Roadblock in Senate for military vehicles

Senior Army officials on Wednesday called a tactical vehicle program a Senate panel wants to kill one of their top priorities but sidestepped a question on whether it remains a better value than a competing effort.

{mosads}With the ground service facing sizable annual budget cuts, defense analysts say the two programs are now competitors for scant Army hardware dollars.

Belva Martin, director of acquisition and sourcing management at the Government Accountability Office (GAO), summed up the Army’s predicament during a House Armed Services subcommittee hearing Wednesday. 

There are big questions about whether “the Army [can] afford both JLTV and Humvee recapitalization,” Martin said. 

Another question is whether the former program will survive a Senate panel’s effort to terminate it.

The Senate Appropriations Committee has approved a 2012 Pentagon spending measure that would terminate the Army-Marine Corps’ JLTV program; other platforms would meet the services’ needs, the committee’s bill states.

The House also has grown skeptical of the joint tactical truck program, cutting the Pentagon’s funding request by $50 billion in its version of defense spending legislation. In their report on the bill, House appropriators hinted at the danger for the program, writing that “the operational niche to be filled by the JLTV appears to be shrinking.”

The looming showdown between the programs carries enormous stakes for defense firms that make massive military vehicles. Several firms had hoped to capture contracts for both vehicle programs.

Lockheed Martin and the teams of General Dynamics and AM General, as well as BAE Systems and Navistar, have all pursued the JLTV tender.

Many of the same players are looking to also grab the Humvee contract: AM General, BAE Systems and Oshkosh are leading teams, and Textron and Granite Tactical Vehicles also have teamed up. AM General has long been the Army’s Humvee provider.

Against that backdrop, the Army and Marines have launched a lobbying effort to keep the JLTV program alive, according to Army officials and industry sources.

Since early spring, “the Army and [Marines] have agreed on a common requirement for the basic vehicle,” Deputy Army Chief of Staff Lt. Gen. Robert Lennox and Lt. Gen. William Phillips, the service’s top uniformed acquisition official, said in written testimony.

At Wednesday’s Armed Services Tactical Air and Land Forces subcommittee hearing, Lennox ticked off the service’s “priority programs.”

JLTV made the list. But Humvee recapitalization was nowhere to be found.

In the service officials’ written testimony, however, both programs received the “priority” tag.

The Army’s initial cost target for each joint tactical vehicle was over $300,000, but service brass lowered that goal to around $200,000 as it became apparent their annual acquisition budget was about to get a lot smaller. (The ground service has slapped a $270,000 per-vehicle cost cap on the program.)

To get there, they lopped off performance standards from the JLTV program’s design. And that means, analysts say, it might not be a major step up from a new Humvee, as first advertised.

With the price of each new Humvee expected to be about $180,000, that program is suddenly looking like a better value to some.

And therein lies the Army’s latest acquisition catch-22.

“Since the Army has a poor record of keeping such programs on track, some potential competitors are considering not bidding at all,” Loren Thompson, an analyst at the Lexington Institute and an industry consultant, wrote in a recent op-ed. “Even if they do, the structure of incentives the Army has put in place drives them toward offering warmed-over versions of vehicles already available as a way of minimizing their investment exposure. 

“But proposing improvements of vehicles that already exist will highlight the fact that the government could save money,” Thompson wrote, “by simply killing the whole program and doing a good job of refurbishing Humvees.”