Lockheed Martin [LMT] likely knew its case against the Joint Light Tactical Vehicle (JLTV) contract award to Oshkosh [OSK] was doomed a week before it voluntarily abandoned the five-month contest, according to court documents.
The lawsuit challenging the Army’s decision was withdrawn by Lockheed Martin on Wednesday, but court documents continue to trickle into the public record. A ruling on Lockheed Martin’s motion for preliminary injunction released Feb. 19 shows a federal judge essentially dismantled Lockheed Martin’s case a week ago.
The document confirms that Lockheed Martin pitched a JLTV that did not meet the Army’s reliability requirements, but promised to improve its truck after it won the $6.7 billion contract that ultimately went to Oshkosh.
Photo: Oshkosh Defense
Lockheed Martin will not say why it aborted its court battle to overturn the contract award. It issued a statement Feb. 16 saying the decision to withdraw the lawsuit was made “after careful deliberation.” A company spokesman declined to elaborate or comment on the court documents when reached by email on Friday.
In the 25-page order filed Feb. 11 but made public Friday, Federal Claims Court Charles Lettow concludes that not only could Oshkosh keep building trucks, but Lockheed Martin failed to make a compelling case that it could ultimately win the case. Lockheed Martin and its lawyers were in possession of the ruling before the lawsuit was scuttled.
The document outlines the court’s denial of a motion by Lockheed Martin to have Oshkosh stop work on its JLTV contract while the case was litigated. It also delves deeply into the structure of Lockheed Martin’s core argument that it was misled and unfairly treated by the Army.
“Because Lockheed has failed to establish a likelihood of success on the merits and irreparable harm, the court cannot grant a preliminary injunction,” the order concludes. The court agrees with the Army that the Oshkosh JLTV would provide the “best value for the government.”
Lockheed Martin’s JLTV might not have met the Army’s performance and reliability requirements at the outset. During engineering and manufacturing development (EMD) the Army measured reliability by each vehicle’s mean miles between hardware mission failures (MMBHMF). Specific scores are redacted in all court documents, but the threshold set by the Army was 3,800 miles. Lockheed Martin’s vehicle failed to meet that bar, according to court documents.
The company beefed up its MMBHMF rate in its final proposal and promised to meet that reliability mark after it won the contract, but the Army was skeptical of Lockheed Martin’s inflated figures.
“Lockheed conceded that it had not yet met this performance standard, but said that it ‘has committed to achieving’ MMBHMF based on future testing and “ongoing RGT design improvements’ after award,” the ruling says.
“The Army explained its concerns to Lockheed, it noted the unsubstantiated technical commitment, and it advised Lockheed that it could not rely on future design changes.”
Reliability was a heavily favored attribute in the Army’s source selection process, weighted more than price and other considerations like participation of small businesses in the supply chain. The court found that Oshkosh offered a more reliable vehicle and a production proposal that came in nearly $400 million below Lockheed Martin’s estimate. As for small business participation, Lockheed Martin was rated “outstanding” while Oshkosh was rated “good.”
One of Lockheed Martin’s primary arguments is that the Army intentionally or by default misled the company as to how reliability would be evaluated and weighted in the vehicles’ final scores.
During a Jan. 20 hearing, Lockheed Martin’s attorney’s argued that if its JLTV had been “properly evaluated,” Lockheed Martin “it would have made a substantially different MMBHMF proposal. If Lockheed Martin had made such a proposal–or Oshkosh’s proposal had been given equivalent scrutiny–a different, more favorable [life cycle cost] adjustment would have resulted in an award to Lockheed Martin.”
That argument did not hold water with the court, which found that “even with adjustments to the reliability and operational availability elements, Oshkosh would still be technically superior.”
Lockheed Martin escalated its bid protest to federal court from the traditional Government Accountability Office (GAO) route because it felt unfairly treated by the Army. In its view of the source selection process, both companies made changes to their vehicles following the engineering and manufacturing development phase but Oshkosh was given a pass on explaining its alterations.
Any changes made had to be supported by data that explained how each differed from the vehicle tested during EMD. “Lockheed argues that the Army treated Lockheed worse than Oshkosh for no rational reason, in particular by refusing to credit certain Lockheed data while crediting Oshkosh data under similar circumstances,” the court summarizes.
“Based on the limited record here, the court finds it likely that the Army treated Lockheed and Oshkosh fairly,” Lettow writes.” To the extent the Army treated Lockheed differently, it acted rationally because Lockheed’s proposal raised issues that Oshkosh’s did not …Oshkosh made fewer changes to important systems. For the changes it did make, it submitted data up front, meaning the Army did not have to ask for more.”