Army Vice Chief Convenes Vehicle Manufacturers to Discuss Future of Truck Programs
Two major questions are likely to dominate the discussion: Will the Army commit to long-term investments in these programs? And will industry assure the Army that it can deliver vehicle on time and on budget?
Top executives from about a dozen companies are expected to meet one-on-one with Chiarelli. Lt. Col. David Gercken, a spokesman for Chiarelli, said the Friday get-together seeks to promote better dialogue with industry in a time of budget uncertainty. Chiarelli agreed to having individual chats with company executives so that discussions could be more candid. Chiarelli has been at the forefront of Army efforts to reform the way it buys equipment following astring of failed programsand billions of dollars sunk into projects that ended up being canceled.
Vehicle manufacturers have been inwait-and-see modefor several months in anticipation of the start of an estimated billion-dollar project known as the Modernized Expanded Capacity Vehicle, or MECV. The goal is to refurbish 5,750 old Humvees and turn the vehicles into like-new trucks at a cost of no more than $180,000 apiece. The Army wants to improve the Humvee’s off-road performance and make it more survivable to bomb blasts without overloading it with armor.
A formal solicitation for industry bids was expected Nov. 10, but has been delayed. Up to three fixed-price contracts not to exceed $4.5 million each could be awarded in 2012. Contractors in recent weeks have speculated that the reason for the delay is that the Army might be having second thoughts about spending a billion dollars to fix up old vehicles after hearing marketing pitches from manufacturers that say they can build brand-new trucks that exceed the performance of the Humvee, for $250,000 per vehicle. The Joint Light Tactical Vehicle, which is intended to replace the Humvee, has been in danger of being terminated for some time, in part because of its price tag. Government Accountability Office auditors calculated thatJLTV would cost $350,000 per truck, which made the MECV option far more attractive.
But if JLTV prices are indeed coming down, the program appears to be now competing with MECV, industry sources said. In addition, there are budget worries as the Pentagon faces a funding crunch in the coming years.
At least two manufacturers, Oshkosh Defense and Navistar Defense, have unveiled new light truck designs that they claim are within the $250,000 range. Three industry teams led by BAE Systems, General Dynamics and Lockheed Martin Corp. already have received research-and-development contracts for the first phase of the program. Oshkosh and Navistar would be allowed to jump into the race in the next stage of the program, known as “milestone B.”
Manufacturers are becoming impatient and would like to see a clear path to the future, said one industry consultant speaking off-the-record. “Industry is really on edge until they talk to the vice chief on Nov. 18,” he said.
Companies that have spent millions of dollars on MECV designs worry that the program will become the “bill payer” for JLTV. Manufacturers that have invested in JLTV, conversely, want to know if the Army is prepared to stick with the program despite funding concerns — and not change the performance and technological requirements. “We’re hoping that after these meeting on the 18th it will be much clearer,” the industry consultant said.
Analysts expect that MECV will go forward, as the Army needs to recapitalize a portion of the Humvee fleet regardless of what happens with JLTV. By most conservative projections, it could take three to five years before JLTV trucks start rolling off an assembly line.
Executives from AM General, the only manufacturer of the Humvee, told National Defense last month thatthey believe the Army’s best bet in the near term, considering the budget situation, is to improve the Humvee. AM General is offering two different designs for MECV, and also has partnered with General Dynamics for JLTV.
Also participating in both programs is Navistar Defense LLC, a commercial truck manufacturer that is making a strong foray into the military market after scoring big sales of its International MaxxPro mine-resistant ambush-protected vehicle, or MRAP. The company at its own expense designed the International Saratoga light armored truck that would compete in JLTV. Some of its components also might be incorporated into an MECV design, said Navistar spokeswoman Elissa Koc. The company also is part of BAE Systems’ JLTV industry team.
“We’d like for the Army’s acquisitions to be more MRAP-like,” Koc said. “That plays to our strengths as a commercial company.” The MRAP procurement, unlike most weapon acquisitions, was fast tracked so many of the cumbersome regulations that are standard in military programs did not apply.
Navistar decided to invest its own funds in Saratoga despite the uncertainty over JLTV, but Koc noted that companies often take such risks if they see a “gap in the market.”
“There’s always going to be a need for light tactical vehicles,” she said.
Topics: Land Forces