Oshkosh Corp. protest starts review of Army truck decision
OSHKOSH - Oshkosh Corp. is protesting the U.S. Army’s decision to bypass it for future production of the Joint Light Tactical Vehicle in favor of Indiana-based AM General. The protest, filed earlier this month, kicks off a U.S. Government Accountability Office review of the contracting decision that would be a first step in determining if the $8.7 billion contract award will stand.
The Oshkosh-based company won the initial $6.7 billion contract to build the truck — a larger, more heavily armored replacement for the Humvee — in 2015. However, the Army, which owns much of the troop-transport truck’s underlying technology, reopened the contract to new bids in hope of better pricing on a new generation of JLTVs that includes enhanced technology and backup battery power.
There’s a lot at stake for Oshkosh Corp., a heavy equipment manufacturer that, in addition to military trucks, makes fire trucks, cement mixers and aerial construction equipment.
Last year, JLTV sales accounted for about $1 billion, or roughly 12%, of Oshkosh Corp.’s $8.3 billion in annual sales. Meanwhile, about 2,000 employees at Oshkosh Defense face an uncertain future after the initial contract work winds down next year. Those employees have built more than 19,000 JLTVs and 3,500 trailers since work began on the 2015 contract.
The company declined to discuss what it saw during a debriefing, wherein it was able to see some of the elements that went into the Army decision. That debriefing convinced company leaders they had a case, although the company hasn’t made any specifics public.
In a statement, the company pointed to its history of manufacturing and innovation since the contract was awarded nearly eight years ago:
“As the incumbent manufacturer and original designer of the JLTV platform, only Oshkosh’s proposal leveraged substantial JLTV experience and proven JLTV production infrastructure, while providing best-in-class upgrades to the JLTV platform.”
What is the Army’s response?
“The Army acknowledges Oshkosh’s decision to file for protest and will comply with GAO requirements. The Army will not comment further on this matter,” according to a statement shared by a spokesperson.
Once a protest is filed, the GAO has up to 100 days to review the case. That means a decision must be made no later than June 14, said Edward Goldstein, a managing associate general counsel in GAO’s Office of the General Counsel.
The process is not an investigation by the GAO. Instead, it’s more like a trial where lawyers representing the sides present and challenge evidence and a GAO lawyer acts as the judge.
The clock started ticking when Oshkosh Corp. filed its protest on March 6, at which point the Army is allowed 30 days to submit its response to Oshkosh Corp.’s arguments.
Once that document is filed, both Oshkosh Corp. and AM General would have an opportunity to respond. That cycle can repeat multiple times, and response deadlines can vary as the case moves along.
The GAO lawyer who presides over the case will then present a preliminary determination to GAO staff for review before a final decision is issued by the agency.
Because the case involves proprietary information about the companies, only limited information about the protest will become public.
In some instances, a protest can result in an order to the company that won the contract to stop work.
That’s not in play in this instance because Oshkosh Corp. remains under contract to build the trucks, and AM General is just beginning to prepare for the start of JLTV production late next year.
AM General, however, has been working toward a major expansion of its military vehicle plant near South Bend, Indiana to produce the trucks. It is working with local and state officials on a package of tax credits and abatements to help offset some of its costs.
How often does GAO sustain challenges?
It’s uncommon but not unheard of: Last year, 59 protests were sustained by the GAO out of 1,658 cases filed, according to the GAO’s bid protest annual report.
If it sustains the challenge, the GAO would send the contract back to the Army for reconsideration. Because it’s a creation of the legislative branch of government, GAO can only recommend changes to the Army.
The Army can award the contract to Oshkosh Corp., alter it to address GAO concerns, or stand by its decision. If the Army doesn’t follow the GAO’s recommendations, the protest could become subject to review by Congress or a lawsuit.