Army stands by Oshkosh contract

The Army late on Friday decided to keep its truck contract with Oshkosh Corp. and lifted a longstanding stop-work order for the Wisconsin-based company.

Oshkosh went head-to-head with BAE Systems and Navistar for the Army’s estimated $3 billion contract for the Family of Medium Tactical Vehicles (FMTV). The Army in August awarded Oshkosh the contract for the trucks, which BAE Systems previously had held for more than a decade.

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Incumbent BAE Systems and another competitor, Navistar, protested the Army’s contract award with the Government Accountability Office (GAO). The GAO upheld the two protests, but the watchdog’s recommendations were limited in scope. GAO recommended that the Army only reevaluate Oshkosh's production capacity and Navistar's past performance as a defense contractor.

In particular, BAE -- the incumbent contractor for the FMTV -- argued that Oshkosh’s price bid for the FMTV was unrealistic. The GAO denied BAE’s challenge regarding the Army’s evaluation of Oshkosh’s price. Under the contract, the government pays a fixed price. That means the company would incur any cost overruns.

The Army, after a 60-day reevaluation, decided to go with Oshkosh instead of the other two competitors, yielding a significant victory for the Wisconsin-based specialty truck maker. Oshkosh also builds the all-terrain mine resistant vehicles for the troops in Afghanistan and also holds the contract for the military’s heavy tactical trucks.

“We are very pleased the Army affirmed its original decision that Oshkosh Corporation’s FMTV bid clearly represents the best overall value for the Army, the taxpayers and the warfighter,” said Robert Bohn, Oshkosh Corporation chairman and chief executive officer.

The Army’s decision also deals a substantial blow to BAE Systems, which stands to lay off about 3,000 employees at its Sealy, Texas, production facility for the FMTV. Both BAE Systems and the Texas delegation fought hard to keep the contract in BAE’s hands.

“I am highly disappointed by the Army’s decision,” said Rep. Mike McCaul (R-Texas), who represents Sealy. “It’s the wrong decision for Sealy, and the wrong decision for the men and women who for 17 years have built the FMTV on time and on budget and contributed to our military’s success on the battlefield. It’s the wrong decision for our soldiers who depend on these vehicles.”

McCaul said he is working with BAE and the Houston-area business community to identify options that would keep the production facility in Sealy open.