshkosh won the contract, the Army had bought its FMTV trucks exclusively from BAE Systems. That the Army decided to award the next order for 23,000 trucks to Oshkosh was a shock to BAE. The company, along with Navistar, challenged the decision. But even though GAO sided with the protestors, its ruling was not based on industrial base concerns. It stemmed from factual mistakes in the Army’s evaluation about the capabilities of the competing bidders, and a flawed assessment of the contractors’ past performance.

BAE and Navistar technically won the protest but still lost.

Most experts had predicted the Army would start over with a new competition. But Friday's announcement confirms that the Army had lost the protest on minor technicalities and its decision to award the contract to Oshkosh would still stand.

This is a complicated issue, even for contracting experts. Asked to provide details on the Army’s decision-making process , Lt. Col. Jimmie E. Cummings Jr., an Army spokesman, provided the following cryptic statement:
“The Government Accountability Office recommended that the Army re-evaluate the proposals under the key tooling and equipment (KT&E) element in a manner consistent with the terms of the solicitation. The GAO also recommended that the agency should consider whether its evaluation under the time phased critical path (TPCP) element was affected by the re-evaluation of the KT&E evaluation.
“Finally, the GAO recommended that the Army conduct a new evaluation of Navistar's past performance that adequately documents the agency's judgments. This meant that we were to re-evaluate Navistar's past performance excluding the information for which a backup questionnaire was missing. After completion of the above, the Army was to make a new selection decision that reflects the re-evaluations listed above.
The Army re-evaluated the KT&E element for all three offerors using the GAO interpretation of the request for proposal criteria. The TPCP for all offerors were reconsidered to see if the re-evaluation for the KT&E Element would also affect the TPCP risk rating for each offeror.
“The missing Navistar past performance questionnaire (PPQ) was found after the GAO made its recommendation that the agency conduct a new evaluation that adequately documents the agency's judgments. Navistar's past performance was re-evaluated using the original PPQs. The source selection decision memorandum was supplemented with an addendum to incorporate the results of the re-evaluations and reconsiderations.”

So what happened? The protestors only were able to successfully challenge technical and procedural lapses. GAO brushed aside more controversial contentions made by BAE and Navistar – that Oshkosh was pricing the trucks unrealistically low, that the company lacked adequate manufacturing capabilities to meet FMTV orders and that the Army would damage the industrial base because BAE would have to potentially shut down facilities and lay of skilled workers if it lost the contract.

According to the Wall Street Journal, Army officials said that a “peer review” of the process was conducted by the office of the secretary of defense. In a statement to the Journal, BAE Systems’ President of the Land & Armaments Group Bob Murphy said he was disappointed by the turn of events.

The Milwaukee-Wisconsin Journal Sentinel cheered the Army’s call, citing the economic benefits that Oshkosh Corp. brings to the area.

An Army official told the Sentinel that the service was satisfied with the outcome. "This contract will create significant savings over the current FMTV contract, and the Army is confident that this award will not create any shortage of vehicles available to deployed soldiers," the official said.

In the same Sentinel article, James Hasik, a defense industry consultant with Hasik Analytic in Austin, Texas, said BAE could still file a lawsuit to overturn the Army’s latest move, but he does not believe that will happen. "The courts, by and large, are loath to interfere with what they consider to be military judgment," Hasik said. Speculating on whether Oshkosh may have offered a low-ball bid, Hasik said, "If Oshkosh did indeed bid too low, then the taxpayers and the Army will benefit, and Oshkosh's shareholders can take the issue up with management."
Posted at 7:47 AM by Sandra Erwin | Permalink | Email this Post | Comments (0)

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