Army Medium Trucks:

Acquisition Plans Need Safeguards

NSIAD-99-28: Published: Nov 19, 1998. Publicly Released: Dec 4, 1998.

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Pursuant to a congressional request, GAO reviewed the Army's Family of Medium Tactical Vehicles (FMTV) program.

GAO noted that: (1) the Army's plan for implementing its follow-on production contracts needs to ensure that the government receives trucks that meet FMTV program quality standards; (2) the current contract allowed the contractor to produce trucks during testing even though the trucks were unable to pass testing and demonstrate that they met FMTV performance and reliability, availability, and maintainability requirements; (3) these trucks required modifications to achieve satisfactory performance that caused program delays; (4) recent government inspection data and quality deficiency reports on trucks in the field show that the contractor is not consistently producing trucks within the quality standards set for FMTV trucks; (5) however, because of incomplete data, the Army does not know overall whether FMTV trucks are performing adequately in the field; (6) under the follow-on contracts, full-rate production of new model trucks will be allowed to start before the trucks pass testing; (7) also, the Army plans to continue to accept the new models under its sampling inspection method; (8) this approach, which was followed under the current contract, caused program delays and uncertainty about the quality of the fielded trucks; (9) the Army has not instituted safeguards to ensure that the follow-on contracts do not result in problems similar to those experienced under the current contract; (10) the Army plans to compete future procurement of the FMTV trucks with the expectation that program costs can be reduced; (11) therefore, it has decided to develop a second source to produce FMTV trucks; (12) the current contractor and second source will share the annual production; (13) the Army has not performed an analysis to determine the costs and benefits of this plan or compared it to other alternatives, including: (a) dividing the program into 5-year production increments and competing each increment among all qualified contractors; (b) delaying the development of the second source until funds are available to support both the current contractor and the second source without a fielding break; or (c) continuing with the current contractor for the rest of the program; and (14) GAO's preliminary analysis of the production quantities that the two contractors could expect to share from the competition indicates that the Army's plan may not result in program cost savings.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Army is establishing a sample data collection effort for the trucks. The data will be collected three times--the first within the quarter, the second 6 months later, and the third 12 months after the second. Some of the soldiers in the field do not like the new trucks and the Army hopes to identify and correct the causes of this dislike. As far as the 100 percent inspection is concerned, the Army believes that its system of sampling for truck inspections is working because it is catching discrepancies and does not plan to change its inspection procedures.

    Recommendation: To improve management of the FMTV program under the current and follow-on contracts, the Secretary of Defense should direct the Secretary of the Army to fund a data collection effort to determine whether fielded FMTV trucks are performing satisfactorily and to direct government inspectors at the FMTV truck plant to return to 100-percent final acceptance inspection of FMTV trucks until the contractor demonstrates its production processes are under statistical process control.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The Army included the standard test statement in its new production contract. The statement says the contractor will not be allowed to start assembly of production vehicles until the production verification test vehicles have successfully completed the 12,000-mile reliability test. However, the Army recently made the decision to enter full-rate production before the new trucks completed the testing. An Army official said that the Army was certain that the new trucks would successfully complete testing.

    Recommendation: To provide a safeguard on the follow-on contracts that could preclude the type of problems that occurred under the current contract, the Secretary of Defense should direct the Secretary of the Army to include a clause in the follow-on production contracts that would delay the start of production until the new FMTV model trucks demonstrate that they meet FMTV performance and reliability, availability, and maintainability requirements.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: In the fiscal year 2000 Defense authorization act, Congress required the Secretary of the Army to use competitive procedures to award any future FMTV production contracts and not to award any new contracts to establish a second source for the FMTV. The act became law on October 5, 1999. As a result of the law, DOD removed all second source funding from the program.

    Recommendation: To ensure that the Army considers all its options before it starts to develop a second source for the FMTV, the Secretary of Defense should direct the Secretary of the Army to delay the Army's plans for developing a second source to produce FMTV trucks until the Army completes an analysis that compares the costs and benefits of its plans with those of other alternatives and to pursue the alternative that is most beneficial to the government.

    Agency Affected: Department of Defense


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