- The Washington Times - Monday, December 14, 2009

In a classic example of how hometown interests rule on Capitol Hill when money is at stake, Texas and Wisconsin lawmakers are slugging it out over whose state takes home a disputed $3 billion defense contract.

The trouble started in August when Wisconsin-based Oshkosh Corp. won the contract to build medium-sized trucks for the Army, beating out BAE Systems, which held the contract for 17 years and manufactures the vehicles in Sealy, Texas. BAE formally challenged the decision, and the Texas delegation in Congress soon entered the fray.

Texas lawmakers sent a letter to Defense Secretary Robert M. Gates in September saying BAE was robbed of the contract. The Wisconsin delegation followed up with a letter to Mr. Gates complaining about a smear campaign against Oshkosh.

“It’s probably not the best way to run the railroad,” said Rep. Ralph M. Hall, Texas Republican. “It’s just a battle between that state and our state.”

Mr. Hall was among 25 Texas lawmakers who signed the letter that was circulated by Rep. Michael McCaul, Texas Republican, whose district includes Sealy. Mr. Hall said he signs just about any letter presented at the delegation meetings. “If it is a pro-Texas letter, I sign it,” he said.

The complaints voiced in the Texans’ letter mirrored the protest that British-based BAE filed with the Government Accountability Office (GAO) seeking to overturn the award, including challenging whether the Army followed its own bid-selection criteria and comparing the competing companies’ financial capabilities to produce the trucks, known as the Family of Medium Tactical Vehicles, or FMTVs.

FMTVs include a variety of 2.5-ton and 5-ton trucks, including troop transport vehicles, cargo trucks, wreckers and tankers. The Army uses these vehicles for combat support and combat service support.

The Texans lauded BAE’s state-of-the art plant and the 3,000 “proud Americans” who would lose their jobs in Sealy, and cited reports saying Oshkosh lost $1.2 billion last year and was on the brink of bankruptcy.

The entire 10-member Wisconsin delegation called foul.

“Politicians ought to keep their … noses out of it and let the Army make the decision,” said Rep. David R. Obey, Wisconsin Democrat and chairman of the House Appropriations Committee.

Still, Mr. Obey and his Wisconsin colleagues weighed in with a letter to Mr. Gates that defended Oshkosh and accused the other side of meddling in the GAO review.

“We are concerned with the blatant efforts to affect the outcome of this independent, quasi-judicial review,” the Wisconsin letter said.

Mr. McCaul acknowledged that his first concern was looking out for his constituents, including about 6,500 Houston-area workers whose jobs are indirectly supported by the Sealy plant. But he also said the lowest bid was not always the best bid and that he was looking out for taxpayer dollars and military readiness.

“We think it is going to be a waste of government money if it goes to Oshkosh because they don’t have the plant and they don’t have the trained employees,” he said. “To say they are on a level playing field and just look at the cost is misplaced.”

The GAO is expected to announce Monday whether it rejects the BAE protest and keeps the contract with Oshkosh, orders another round of bids or sends the contract back to the Army for further deliberations about the FMTVs.

At the heart of the dispute are the bids tendered for the fixed-price contract by Oshkosh, BAE and a third company, Illinois-based Navistar International, which joined BAE in protesting the award but otherwise has stayed out of the wrangling. Unlike most other government contracts, the fixed-price contract requires the company to absorb losses if the project goes over budget.

Oshkosh’s critics say it can’t afford to lose any money and its low bid could toss the company into financial turmoil, delaying the delivery of trucks that the Army sorely needs for the wars in Iraq and Afghanistan.

The bid by Oshkosh, which already builds heavy armored trucks for the Army, was 10 percent lower than BAE’s.

BAE has disclosed that its bid was already 20 percent less than the company currently charges the government for the trucks.

It argues that the Army did not get an independent cost estimate or detailed pricing analysis to demonstrate that Oshkosh can deliver the trucks at the quoted price, though Oshkosh officials insist they are ready to move forward with production.

Oshkosh spokesman John Daggett said the company appreciated the support it received from the Wisconsin delegation.

“We feel that our bid was the best for the Army and for war fighters and for the U.S. taxpayers, and we await the ruling by the GAO,” he said.

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