Army says it's saving money with JLTV recompete, expects new test vehicles within 18 months

The Army’s JLTV poses for the camera. (US Army)

WASHINGTON — The Army is remaining tight-lipped about key details of its new deal with AM General to build future Joint Light Tactical Vehicles (JLTVs) but said the recompete “succeeded” in lowering the program’s costs, according to a service official.

Earlier this month, the Army announced that it had selected AM General’s JLTV production bid over the incumbent producer, Oshkosh Defense. Oshkosh still has a few days to decide if it will lodge a protest with the Government Accountability Office, and until then, the Army said it cannot divulge price point details.

“Unit prices are considered competition sensitive until the post award debriefings are complete and the protest window is closed; absent any protest,” Michael Sprang, the project manager with the Joint Program Office Joint Light Tactical Vehicle, wrote in Feb. 14 email in response to Breaking Defense’s questions.

However, he said, “the Army succeeded in obtaining a lower cost than the independent government cost estimate through the recompete” and noted that the competition was never intended to include dollars for a company to pay for the “setting up or improving” its JLTV production line. That burden was on them.

“Any amortized costs would be included in a vendor’s evaluated cost,” Sprang wrote.

In 2015, the service tapped Oshkosh to produce its JLTV line and awarded the company with a $6.7 billion low-rate initial production (LRIP) contract before approving full-rate production in 2019. Under this setup, the government owns the JLTV technical data package, which enabled it to recompete the contract to find a team that could produce the vehicles at a reduced cost. (Fiscal 2023 budget request documents said the Army expects to spend $413,000 for each JLTV this year under its current deal with Oshkosh Defense).

However, in January the Congressional Research Service (CRS) released a report warning that if the Army selected a new company to produce its JLTVs, that could increase cost the first year. At the same time, CRS said a new deal with Oshkosh could also increase the price point due to “unpredictable prices and strong commodity-related inflation.”

“Despite the Army’s intent to lower costs by competing a follow-on contract with another vendor, slowing production rates and extended procurement timelines could act to increase costs if current JLTV requirements are no longer valid,” CRS wrote.

It may take time to see what impact the recompete really has on the program or if lawmakers decide to step in. But for now AM General’s new deal is worth up to $8.66 billion over the next decade for up to 20,682 JLTVs and 9,883 trailers, according to new Army numbers.

For now, Sprang said AM General has 18 months to establish its production line and validate its production processes. The first JLTV A2 first article test vehicles are then expected to roll off the production line within 18 months, or around July 2024, and if things proceed as planned, the company will gradually ramp up production.

However, that plan will be delayed if Oshkosh contests the decision.

“A protest, with associated stop work order, will result in a day-to-day delay in initiating production,” Sprang explained. JLTV production will not grind to an immediate halt, even if the service’s recompete decision is overturned or lawmakers decide to slow roll funding.

“The Army developed the contracting strategy where the current JLTV production contract [with Oshkosh Defense] will continue to be executed through 2025,” he explained. “This could provide continued products and services to the program while the follow-on production contract is ramped up, including a potential protest.”

Sprang said the service expects to place all its remaining orders with Oshkosh by November 2023. Then by FY25, all new work is anticipated to be placed on the follow-on contract and awarded to AM General.