BAE Systems Continues Protest Of Oshkosh Contract
Last week BAE Systems made it very clear that they face financial issues related to their purchase of American company Armor Holdings. This is primarily due to Oshkosh Defense winning a contract from the U.S. Army for new trucks and trailers. Armor Holdings had been making this system for several years and was the core of their business. Losing the contract severely effects the viability of acquired business and would see their facility in Texas closed.
BAE Systems had filed two protests of the award in September and filed a third one yesterday. Normally the Government Accountability Office (GAO) has one hundred days to settle the protest so the contract is on hold until late December right now. BAE Systems is protesting the award based on "best value" meaning that while their bid might not have been the cheapest their experience and past performance compared to new source, Oshkosh, should make it less risky for the Army.
As well as loser BAE Systems protesting another bidder, Navistar, also filed one. This is not uncommon in these kind of awards especially when the Government selects a new provider for an existing system. The companies have their supporters in Congress with dueling press releases and letters going out to the press and Army. BAE Systems advocates Representatives Conaway (R-TX) and Andrews (D-NJ) contact the Army about the award questioning the requirements contained in the Request for Proposal (RFP).
They believe that the requirements should have been updated to include planned or proposed improvements based on experience in Iraq and Afghanistan. They say that some of these improvements already put into production by BAE Systems were not considered as part of the new contract and this hurt the incumbent.
At the same time the Congressional delegation from Wisconsin has risen to the defense of their state's company. They want to meet with the Army and review documents accusing BAE Systems supporters of creating a PR campaign against Oshkosh.
The issue over the FMTV truck contract is only exacerbated by Oshkosh's win of the new MRAP-ATV contract for use in Afghanistan. BAE Systems and Navistar were also losers there with all of the contracts so far going to the Wisconsin manufacturer. The decline in traditional MRAP business has hurt both companies and the MRAP-ATV represents a major business area that they will have no major part in.
The GAO will rule by the end of the year. Protests have become more common and are predicted to increase as the defense budget stabilizes with fewer large contracts. This means that companies will have to fight harder to win work. Any loss of a major procurement contract may automatically be protested to try and preserve some business. This is what happened in the Nineties as the defense budget was reduced.