Wednesday, July 9, 2014

Army Sends Congress Long-Awaited Analysis Of Combat Vehicle Industrial Base

Posted on July 8, 2014
The Army has completed its long-awaited analysis of the combat vehicle industrial base, briefing Capitol Hill this week on an array of controversial findings that show ample opportunity exists for consolidation, according to an internal slide presentation obtained by
The analysis carried out by the firm of A.T. Kearney is sure to ruffle the feathers of prime contractors like General Dynamics Land Systems and BAE Systems, which have attempted to outflank the study for fear its findings will be used to justify funding cuts.
The A.T. Kearney study found "significant excess in large structure machining capacity throughout the ground combat manufacturing network," along with "significant overlap of similar capabilities," according to the slides. "Machining capability within the network presents an opportunity for consolidation, depending on capacity and cost factors," the presentation notes.
The study also found that "the financial impacts to the Army as a result of any potential production breaks were overstated by the Original Equipment Manufacturers (OEMs)."
GDLS and BAE have long asserted that breaks in combat vehicle production or spending would result in massive layoffs of skilled workers and high costs to train and re-certify them when the production line re-starts again. Both companies also argue that production breaks will hurt their 48-state supply base.
But A.T. Kearney "identified a smaller number of skills that are unique to the manufacture and sustainment of combat vehicles," noting "these skill sets can be managed through training within the network."
The study did find a "small number of high risk critical and fragile suppliers which can be mitigated by individual company action or limited Army intervention." Those fragile suppliers mostly provide combat vehicle transmissions and forward looking infrared (FLIR) systems.
"With the exception of FLIR, there is much less Army risk in the supply base than indicated by the primes," the slides state.
The presentation also included some key conclusions regarding the service's path forward, noting that foreign military sales and limited Army investments will be needed to sustain the industrial base.
"Foreign military sales continue to play a major role in sustaining the combat vehicle industrial base," the slides state. "Directed Army investments may be required for sustaining critical lower tier suppliers [and] sustaining critical capabilities within the prime contractors. Continuous assessments of the combined commercial and organic industrial base is essential during periods of fiscal uncertainty."
The Army's presentation points to a variety of steps the service has already taken to short up the combat vehicle industrial base such as accelerating the start date of an Abrams tank upgrade program to FY-17 from FY-19; accelerating Bradley and Paladin Integrated Management system efforts; procuring 12 additional Abrams tanks at a rate of one tank per month in "an effort to preserve Abrams tank production capability at JSMC and to preserve critical manufacturing" and engineering skills; and increasing investments for Abrams transmission and FLIR suppliers.
The study states that actions taken by the Army and BAE have essentially nullified a 2012 report the company presented asserting that shutting down and restarting the Bradley production line at its facility in York, PA, would cost $750 million. For instance, BAE has closed several facilities since 2012 and terminated employees, while the Army has accelerated its Bradley, PIM and M88 Hercules programs; made direct investments in critical suppliers; and enacted advanced procurement of key Bradley components.
"The costs associated with these actions replace or avoid many of the costs given in the BAE report," the slides state.
Instead, "it is estimated that it will cost approximately $50 million to shutdown the Bradley production line," according to the presentation.
For several years GDLS and BAE have been fighting the Army's plans to pause combat vehicle spending in favor of other priorities, while relying on foreign military sales to keep productions hot for the Abrams tank and Bradley Fighting Vehicle.
The companies have successfully lobbied Congress to plus-up the Army's combat vehicle spending and lawmakers also plan to enlist the Government Accountability Office to "grade" A.T. Kearney's analysis, according to Hill staffers.
"The combat vehicle data collection is complete. The analysis of the current state of the network along with key elements such as critical suppliers and critical manufacturing skills is complete and reported in this presentation," the slides state. "The Army will continue to analyze the very complex combat vehicle industrial base and to work with industry to ensure that it remains capable now and in the future." -- Tony Bertuca

Joint Light Tactical Vehicle vendors and the Army are being preparing for a major acquisition milestone:

Army Releases FRP Draft RFP For JLTV; Industry One-On-Ones Scheduled

The Army this month expects to host a series of one-on-one meetings with defense industry contractors to discuss the recently released draft request for proposals for the Joint Light Tactical Vehicle's full-rate production phase, according to a government notice.
Three contractors are competing in the JLTV engineering and manufacturing development phase: Oshkosh Defense, AM General and Lockheed Martin. The Army ultimately plans to buy 50,000 JLTVs at $250,000 per vehicle, while the Marine Corps will purchase 5,500.
The contractor meetings will be held July 11 at Selfridge Air National Guard Base in Harrison Township, MI. "Joint Program Office (JPO) JLTV anticipates only answering questions or comments from the three current JLTV Engineering Manufacturing and Development (EMD) contractors related to the draft RFP," the June 25 notice states. "In order to balance the benefit of open communication with industry with the need to focus on critical issues of the RFP, judicious utilization of the question and answer process will be implemented. Questions and answers on the draft JLTV LRIP and FRP RFP shall be coordinated between the subcontractor with potential prime offerors for this procurement."

No comments:

Post a Comment