Summary

The Army's modernization of its fleet of medium tactical vehicles, at a projected cost of $15.7 billion, is one of the Army's largest acquisition programs. From 1991 through 2022, the Army plans to buy more than 85,000 trucks to replace its aging fleet of medium trucks. The new trucks, part of the Family of Medium Tactical Vehicles (FMTV), are 2.5- and 5-ton trucks based on a common truck cab and chassis. GAO found that the Army's plans for implementing its follow-on production contracts need to ensure that the government receives trucks that meet FMTV program standards. The current contract allowed the contractor to produce trucks even though they were unable to pass testing and show that they met performance and reliability, availability, and maintainability standards. These trucks required modifications to achieve satisfactory performance that caused program delays. In addition, the Army relaxed its final acceptance inspection method from a 100-percent inspection to a sampling inspection method without validating that the contractor's production processes ensured that the trucks met quality standards. Recent government inspection data and quality deficiency reports on trucks in the field show that the contractor is not consistently producing trucks with the quality standards set for FMTV trucks. The Army plans to compete future procurement of these trucks with the expectation that program costs can be reduced. Therefore, it has decided to develop a second source to produce the trucks. The current contractors and second source will share the annual production. However, the Army has not determined the costs and the benefits of this plan or compared it to other alternatives. 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 yield cost savings.

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.