Army Purchased Truck Trailers That Cannot be Used as Planned
NSIAD-00-15, Oct 27, 1999
Pursuant to a congressional request, GAO provided information on the Army's purchase of the High Mobility Trailers, focusing on the: (1) factors leading to the substantial increase in the contract unit price of the trailers; (2) reasons the trailers cannot be used as planned and the cost to the Army for required modifications; and (3) Army's acquisition strategy and plans to procure additional trailers.
GAO noted that: (1) the Army has paid a much higher unit price for the High Mobility Trailers than it originally expected primarily because it awarded a $50.6 million, 5-year, multiyear contract to produce 7,563 trailers and then decided not to fund the fourth year of the contract; (2) a program official said that the Army did not fund the fourth year of the contract because of other higher funding priorities; (3) rather than cancel the final 2 years of the contract, the Army and the contractor agreed to a restructured contract; (4) the restructured contract reduced annual production quantities; extended production a year; and increased the price of each cargo trailer by 57 percent, from $6,710 to $10,521, and each chassis trailer by 50 percent, from $3,560 to $5,334; (5) the increase in the unit price was attributed primarily to spreading overhead costs over fewer units, allowing for higher labor and material costs, and an increase in the contractor's profit percentage; (6) most of the 6,700 High Mobility Trailers the Army has purchased are: (a) not usable because of a safety problem; and (b) not suitable because they damage the light and heavy trucks towing them; (7) in addition to damaging the truck, the Army found that the trailer drawbar could break, causing a safety problem; (8) if it breaks, the trailer can disconnect from the truck or overturn; (9) to make the trailers usable and suitable, the Army needs to make two modifications to the trailers and one modification to each type of truck; (10) it has identified a trailer modification that will cost an additional $640 for each trailer and a truck modification that will cost an additional $250 for each heavy truck; (11) the Army's acquisition strategy underestimated the risks; (12) the Army, based on its belief that only minor modifications to an existing trailer design were required, entered into a multiyear production contract without demonstrating that the design would meet its requirements; (13) further, the contract required the contractor to design, produce, and deliver trailers within 150 days of contract award; (14) the Army subsequently found that the contractor could not meet the contract's original delivery schedule, the trailers initially did not pass testing, and initial trailer design required significant modifications; (15) it plans to award a competitively bid, 5-year requirements contract sometime after fiscal year 2002 begins to acquire 18,412 more High Mobility Trailers; and (16) the Army is in the early stages of planning for this contract and has not worked out many of the details.
- Closed - implemented
- Closed - not implemented
Recommendation for Executive Action
Recommendation: To ensure that the Army does not again acquire trailers that need substantial modifications before being fielded, the Secretary of Defense should require the Army, before proceeding with follow-on production of the trailer, to demonstrate the design will meet requirements and will not damage the trucks.
Agency Affected: Department of Defense
Status: Closed - Implemented
Comments: The Army revised its trailer acquisition strategy to procure additional trailers. Originally it planned to award a follow-on trailer production contract using the original trailer specifications and drawings. Instead, it plans to award two contracts for the development of trailer prototypes based on performance specifications. The Army then plans to test the prototypes and award a production contract to the contractor whose prototype offers the Army the best value. The new strategy meets the intent of GAO's recommendation.