Army Medium Trucks

A combination of factors caused lengthy delays in delivering trucks under the Army's Family of Medium Tactical Vehicles program. First, the Army chose a contractor that was not experienced in producing trucks and was no longer affiliated with an experienced truck producer. Second, the contract contained an aggressive schedule for truck production considering the contractor's inexperience. The inexperienced contractor had difficulty in both establishing a production line and producing trucks that could meet qualification and operational testing requirements. Despite these problems, the Army allowed production to continue and increase during testing. As a result, many trucks were produced that required modification or repair. The contract specified that the trucks were to be designed to prevent corrosion from perforating or causing other damage requiring repair or replacement of parts during the first 10 years of service. However, corrosion was discovered on the cabs of trucks less than three years old that were still awaiting modification at the contractor's plant. Rather than making the contractor replace all 4,955 truck cabs at a cost of $31 million, the Army accepted the contractors' proposal to repair the corrosion damage and to provide a 10-year warranty, not to exceed $10 million, against any further corrosion. This dollar limitation, in effect, relieved the contractor of a potential $21 million liability. The Army also subjected one of the 4,955 trucks to a contract-specified corrosion test. It failed, with corrosion being found in 60 areas. The Army and the contractor later agreed on modified production procedures to address the corrosion problem, and the contractor later produced 2,491 trucks under these procedures. However, the Army and the contractor ultimately concluded that galvanized steel cabs were required to meet 10-year corrosion prevention requirement, and the contract's final 3,751 trucks were produced with galvanized steel cabs. The Army agreed to pay up to $7 million for the cabs and other corrosion improvements. It did not test or require the contractor to provide a corrosion warranty on the 2,491 trucks produced before the switch to galvanized steel cabs.

GAO noted that: (1) a combination of factors caused lengthy delays in delivering FMTV trucks; (2) the Army did not execute a low-risk acquisition strategy; (3) the contract contained an aggressive schedule for truck production considering the contractor's inexperience; (4) the inexperienced contractor had difficulty in both establishing a production line and producing trucks that could meet qualification and operational testing requirements; (5) despite the difficulties, the Army allowed production to continue and increase during testing; (6) as a result, many trucks were produced that required modification or repair; (7) because of production problems and competing funding requirements, the Army decided in 1994 to terminate the final year of the original 5-year FMTV production contract; (8) the Army requested only enough funding for fiscal year 1996 to terminate the program; (9) Congress, not wanting a break in the program, provided additional funding for that year, but not enough to fully fund the production quantities called for in the contract; (10) the Army and the contractor agreed to extend the contract and spread the final year's quantities over 3 years; (11) the Army determined that the first 4,955 trucks produced did not meet the FMTV's corrosion protection requirements; (12) corrosion was found on the cabs of trucks less than 3 years old that were still awaiting modification at the contractor's plant; (13) rather than making the contractor replace all the 4,955 truck cabs at a cost of $31 million, the Army accepted the contractor's proposal to repair the corrosion damage and to provide a 10-year warranty, not to exceed $10 million, against any future corrosion; (14) the Army also subjected one of the 4,955 trucks to a contract-specified corrosion test; (15) it failed with corrosion being detected in 60 areas; (16) following these events, the Army and the contractor agreed on modified production procedures to address the corrosion problem on subsequently produced trucks; (17) however, the Army and the contractor ultimately concluded that galvanized steel cabs may be required to meet the 10-year corrosion prevention requirement and the contract was modified to require galvanized steel cabs; (18) the contract's final 3,751 trucks were produced with galvanized steel cabs; (19) the Army agreed to pay up to $7 million for the galvanized steel cabs and other corrosion improvements; and (20) the Army did not test or require the contractor to provide a corrosion warranty on the 2,491 trucks produced prior to the switch to galvanized steel cabs.