- The Washington Times - Friday, December 18, 2009

Government auditors have recommended a do-over of a hotly disputed contract award to build Army trucks, prolonging a battle between Texas and Wisconsin lawmakers over which state takes home the $3 billion deal and the jobs that go with it.

The Government Accountability Office this week upheld a protest of the award filed by BAE Systems, which had built the trucks in Sealy, Texas, for 17 years but lost the contract in August to a dramatically lower bid by Wisconsin-based Oshkosh Corp.

The GAO agreed with the central complaint in the protest that the Army did not fully evaluate the capability of Oshkosh to produce the trucks, known as the Family of Medium Tactical Vehicles, or FMTVs. The auditors recommended the Army re-evaluate the bids and rescind the Oshkosh contract if it is not the best value.

FMTVs are made up of 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 GAO also upheld a protest by Illinois-based Navistar International, a third bidder in the competition, which complained that the Army did not adequately evaluate its past performance as a defense contractor. It was recommended that the Army correct that mistake in reviewing the bids from the three companies.

“Our review of the record led us to conclude that the Army’s evaluation was flawed with regard to the evaluation of Oshkosh’s proposal under the capability evaluation factor, and the evaluation of Navistar’s past performance,” said Michael R. Golden, GAO’s managing associate general counsel for procurement law.

He stressed that the recommendation to review the bids did not signal an endorsement of the firms’ respective approaches to produce the FMTV.

The contract is a boon for Oshkosh, which already produces medium and heavy tactical vehicles for various branches of the U.S. military. For British-based BAE, losing the FMTV deal is a painful setback and threatens job losses for 3,000 workers at its Sealy plant and for other workers in its Michigan plant.

Sen. John Cornyn, Texas Republican, said the “decision by the GAO confirms that the Army’s decision to strip thousands of jobs from Texas was flawed and misguided.”

While the protest was under consideration, a war of words erupted between the Texas and Wisconsin delegations in Congress. 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.

“Politicians ought to keep their … noses out of it and let the Army make the decision,” Rep. David R. Obey, Wisconsin Democrat and chairman of the House Appropriations Committee, said earlier this month. He nevertheless signed on to his delegation’s letter to the defense secretary.

Illinois lawmakers appeared to stay out of the fracas.

At the heart of the dispute are the bids tendered for the fixed-price contract. Unlike most other government contracts, the fixed-price contract requires the company to absorb losses if the project goes over budget.

The bid by Oshkosh was 10 percent lower than the bid by BAE, which has disclosed that its offer was already 20 percent less than the company currently charges the government for the trucks. That makes the price quoted by Oshkosh 30 percent cheaper than what the Army currently spends on FMTVs.

“This ruling is potentially good news for our over 3,000 employees in Texas and Michigan, who have built more than 65,000 FMTV vehicles for our nation’s soldiers,” said Bob Murphy, president of BAE Systems Land and Armaments group.

Oshkosh Chairman and Chief Executive Officer Robert G. Bohn said the company remained confident it would get the contract.

“We believe that our FMTV offer was, and continues to be, the best value for the U.S. Army, our troops and the U.S. taxpayer,” he said. “It is important to realize that today’s decision did not recommend proposal revisions nor did it recommend termination of our contract.”

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