The Army on Tuesday placed a $243 million order with Oshkosh Defense [OSK] to build 657 Joint Light Tactical Vehicles (JLTV), the first lot of trucks that will replace a portion of the Army and Marine Corps Humvee fleets.
Also included in the deal are 2,977 installed kits and related vehicle support for low-rate initial production (LRIP) of the JLTV. This contract award starts a gradual annual production rate increase, building to a fleet of 49,099 trucks for the Army and another 5,000 or so for the Marine Corps.
The Future Years Defense Plan (FYDP) in the fiscal 2017 budget request prescribes a ramp-up in JLTV production over the next five years.
“The nature of the program is such that it is a very slow and deliberate ramp up to production,” John Bryant, Oshkosh’s senior vice president for defense programs, told Defense Daily in a recent interview.
Clear of the shadow of Lockheed Martin’s [LMT] protest, which lasted three months and was nearly litigated in federal court, Oshkosh’s JLTV production is humming, Bryant said. Because of the gradual funding increase built into the program, and its history building the MRAP all-terrain vehicle (M-ATV) on which the truck is based, the company should have no problem meeting delivery schedules.
“To put it in perspective, we were producing 1,000 M-ATVs every month within a few months of a production order. Compare that to JLTV, which is a much more deliberate program where in the first fiscal year they are buying a few hundred vehicles for the whole year. … In JLTV, in year three, the government will buy as many vehicles as Oshkosh produced in the M-ATV program in two months.”
Oshkosh will begin delivering test article JLTVs in late September or early October, Bryant said. Deliveries were scheduled to begin in June, but the date was pushed back because of a 98-day delay caused by Lockheed Martin’s bid protest to the Government Accountability Office (GAO).
The Army plans to more than double its spending on JLTV procurement from $250 million to buy 686 trucks in the current fiscal year to $588 million for 1,828 trucks in fiscal 2017. The FYDP has the JLTV line item expanding incrementally through 2020, when the Army plans to spend $1.1 billion on 3,111 JLTVs.
The contract awarded to Oshkosh for the first 17,000 vehicles is worth about $6.7 billion. The total program will cost much more.
Regardless of delays incurred by the protest, the JLTV joint program office estimates it will shave 10 percent to 15 percent off the total JLTV program cost as a result of a thorough competition that resulted in an effective, affordable vehicle. Those savings will be rolled back into the program to speed production and delivery so that fielding will be complete in the mid-2030s instead of the early 2040s.
The most recent Selected Acquisition Report (SAR) from December 2014 showed a planned cost in base-year fiscal 2012 dollars of $22.5 billion, so the Army stands to save between $2.25 and $3.3 billion over the life of the program.
“That, very simply, is a reflection of the fact that not only did we provide a great vehicle, a winning vehicle, but we also provided a price for the vehicle that was significantly lower than the government’s cost targets and significantly below government expectations,” Bryant said. “That’s a prime example of value being delivered directly to the government. It lets them buy more vehicles sooner with the same amount of money. It is simple math: Their dollars buy more vehicles now.”
All of the competing vehicles were thoroughly put through their paces during the engineering and manufacturing development (EMD) phase of the program. Oshkosh came out ahead in that testing. Now the company is working to deliver vehicles that will undergo another round of extensive government testing that will last at least another 18 months and will inform the full-rate production decision.
“We listened to the customer very, very carefully over a number of years and carefully evolved our product as his requirements evolved,” Bryant said. “When we saw the multiple draft request for proposals (RFP), it was crystal-clear to us what the government valued. They really wanted the best vehicle they could get at a very competitive price.”
Competitors were allowed to modify their offerings between EMD and an award for LRIP vehicles. Lockheed Martin, in its protest, contended that the changes to its vehicle prior to offering a production example were scrutinized more heavily than those Oshkosh made to its truck. Bryant said Oshkosh simply offered a truck that required few corrections after EMD and the alterations made were minor.
“The Army made it very clear in its request for proposals that they attached the highest value to substantiation of the performance on the primary technical requirements,” he said. “So we made sure that if we changed some component on the vehicle to make it more reliable or if we added a capability … that we would never place at risk the substantiation of any of the primary technical requirements. We took the time to go back to government test sites and validate the performance of anything we added to the vehicle.”
Bryant provided an example of a change Oshkosh made to its vehicle during development. In EMD, the Oshkosh JLTV was outfitted with headlights that complied with Australian requirements, because that country initially planned on buying into the program. When that requirement went away, Oshkosh changed its headlights to meet U.S. Army guidelines and was required to justify the change.
“The main factor was that we already had a great vehicle, so we didn’t have to make wholesale changes to major subsystems,” Bryant said. “These were just minor tweaks around the vehicle, just natural evolution in reacting to the changing draft RFP.”