Defense contractors duel for $8-billion armored vehicle contract
By Frank Witsil | Detroit Free Press | Published: May 19, 2014
With $8 billion at stake, two of the largest defense contractors — each with offices in Macomb County, Michigan — are battling to make the Army's next large combat vehicle.
But the fight — with its own twists and accusations of unfairness — isn't just over which company will be selected to replace a decades-old fleet of 2,900 armored personnel carriers. It's also about picking between wheels and treads and deciding what makes the most sense for a modern Army.
General Dynamics' contender, the Stryker armored fighting vehicle, has wheels and is cheaper to maintain. But it doesn't do as well over marshy terrain. Competitor BAE Systems makes the Bradley fighting vehicle, which has treads.
"It's not to make GD money or BAE money, it's to make your soldiers safe," said Ann Roosevelt, who has been covering the issue for Defense Daily, a defense industry trade publication in Arlington, Va. "It's about protecting the troops."
The May 28 bid deadline is looming.
The competition, which includes a recommendation from the Army Tank-Automotive Command in Warren, has been especially pointed because so much is at stake financially — and for the future of U.S ground forces, which use M113s, vehicles from the Vietnam War era.
The companies don't have manufacturing facilities in metro Detroit, but winning the contract could mean more jobs and investment in metro Detroit and in factories in other parts of the country.
Macomb County, which bills itself as the defense capital of the Midwest, is eager for both companies to profit. So are other districts. A delegation of 10 members of Congress, including a Democrat and three Republicans from Michigan, sent a letter to the Pentagon proposing it change the contract so both companies can split the deal.
Few other contracts
General Dynamics, based in Falls Church, Va., and BAE, based in Arlington, Va., have engineering offices a few miles apart in Sterling Heights -- stretches along Van Dyke and Mound that the county promotes as an ideal place for defense contractors and calls the defense corridor.
As with many defense contracts, this deal has the potential to be worth much more, upwards of $12 billion, bidders said, if additional vehicles, dubbed armored multipurpose vehicles, are requested after the first order. But for the company that doesn't get the contract, the consequences are potentially big, too.
"The Army has thousands of Vietnam-era troop carriers that are on their last leg," said Loren Thompson, chief operating officer of Lexington Institute, a nonprofit think tank. "It's no exaggeration to say if one or the other of these companies can't find its way into some aspect of the armored troop carriers, they will have a hard time."
The reason: There are few other big Army contracts up for grabs.
In the meantime, General Dynamics — which also makes the M1 Abrams tank and took the added twist of formally protesting the contract requirements in February — has complained that it doesn't have enough information, and the competition is stacked against it.
The Army has rejected the protest.
Still, General Dynamics contends the contract offers an advantage to BAE. The way the specs are written, the company can't offer an upgraded version of its Stryker, because it has wheels instead of treads, and it would cost too much to develop an entirely new vehicle.
Though wheels perform better on pavement and dirt roads, they can't traverse swampy terrain as easily.
But, the company said, wheeled vehicles are cheaper to maintain and that would save the Army money.
"We're not taking any option off the table," said Pete Keating, General Dynamic's director of communications. "But we feel the competition is weighted too heavily toward a single solution, which is an existing tread vehicle manufactured by another defense contractor."
Of course BAE disagrees.
Megan Mitchell, BAE's communications manager, said the Army has sought to upgrade its fleet of armored personnel carriers for seven years. The specifications are clear, and the new vehicle has to be able to go across a variety of terrains.
BAE, she said, is submitting its bid -- and has built a prototype.
The lawmakers who sent the letter dated April 3 -- who include Rep. Candice Miller, R-Harrison Township; Mike Rogers, R-Howell; Bill Huizenga, R-Zeeland; and Rep. Gary Peters, R-West Bloomfield -- suggest both types of vehicles are needed, and that using both could save money.
"A mixed fleet is not about choosing between companies; it is about getting the best value," they wrote. "A mixed fleet is not about picking Bradley or Stryker; it is about fielding the correct vehicle type depending on the mission."
General Dynamics supports this option.
But BAE said the proposal stalls what has already been a long process.
"If we start over again, that's just another delay," Mitchell said, adding the new vehicle is something the troops desperately need.