Contractors vie for lucrative vehicle work

The Army will soon select as many as three winners in the competition for a $40 billion ground combat vehicle program that is sure to receive close scrutiny from members of Congress. 

The Army is in the process of evaluating bids from three industry teams that feature many of Washington’s top defense contractors. General Dynamics, Lockheed Martin, Boeing, Science Applications International Corp. (SAIC), Northrop Grumman, Raytheon and BAE Systems are all vying for the project, which is one of the few major spending initiatives in the pipeline at the Pentagon.

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The Army is expected to award as many as three contracts for the technology demonstration phase of the program by the end of September or early October.

The service is budgeting $7.6 billion for research and development on the project. Once that is completed, the Army plans to go down to two contracting teams for the engineering and development phase. In late 2015, a final winner will be selected to start producing the new model. The Army will equip the first battalion with the ground combat vehicle in 2017. 

The Army projects that the production phase of the program will cost $32 billon. The Army plans to buy about 1,450 of the vehicles, which are designed to eventually replace the Bradley infantry fighting vehicle made by BAE Systems. The new combat vehicle will be on tracks, just like the Bradley, and weigh over 50 tons. The Army will be able to tack on additional armor and protective systems to make it withstand explosive threats. 

General Dynamics is leading a team made up of Lockheed Martin, Raytheon and MTU Detroit Diesel. SAIC is heading a team consisting of Boeing German firms Krauss-Maffei Wegmann GmbH & Co. and Rheinmetall AG. BAE Systems is at the helm of a team that includes Northrop Grumman and Qinetiq.

BAE’s team is the only one offering the Army a hybrid-electric engine. All the bidders have highlighted the ability of their vehicle offerings to survive roadside bombs, which have become ubiquitous in the Iraq and Afghanistan wars. 

The Army will embrace “full and open competition” and “competitive proto-typing” for the new combat vehicle program, Army spokesman Paul Mehney said in an e-mailed statement. “The formal request for proposals closed in May with good response from industry. The Army intends to award up to three competitive contracts for the technology demonstration phase of the effort with the coming months.”

The new ground combat vehicle became a crucial project last year after Defense Secretary Robert Gates scrapped the Army’s plans for combat vehicles under the defunct $160 billion Future Combat Systems (FCS) program — previously the Army’s most sweeping modernization effort. 

Gates scrapped the manned ground vehicle portion of FCS because the vehicles, as designed, would not have adequately protected soldiers from roadside bombs. 

Gen. George Casey, the Army’s chief of staff, has pledged to make the new ground combat vehicle program a model of “acquisition reform.” 

But the program is already attracting significant congressional scrutiny. Congressional sources and defense insiders predict the Army will have to make some sacrifices in order to pay for the hefty program and still have money left for upgrading and maintaining other combat vehicle fleets. 

One possible funding trade-off could be to reduce the number of the Army’s heavy brigades, which would reduce the size of the buy for armored vehicles in those brigades, a congressional source said. 

Continuous deployments over the last nine years have taken their toll on the Army’s aging fleet of combat vehicles — making them very expensive to maintain over the long term, putting even more pressure on future budgets. 

Meanwhile, House defense appropriators cut $100 million from the Army’s request of $934.4 million for the research and development phase of the program. Defense appropriations Chairman Norm Dicks (D-Wash.) said after his panel finished writing the 2011 defense-spending bill that he is concerned about the Army’s procurement efforts. 

“A seven-year development program … I get nervous,” Dicks said of the Army’s plans to buy the new combat vehicle. 

House defense authorizers are warning the Army that its ambitious plans for combat vehicles could lead to skyrocketing costs and delays. In the House’s version of the 2011 defense authorization bill, lawmakers recommend that the Army take an incremental approach to the program. They suggest the Army focus first on the most critical technology, such as vehicle and crew survivability, in its initial vehicle model — rather than trying to include multiple technologies at once, such as non-lethal weapons and the ability to defeat heavily armored vehicles at long ranges. 

Requiring too many technologies at once could complicate the vehicle’s design and prove too costly, the defense authorizers warn.

Lawmakers and defense insiders will follow the program’s future with some trepidation amid belt-tightening at the Pentagon. Defense Department leaders have started a sweeping savings exercise; as part of that initiative, leaders have called on the military acquisition corps and on defense companies to make contracts more affordable and to eliminate unnecessary spending on weapons and services.

Under the cost-cutting initiative, the Pentagon acquisition corps will be tasked with finding the proper contract types for both weapons systems and services. They will look to reduce costs with fixed-price contracts that require defense companies to bear cost overruns, and through encouraging “real” competition between contractors. 

The Army’s new ground combat vehicle is one of the new banner programs that likely will be considered under the terms of the new affordability drive.