By Ann Roosevelt
BAE Systems yesterday announced it filed a protest with the Government Accountability Office (GAO), asking for a review of the Army’s award to Oshkosh Corp. [OSK], of a five-year, potential multi-billion rebuy program for the Army’s Family of Medium Tactical Vehicles (FMTV).
“We believe we were treated unfairly,” Linda Hudson, president of Land & Armaments BAE Systems, told Defense Daily.
BAE, the incumbant on the program, believes the Army did not properly evaluate the proposals consistent with the government’s requirements and that the service did not accurately assess the various risks associated with the proposals.
Another competitor, Navistar International Corp. [NAV.N], also filed a protest last week.
In the wake of the protests, the Army issued a stop work order to Oshkosh, which received the FMTV rebuy award in late August (Defense Daily, Aug. 28).
The protest initiates a 100-day process; GAO is expected to make its decision on or before Dec. 14.
The FMTV rebuy was to be a best-value competition based on a series of specific criteria.
“When we heard that after all of our experience, all of our history of delivering this truck–it’s got a tremendous operational reliability rate of 94 percent in the field today–how could they say that two [companies that] had never done this before, and two companies whose financials are not nearly as robust as ours and that both production capabilities, technical capability and financial capability were all equal, therefore they were going to take the lowest price. We just don’t think that’s right.”
After the Army’s debriefing and an analysis of information and options, BAE Systems decided to move to a formal protest.
“This corporation does not protest contracts very often nor do we take that decision lightly, but we also can’t sit by and watch something happen that we think is just grossly wrong,” she said.
A quote from a decision memorandum from the Army’s Source Selection Authority, in part, informed BAE’s decision to file the protest after an Army debriefing after the award, and extensive analysis:
“In that I find all three offeror’s ratings equal in both the Capability Factor and the Past Performance/Small Business Participation Factor and consistent with the [request for proposals] and the Source Selection Plan concerning evaluations resulting in the non-Cost & Price factors being considered equal, I must therefore rely on the Total Evaluated Price as the determining Factor in my decision.”
Hudson said the key for the company was in the evaluation that BAE and Oshkosh were equal in cost and price factors.
“If you look at the selection criteria, 40 percent of it was to be based on cost and price, 40 percent on capability and 20 percent on other factors like small business participation and past performance,” she said. “And then when you look at cost and price, it wasn’t just the lowest price it was also the financial capability of the offerors.”
This was a discriminating factor, Hudson said. “When you look at embarking upon a potential multi-billion dollar contract, the company’s ability to execute a fixed price multi- billion dollar contract is a key factor. Can you handle the financial exposure, the investment required, what if you get in trouble, do you have the wherewithal to meet your obligations even if you’ve underbid the contract?
Capability subfactors were production and technical capability. Under the production heading fell such items as manufacturing facilities, key tooling and equipment, production approach, and manpower. Under the technical capability fell a armored cab design, the Long Term Armor Strategy requirements.
“It’s worth pointing out that we own the armored cab design that’s on the current truck, the one that’s been deployed,” Hudson said. “So the offerors had to design their own armored cab as part of their offering whereas we already have a qualified cab in production.”
Qualifying is important, she said, and must go through ballistic and survivability testing.
“It’s worth keeping in mind, we have built 56,000 of these things [FMTV] over 17 years,” Hudson said. “We have existing facilities, people, production processes, as well as the qualified cab. We are a large corporation with a very sound balance sheet. A lot of financial capability. Our competitors have never built one of these trucks. They don’t have existing processes and facilities. They don’t have a qualified cab design that meets the survivability and ballistic threat and yet the source selection authority decided we were all equal.”
The evaluation of equality between competitors raises the question of risk for the Army, Hudson said. “How can you say that a plan put forth by someone who’s never done this before is equivalent production risk to someone who’s building 40 trucks a day, today. It just doesn’t seem right.”
Oshkosh and Navistar “absolutely” are qualified truck producers, Hudson said. But they have never built this truck, and this is a build-to-print acquisition. They have to build the exact same truck BAE is building to the requirements in the technical package. And they have to design, develop and qualify a new armored cab.
“To say their ability to execute on this program to these requirements, that the risk of their execution and the financial capabilities of their corporation are equivalent to ours, I think, is an injustice,” Hudson said.
Not included in the FMTV rebuy are the High Mobility Artillery Rocket System (HIMARS) and Medium Extended Air Defense System (MEADS) truck variants.
“The business question for us is whether it makes sense for us to continue to build those trucks because of the smaller quantities if we’re not given the larger quantity of trucks,” Hudson said. “It forces us into a business decision that says they’re going to take the mainstream production trucks and give them to another supplier–is this a business we want to be in or do we want to focus our efforts on perhaps the tactical truck world in the international market out of our South African facility. Those decisions we’re evaluating at the moment.”
Meanwhile, BAE continues to product FMTV trucks under a bridge contract through the fourth quarter of fiscal year 2010.