Sequestration Threatens Joint Light Tactical Vehicle Acquisition

By Yasmin Tadjdeh

With round two of sequestration looming over the Pentagon, major weapon programs could be on the chopping block. The joint light tactical vehicle program — which if fulfilled would see more than 50,000 vehicles manufactured — could be a casualty, some experts said.

The fierce competition pits Lockheed Martin, Oshkosh Defense and AM General against each other to build the Army and Marine Corps’ next light tactical vehicle. The Army has said it intends to purchase more than 49,000 vehicles and the Marine Corps is slated for 5,500 units.

Interviews with JLTV program office leadership were not made available to National Defense, but a joint program office spokesman pointed to October remarks from Army Col. John R. Cavedo Jr., program manager for the JPO, in which he describes sequestration’s potential effects.

“The impact will more than likely … be a slowdown of production, which equals a stretch out of production,” Cavedo said at the Association of the United States Army’s annual meeting-exposition in Washington, D.C. “If you buy less, the cost will move up.”

He noted that the program was able to survive earlier budget cuts through efficiency.

“We were able to work through both furlough and government shut down, the impacts of sequestration … by being incredibly efficient,” he said. “The folks on my team worked day in and day out … [looking at] every cell on the Excel spreadsheet, looking for every little block they could shave a little bit of money from.”

Ryan Crotty, a fellow and deputy director for defense budget analysis at the Center for Strategic and International Studies, a Washington, D.C.-based think tank, said the JLTV is one of the Defense Department’s safest programs. However, acquiring combat vehicles is currently a lower priority.

“In some ways the JLTV is kind of at the head of the class for land vehicle acquisition, but that class itself is pretty low on the totem pole right now,” he noted.

The program also faces competition from other Army vehicle procurement efforts, said Brad Curran, an aerospace and defense senior industry analyst at Frost & Sullivan.

“Total spending for new-build combat vehicles should remain stable, but the Army will probably have to prioritize programs,” he said. “I think the armored multi-purpose vehicle will win out as the higher priority for a new build as the Army downsizes in a tight budget environment.”

The AMPV program is meant to replace M113 armored personnel carriers, which have been in the Army’s fleet since the Vietnam War. Curran said the need for a heavier armor platform as well as shedding the cost of maintaining the aging vehicles will cause the AMPV program to take priority over the JLTV.

Most of the competitors have remained tight-lipped about the potential effects of sequestration on the program, which is meant to replace aging Humvees with better-protected vehicles while not skimping on payload, performance or maneuverability.

Oshkosh Defense said that while budget cuts have been hard on the industry, it is confident the program will move forward.

“The U.S. defense spending downturn — with and without sequestration — is having a significant impact on defense contractors. But despite these pressures, Oshkosh has continued to invest in our JLTV solution,” said retired Army Maj. Gen. John Urias, president of the company.

While there are budgetary challenges, the program is on solid footing and enjoys support from both the Defense Department and Congress, he noted.

“Both services have listed JLTV among their top modernization priorities, and the program has consistently had strong congressional support. Based on decades of Department of Defense acquisition experience, I can tell you that JLTV is a solid, well-managed program that will fill a critical capability gap for our nation’s soldiers and Marines,” he said in an emailed statement.

Jeff Adams, executive director for communications and marketing at AM General, the manufacturer of the Humvee, said he did not want to speculate on hypothetical situations such as sequestration. However, he noted “everybody [in industry] is concerned about it.”

He emphasized that the company has been supportive of the Defense Department as it faces a “difficult period” of budget cuts. AM General is offering its blast resistant vehicle–off road for the program.

Adams said it is clear that the JLTV program has been a “priority” in the Pentagon. Christopher Vanslager, vice president of business development and program management at the company, agreed and said “the program has significant support throughout the Department of Defense.”
In a statement, Lockheed Martin declined to comment on potential effects of sequestration.

The Pentagon plans to downselect to a single vendor by the end of fiscal year 2015. Shortly after, three years of low-rate initial production are set to begin, with five years of full-rate production starting in fiscal year 2018. Approximately 17,000 vehicles will be procured during the timeframe.

The president’s fiscal year 2015 budget request allocated $229.3 million for Army and Marine Corps engineering and manufacturing development, research, development, test and evaluation and procurement funding for the JLTV. The program was fully funded under the fiscal year 2015 National Defense Authorization Act.

By fiscal year 2018, the first Army unit is expected to be equipped with the vehicles, and the Marine Corps will have reached an initial operating capability. The Marine Corps and Army will finish fielding vehicles around fiscal years 2022 and 2040, respectively, according to JPO materials.

The average unit manufacturing cost is not to exceed $250,000.

A Congressional Research Service report by Andrew Feickert, a specialist in military ground forces, outlined some of the key requirements: “As planned, JLTVs would be more mechanically reliable, maintainable (with on-board diagnostics), all-terrain mobile and equipped to link into current and future tactical data nets. Survivability and strategic and operational transportability by ship and aircraft are also key JLTV design requirements,” the report said.

After some delays, competitors received the final request for proposals for the full-rate production phase in December, with submissions due in February.

“The JLTV program remains on track to deliver an affordable, protected mobility solution that fills today’s critical capability gap with substantial advances in the balance of payload, performance and protection,” Cavedo said in a statement. 

The final RFP’s delay is not expected to affect the program’s schedule, Michael Clow, a spokesman for the joint program office, said.

In a CSIS report called, “U.S. Department of Defense Contract Spending and the Industrial Base, 2000-2013,” the think tank examined defense acquisition programs during the first year sequester was in effect. The result, Crotty said, was a 15 percent cut to total Defense Department contracts. Land vehicles, however, took a 40 percent cut.

“If that is what sequester looks like in one year, it is certainly possible that it could happen again,” he said.

If sequestration forces the military to make additional cuts to force structure it could cause the services — which Crotty described as “personnel heavy” — to evaluate how many JLTVs they really need in light of a smaller force.

Ultimately, Crotty believes the JLTV will be able to weather sequestration, although the program may be delayed or pared back, he said.

“Time, I think, is the issue that is not being valued as highly anymore. Things are being pushed to the right all the time,” he said. “Whether that is coming from the DoD end or the contractor end, depending on the program, I have very low confidence in any program not ending up with some delays.”

Crotty’s confidence in the perseverance of the program is in part due to the JLTV’s support in both the House of Representatives and the Senate, he noted.

Further, the program is seen within the Pentagon as fairly uncontroversial, which could also signal it surviving potential budgets cuts, he said.

“It’s a program that has gone so well so far — at least it seems from an outside perspective — and they are so close to being on track that I would think they would want to keep that moving forward,” he said.

If the program is canceled, the Marine Corps could reinstate a modernization program for the Humvee, Curran noted.

“The most likely scenario is continued incremental improvements to current vehicles,” he said.
Previously, the Marine Corps had a program to modernize its existing Humvee fleet but pooled funds — $53 million of about $57 million requested from its Humvee modernization program in fiscal year 2015 — with the Army to replace much of its fleet with the JLTV, according to the CRS report.

If the military is forced to scrap or reduce JLTVs, foreign military sales could help ease the blow. Crotty said that will likely be a top goal for the contract’s competitors, though they have so far struggled to find partners.

Vanslager said while the main focus is on the domestic program, AM General has received interest from various countries.

“There is interest by international customers on JLTV, but I think they are in the wait-and-see mode depending on what the U.S. does,” Vanslager said. “They are very interested, [and] we’ve provided briefs to them, as much as we could.”

Urias noted that evolving threats around the globe are facilitating a demand for vehicles like the light combat tactical all-terrain vehicle, Oshkosh’s JLTV offering.

“Given world events and the proliferation of conflicts, we are seeing an increase in international demand for well-protected, lightweight military vehicles with off-road mobility such as our L-ATV,” he said. “The L-ATV platform is highly transportable and built to serve a wide range of mission profiles.”

The company has exhibited the vehicle at various trade shows and demonstrations internationally, he noted.

Photo Credit: Thinkstock

Topics: Land Forces, Land Forces

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