Lockheed, AM General May Protest JLTV Award

Oshkosh_JLTV_C-130

Defense contracting giant Lockheed Martin Corp. and Humvee-maker AM General LLC may protest the U.S. Army’s decision to award a contract to truck-maker Oshkosh Corp. to build a Humvee replacement.

In separate statements after the Army awarded Oshkosh a $6.7 billion contract to build the first 17,000 production models of the Joint Light Tactical Vehicle, the losing bidders expressed disappointment that they weren’t selected for the work.

Notably, they didn’t rule out the possibility of filing a protest over the decision with the Government Accountability Office, which adjudicates contract disputes.

“The Lockheed Martin JLTV Team was disappointed to learn that the U.S. Army and Marine Corps did not select our JLTV,” the company said in a statement.

“We believe we presented a very strong solution and await the customers’ debrief to hear more detail regarding the reasons behind this selection before making a decision about a potential protest,” it added.

AM General issued a similar statement.

“We are disappointed with the Government’s decision and continue to believe that AM General and our BRV-O vehicle are the right choice for the JLTV program, based on our best value offer which is backed by decades of LTV expertise and proven record as a trusted and reliable partner with the U.S. military,” a spokesman said.

“Our BRV-O provides world-class survivability features to Soldiers and Marines while delivering unmatched vehicle payload and performance,” the spokesman said. “We are very proud of our team’s efforts and our BRV-O offering. At this time, we are reviewing the Government’s decision and are considering all available options.”

The contract could eventually be worth some $30 billion, as the Army and Marine Corps plan to buy a total of nearly 55,000 of the vehicles, including 49,100 for the Army and 5,500 for the Corps, to replace about a third of the Humvee fleets.

That figure works out to about $559,000 per vehicle and includes expenses for research and development, overhead and add-on equipment such as radios, weapons and armor. Officials have said the cost of manufacturing the vehicle alone will be about $250,000.

Over the past decade, Oshkosh has gained a reputation among soldiers, Marines and military officials as a manufacturer of durable, highly protective trucks. The company produced thousands of blast-resistant vehicles called M-ATVs to better shield troops from roadside bombs in Afghanistan.

While the Humvee was developed in the 1980s as a light-duty utility truck, its vulnerability to improvised explosive devices and explosively formed projectiles, or EFPs, was exposed during the wars in Iraq and Afghanistan. The JLTV decision was a blow to AM General, which relies heavily on military sales to the U.S. and foreign customers.

About the Author

Brendan McGarry
Brendan McGarry is the managing editor of Military.com. He can be reached at brendan.mcgarry@military.com. Follow him on Twitter at @Brendan_McGarry.
  • Curt

    Well hopefully the Army has their ducks in a row here and actually awarded the contract on the demonstrated capability versus the award criteria. That would make it virtually impossible for the losers to protest. Of course, that is probably asking too much from any of the services.

    • Motive25

      In today's world of desperate scramble for fewer & fewer Government dollars, it doesn't matter if the unsuccessful bidders may have a valid case or not. Protests against every contract award are almost automatic now. Companies use them to get more information about why they lost and also to "fire a shot across the Government's bow"- to tell the Government they aren't going away easily, and that the Government better have their ducks perfectly lined up when it came to making a selection. Companies have nothing lose by filing a protest, but is a PITA for the Government.

      • Curt

        True, protests are common, but largely because the Services don't have there ducks in a row. Take for instance the USAF tanker award. The GAO found that, by the stated criteria, Boeing won, not just by a small margin, but by a landslide. You can argue the selection criteria was slanted toward Boeing (or Boeings product better met the USAF criteria, I don't really care how you spin it) but the simple fact was the USAF selection team screwed the pooch royally and it showed (which is why most of the selection team got the axe). In this case, if you say price was 25pct of the award, it better be 25pct of the award. If you have a minimum standard with no bonus for exceeding the standard, that is how they better have graded it. If their ducks are in a row and the Army can clearly show that, I predict there will be no problems and no protests. If someone used non-criteria to award the contract, Or changed the criteria weighting, or any of the other ways the contracting agents screw up, they deserve to be protested.

    • DCAADCMARetired

      I agree.

      Contract Award Factors for the JLTV are not based on price alone. At the time of the JLTV draft, the "Source Selection Criteria" included five factors. Different weights are assigned to each factor so each factor is not simply worth 20%.

      • Factor 1: Primary Technical
      • Factor 2: Total Evaluated Cost/Price
      • Factor 3: Secondary Technical
      • Factor 4: Manufacturing (Mfg) Readiness
      • Factor 5: Small Business Participation

      The Army's Source Selection Evaluation Board (SSEB) is required to document their entire evaluation process. DoD Contractors typically protests contract awards especially when the contract values are in the billion dollar range. So, now you will see Indiana Senator Joe Donnelly and Congress woman Jackie Walorski getting more involved. Really not much they can do.

      • Adrestia

        It's hard to determine factors when the requirements change so much. We have some terrible PMs, considering they let designs which weighed more than lift capacity parameters at the onset, then changed when they suddenly realized they couldn't sling load or carry on C130. Cost/price was a major factor, again, since the process was delayed when everyone came in with higher cost/price, so I would say cost/price was a major factor.

      • GAC

        IF you referring to the operational requirements – the requirements in the 2012 CDD are nearly IDENTICAL to the reqmts in the 2015 CPD. C130 transport isn't a problem. But, as JLTV reqmts were being developed, CH47 capabilities declined due to more ballistic protection, an extra door-gunner w/ associated weapon & ammo, a loading system being installed, etc. But those were several years ago…

  • Lance

    In modern military procurement this is a big DUH!!!

    • Fordownr

      Sad but true, Same thing happened to the Stryker program more than a decade ago.

  • d. kellogg

    Sadly, this behavior has become the norm of "Entitlement America", taking root in the defense industry like a cancer.
    We've seen it all too often in big-ticket programs, and it's doubtful we'll see it end anytime soon. If anything, the US Govt should take the approach of, "the winning bidder gets their design built, parts can be subcontracted from the losing bidders", so there's no crying foul when all's said and done and everybody can make some kind of margin.

    Years ago I heard a great seminar from a small collective of former DOT&E personnel and ex-Congressional defense staffers suggesting the pluses and minuses of performance-based contracts. Wish I still had all the transcripts and other material. But it summed up, were the budget available, multiple competing designs would be purchased, and the highest performing builder for a given cycle, in cost and reliability, gets the larger award percentage the next cycle's production batches.
    The idea was that it would encourage contractors to start standing behind the merits of their projects actual capabilities moreso than PR hype that, so far, has ended up costing the Government more money to fix the contractors' shortsightedness (and over-optimism in unproven technologies).

    • theotherman

      Problem is that costs the government a lot of money in maintenance. If you have 3 builders with 3 designs, you need 3 sets of spare parts and 3 groups of trained mechanics/operators.

      This was one of the major issues with the MRAP. Did its job well, but was a logistical problem.

      • d. kellogg

        Yes it does cost money, but at the same time, it prevents a major failure with one system grounding an entire fleet of military capability, like when entire aircraft series have been grounded for a defective wiring harness or wing crack area, engine issues, etc.
        Again, the expense of multiple system has always been seen as the critical drawback.

        We got thru the 1950-1970s period in the US military with multiple fighter, attack, and bomber aircraft types, and when there were issues with one, the others were able to surrogate until fixed. Now we center on just a few types, and if another major problem surfaces that grounds entire F-22, F-35, tanker or P-8s fleets, what do we have to fall back on?

    • Nobody

      As a government contractor, I'd like to point out that it is usually the customer who is shortsighted. The DoD is very bad at articulating "what they want," which results in feature creep or inappropriate systems engineering and design up-front.

      Lockheed and other contractors are militant (contracting is) about not doing work that is out of scope. And it's a pain in the ass to change the contracts and paperwork– on both the customer side and the prime, sub, sub-sub, etc sides.

  • JJSchwartz

    My heart bleeds for Lockheed. How many multi-billions do they need to steal from the American taxpayer anyhow? They should take a very long hiatus to Barbados for a few years and live off the billions that they 'earned.'

    • Gman

      Ya, how dare Lockheed supply our warfighters with these cutting edge, high tech, never been done before equipment and want to make money too. The nerve of them.

      • 45k20e4

        That's a joke, considering how far off budget and behind schedule the F-35 is. For being the largest Defense contractor in the world, they certainly don't have their crap together.

      • d. kellogg

        The joke is, back in the day in less than half the time it took to develop the F-22 or F-35, Lockheed greatness engineered the A-12/SR-71 family with capabilities unmatched even today.

        Now, engineers have become over-dependent in relying on software to compensate for where they have lost mechanical hardware development knowhow. Today's LM crowd would take a quarter century to field a new design SR-71 comparable platform. And the software writers themselves, being pioneers into a lot of what they've done, have only complicated development further. Curious how many years of mechanical knowhow have been effectively tossed aside in the fallacy of everything being controllable effectively enough thru software.

      • Nobody

        True. But as an engineer let me tell you that we'd rather be building and testing prototypes. The recent emphasis on simulation and computers is partially driven by industry and the DoD to cut costs and reduce risk.

        I work extensively with simulations, and I can tell you firsthand that big companies like lockheed and the DoD customers put too much time and money into them. Some of the sims are ridiculously huge and too "general." (They don't answer specific questions or they try too hard to answer all the questions in one shot.) The end up being programs in themselves.

        The irony is that a good simulation has to be anchored to real data. How do you get real data? By building a prototype.

        FYI in my area sims are used to predict performance *before* building a system, which is useful in specing out design and components for a prototype.

        If you want to reduce the cost of programs, look at the lawyers, contracting and other accountability efforts. On a given government program there is as much administration as there are technical workers.

    • LjS

      Well put!

    • Adrestia

      Steal? LM didn't force the government to spend money. If the government is running into cost over runs, it's because of the government's contracting process and poor program management.

  • Brian B. Mulholland

    I don't know if the contractor's performance on other contracts, already awarded at the time of a protest, is considered as a part of the protest review. If it is, LM's performance on the F-35 ought to be sufficient to see their complaint dismissed in a hurry. As for AM General, I wonder if the company's relatively small size may bot have been held against it. Oshkosh is a major maker of military trucks and might have been able to get volume discounts for components that are usable in both the JLTV and the smaller of the trucks in production.

    • Chris

      Previous awarded contracts due weigh heavily on future contract awards though no one will say so. Main success/failure of past awards, on time performance, technical proficiency as well other factors. Capacity/Company size also plays into this. A company may have a superior product by the can build enough to support delivery schedule that that company may not be chosen.

      • d. kellogg

        The original Jeep program winner into WW2 was the Bantam Company's design, and they didn't have the production capacity to meet the War Department's needs, so the Government stepped in and worked out production rights with the automakers who DID have the capacity. Same can be said for various aircraft and armored vehicle designs: originally designed by one company but produced at several.

        Today we have far too many corporate lawyers fretting over IP infringement and industrial espionage (theft of proprietary design, processes, PROFITS, etc) to ever allow for a major industrialized war effort to ever happen again in America. "For the sake of America's Servicemembers" in all actuality takes a backseat to quarterly returns.

      • blight_

        And bantam got screwed over on design royalties, and folded after the war. It is a lesson for the private sector on how to get crushed by being the best design, but the worst at litigating/protecting the IP.

    • DCAADCMARetired

      Contract Award Factors for the JLTV is not based on price alone. At the time of the JLTV draft, the "Source Selection Criteria" included five factors. Different weights are assigned to each factor so each factor is not simply worth 20%.

      • Factor 1: Primary Technical
      • Factor 2: Total Evaluated Cost/Price
      • Factor 3: Secondary Technical
      • Factor 4: Manufacturing (Mfg) Readiness
      • Factor 5: Small Business Participation

      The Army's Source Selection Evaluation Board (SSEB) is required to document their entire evaluation process. DoD Contractors typically protests contract awards especially when the contract values are in the billion dollar range. So, now you will see Indiana Senator Joe Donnelly and Congress woman Jackie Walorski getting more involved. Really not much they can do. .

    • Guy

      I Think the F-35 sucks. But Let’s not forget that the requirements leading to the F-35 flowed down from the customer.

      It’s a one-size-fits-all piece of crap. And one-size-fits-all is typical federal government philosophy.

  • glockman

    poor babies gonna cry!!!!!!!!

  • Moises Del Toro

    As a former AMG employee of 18 years, I know that their strength has always been exceptional contract administration people who serve to fillet product pricing to the bone. Add this to supplying quality vehicles and service to the military for over the last 45 years and it's tough to argue against this "small" company.

  • Brian B. Mulholland

    I wish AM General well. I can't comment on performance on past contracts save to be critical of LM. As between Oshkosh and AM General, I certainly don't know enough.

  • duker

    Oshkosh say their vehicle will have suppliers in 31 states?

    For goodness sake, thats 50% of your problem right there, for political reasons they have to cover a big as areas as possible.

    Best and lowest cost went out the window a long time ago and its mostly a pork barrel on wheels, however all finalists would be guilty of this

    • d. kellogg

      Didn't LockMart get away with something similar in the F-35 program? Make the whole thing too big to fail and how can the government say no?

      • blight_

        F-22 had suppliers in 46 states, or some ridiculous number.

  • CTOCS77

    Defense contracting giant Lockheed Martin Corp. and Humvee-maker AM General LLC may protest the U.S. Army’s decision to award a contract to truck-maker Oshkosh Corp. to build a Humvee replacement.

    I would tell them go ahead protest and that will be that last time you will ever have the opportunity to protest.

  • CTOCS77

    Founded in 1917, Oshkosh Corporation has manufacturing operations in eight U.S. states and in Australia, Belgium, Canada, China, France and Romania and through investments in joint ventures in Mexico and Brazil. The company currently employs approximately 12,000 people worldwide.

    Headquartered in Bethesda, Md., Lockheed Martin is a global security and aerospace company that employs about 112,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

    As original designer and manufacturer of the famous HMMWV (Humvee®) and HUMMER® H1 vehicles, AM General has more than six decades of experience meeting the changing needs of the defense and automotive industries, supported by approximately 1,500 employees at its major facilities, and a strong supplier base that stretches across 43 states.

  • Glockster

    I am glad to see someone else got the contract. There are capable companies than the usual group. These companies have other contracts to bilk America for money.

  • mshaw8099

    As someone who spent over 20 years in the maintenance field of the Army, I remember when the HMMWV first came out and the price tag was around $32k for the base model, and now this new one as mentioned above;
    "…works out to about $559,000 per vehicle and includes expenses for research and development, overhead and add-on equipment such as radios, weapons and armor. Officials have said the cost of manufacturing the vehicle alone will be about $250,000."
    HELLO!!! and no where in there says a WARRANTY, and why do we need to pay them to do R&D?

    • 45k20e4

      True, but the average price of a new car back then was 25% of what it is now. Also, these are far more than just your basic M998 replacement.

    • Curt

      You realize that the U.S. Government paid AM General for all the R&D on the HMMWV don't you? Just like it paid Chrysler for the M-1 tank (as well as GM for the losing bid) and virtually every other program you can name going back to at least WWII Also that the price for the HMMWV did not include any of the add on stuff like radios, weapons, sights, etc. You also might want to price a medium truck these days or even a basic HMMWV (here's a hint, both are closer to $250k than to $32k). If you are going to rant, at least do it with some education on the subject, you won't look as ignorant that way.

    • Guy

      "why do we need to pay them to do R&D"

      Because the primes won't do R&D on their own unless there is a good chance it will pay off. Nobody is going to drop hundreds of millions of dollars into vehicle development without knowing what the customer really wants and without a reasonable chance that they will be able to sell the results.

      Even with the stuff I build at work, which are very simple mechanisms, I can't just build and sell them out of my garage because they are export controlled due to their mechanical precision. In the case of a weapon system, would you drop $100M to develop a system that you can only sell to one customer without knowing if the customer will buy it?

      Plus when it comes time to cut programs to keep the profit margin stable, R&D and labor go first.

    • Adrestia

      Any new vehicle or widget includes R&D in per unit price paid by the customer. Even your iPhone includes R&D per unit cost.

    • RSJ

      It is commissioned R&D. The Pentagon will own it. If they didn't pay for it, it would be Intellectual Property owned by the Contractor. The Pentagon would then subject to royalties over the duration of the Life Cycle of the Vehicle.

      • Curt

        Not sure if the pentagon will get royalties, but they do own the design and get to recompete the production contract in five years, just like they did for the FMTV, with Oshkosh winning the latest award despite BAE being the incumbent.

    • theotherman

      "and why do we need to pay them to do R&D"

      1. The government will pay one way or another. Assuming they don't directly fund it, it'll be rolled into operating/overhead/some other cost or increased margin on bids and passed on.

      2. It allows for targetted R&D in that the government gets to say what they want.

      3. Most companies will not pay for extensive R&D when there is no known market in sight. Defense equipment basically has only one buyer. It's hard to create a market like you can with consumer goods. If you guess wrong, or get out lobbied, you can quickly find yourself wasting tons of R&D money and on the road to going out of business.

      3a. For this sort of program, it also ensures a mature design to test. I'm not going to make 22 vehicles for you to smash out of a sense of altruism.

  • wingmaster

    Lets Hope in 10 – 15 Yrs, we can keep these new JLTV's ( humvee ) OUT of ISIS' hands…

  • Eggshen

    I've rolled in just about every wheeled and tracked vehicle that's been in the Army inventory within the last 15 years and I'm here to tell you that Oshkosh knows how to make highly durable, insanely agile (for their size), and incredibley reliable trucks. I was a tanker and maintenance officer so I know first hand how the fleets match up. I honestly can't give my $.02 on the LM or AMC offerings but you can't go wrong with Oshkosh. Hopefully, there will be at least some common parts with the PLS, LHS, HEMTT, and HET for class IX simplification.

    • Theotherman

      Not sure about the later designs but LM early model had horrible performance. An early promo video of them riding around the lawn had the thing leaning and rolling around on the terrible suspension and they were barely moving. The display one at Ausa looked crappy too.

      Oshkosh is relatively unknown despite making a lot of the heavy utilty vehicles.

    • Adrestia

      I'm not sure how you are any expert on Oshkosh vehicle performance over other offerings, considering you've rolled in every wheeled and tracked vehicle. No common parts with all the above, except paint.

  • Mike

    I was glad to hear Osh Kosh got the award. Apparently the vehicles they have already provided impressed some people. I don't know many who are impressed by the Humvee. Oversized and not that dependable…New Blood in the contracting world can't hurt either!! Lockheed Martin is into too much of the Govt Dole. Fresh new ideas are needed.

    • Adrestia

      I was impressed and depressed by the HMMWV, for what it was and is. I'm impressed and depressed about OshKosh JLTV, too. What's the point? OshKosh isn't new blood in the contracting world for the military. I wouldn't call scaling down the M-ATV by 1/3 is a fresh new idea.

  • Robert K.

    As a sub system supplier on all three vehicles I can tell you that Lockheed Martin made some strange decisions in how their vehicle sub systems functioned. They also replaced at least one critical system with a less expensive option that may have become a problem. The AMG team was just not that cohesive to work with, enough said. We have been a supplier to Oshkosh for over a decade now, and have content on the MTVR and many more military vehicles. They have very intelligent people working for them, they communicate well, the listen to suggestions and respond quickly. The only chance AMG should have had to win this contract, was as the sympathetic supplier vote. Oshkosh should always have been the hands down winner, and is.

    • CTOCS77

      Excellent overview. Less expensive option to increase profit maybe at the risk to the military folks that are driving them? Where are you John McCain….Sure congress can ask a few questions.

    • Adrestia

      I guess the operative part of your comment was you "have been a supplier to Oshkosh for over a decade now…", which in of itself shows a bias. You do realize that Oshokosh also made cost cutting choices, since the requirements changed to reducing the cost of the JLTV.

      • Robert K.

        Thank you for the replies…
        We have worked with almost all of the US military vehicle suppliers for many years now. Our product is not just a single part, but a complex integrated system. Oshkosh is simply at the top when it comes to working with their suppliers (at least us) when it comes to system integration, performance enhancements, and intelligent communication. They have very little personnel turn over, like we see at the other companies. Yes there are a couple of other solid suppliers, but then there are others, that just can't put together a complete team, and these teams struggle because of these weak links.

  • Mike Hunt

    No wonder Lockheed MArtin lost all they do is overcharge. I am very happy. they do not care about the little guys.

  • JOHN DOE

    most of they buyers at LM are probably getting kick backs anyway, they do not add new suppliers..

  • SMSgt Ret. 1972-1992

    Losers crying over spilled milk. The largest contractor and an other run wanting the whole contract. I look to see Lockheed and AM General being awarded future runs on this contract due not to price or added value but influence in the DOD or Congress.

    • Adrestia

      Oshkosh would have protested, too, if they did not get the contract.

      • Robert K.

        This is very true. All major contract looser's are likely to protest. This is simply what you do, so the next time you are not remembered as crawling away a loser. Even if the government got it way wrong, they are never going to admit it, at least not for a decade when the finally give your contract to someone who can do it better (BAE, FMTV). Maybe if they pay attention, they will actually learn something valuable.

  • Brian B. Mulholland

    It could happen, sadly. I'm aware that at least one representative, in whose district Lockheed would have had its' major plant, has already denounced the award, and "stands ready to assist LM" in any protest.

    • 45k20e4

      Not surprising…all about lining pockets and getting votes…not about getting the best vehicle for the soldiers.

  • GAC

    1. Mr. McGarry needs ta do some homework. PM-JLTV will NOT buy radios, weapons, etc. JLTV must provide space – weight – electrical power for the wpns & radios, but those items will be taken off the predecessor vehicles (HMMWVs) and put on new JLTV. MRAP was sole exception to this standard practice- I suppose the us congress felt so guilty about the delay in developing & fielding MRAPs, they provided essentially a "blank check." Many MRAPs that had all the bells & whistles were used for purely admin uses – moving from Point A to Point B. 2. OIF & OEF weren't first time US Soldiers / Marines etc. coulda used armored TWV, despite many folks stating so; RVN, Somalia, Bosnia, etc. But, vast majority of our Imperial congress appears ta give a flip about the troops only as long as it takes for grass to grow on graves.

    • Adrestia

      Why would you make such a definitive comment that "PM-JLTV will NOT buy radios, weapons, etc." when there seems to be modular equipment which have not been purchased or attached to HMMWVs. Seems the contract would need to include costs of integration, too. The part you did leave out was armor, which seems to actually be definitively accurate, since Configuration B are the attachable armor.

      • GAC

        Sir – Simple; it is DA policy / practice. Those items will be taken off the predecessor vehicles (HMMWVs) and put on new JLTV. JLTV has undergone extensive testing (22 vehicles each from LM, OTC, & AM General). PMs for radios buy radios; PMs for wpns buy weapons. They all gotta be integrated onto JLTV, which provides space & power & cooling. PM-JLTV works w/ the other PMs to ensure all is integrated properly. Ultimate test is an operational test, by Soldiers & Marines. Add-on armor obviously needs bought – DA has a goal of buying "X" % add-on armor kits…first several JLTV will likely have armor kits bought for them – otherwise, would be sorta useless in other than combat operations.

  • msgingram

    There should not be a different unit for each service for this vehicle. One unit for all and cut out this bull crap of I’m special, then we can cut the cost in order to have more units.

    • GAC

      Sir – is a JOINT program. Requirements are 99.9% same for all services. Small difference in reqmts; e.g., USMC has CH53, Army has CH47. All JLTV gotta be transported via helicopter…just different tests in that instance.

  • Joe

    I do not believe there will be a protest. Of course we shall see. Lockheed-Martin has plenty of work. AM General has alot of work. Coming up will be the US Postal Service truck replacement RFQ. So, Each, including Oshkosh, will get another chance at a huge contract.

  • Joe

    In the near future, the U.S. Postal Service will replace all of it's current mail trucks. A monster contract. If AMGeneral wins this contract, would they be OK with it, if Oshkosh and others protest that!