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BAE's $10 billion howitzer project improves after years of flaws

BAE Systems shows the new Paladin Integrated Management program to a group of military, political and industry partners April 9, 2015, at a ceremony at the Elgin facility.

MARIE BERBEREA/U.S. ARMY

By TONY CAPACCIO | Bloomberg | Published: January 2, 2020

BAE Systems will win U.S. Army approval this month for full-rate production of self-propelled howitzers and ammunition carriers based on improvements in the $10 billion program after several years of delays over welding defects.

"BAE has met all requirements to enter into full-rate production and we anticipate that happening" during January, Sam Tricomo, a spokesman for the weapon's Army program office, said in an email.

The company had been assembling the weapons system since October 2013 under a series of low-rate production contracts during which it produced the vehicles late and with numerous welding defects.

Deliveries were halted for six months in 2017 because of welding flaws that required the return for repairs of 50 of 86 vehicles already delivered. Since then, London-based BAE has invested $200 million in improvements at its factory in York, Pennsylvania, and delivered quality vehicles consistently in the last months of 2019, according to the Army.

"To ensure no break in vehicle production" at the York facility and another in Elgin, Oklahoma, the Army last month extended low-rate production, Tricomo said. "Our confidence in BAE's ability to deliver has increased month after month as we have seen continuous improvement in quality vehicles at increased production rates."

Full-rate production is the most lucrative phase for a contractor. In 2018, the Army increased planned quantities of the howitzer and carriers by 109 vehicles to 689. The Army plans to spend $8.9 billion on vehicle procurement for the Paladin Integrated Management program, or PIM, that consists of the howitzer, which can fire rounds that travel more than 31 miles, and the ammunition carrier that accompanies it.

About $3.9 billion has been appropriated to date.

The 155mm Paladin howitzer and the ammunition carrier are the centerpiece of the Army's artillery plans as it shifts its focus to countering Russia after 18 years of emphasizing the defeat of terrorists. It's part of the service's "Long-Range Precision Fires" capability, which tops its list of modernization priorities.

The weapon is scheduled to be upgraded in the next few years with a new Extended Range Cannon designed to match Russian systems in Europe.

BAE's factory quality is a priority for the Army because it wants to increase production through 2023, not only for the howitzer system but also the other major military vehicles that BAE builds: the Armored Multi-Purpose Vehicle, the Bradley Fighting Vehicle and the M88A2 tank recovery vehicle.

The Army plans to surge production of the Armored Multi-Purpose Vehicle for deployment to Europe as part of the U.S.'s deterrence buildup against Russia.

Defense Secretary Mark Esper was secretary of the Army when he signaled his concern by visiting the York facility in September 2018 to examine the welding process and deficiencies and hear solutions. The program has a strong advocate in Senate Armed Services Chairman Jim Inhofe, an Oklahoma Republican.

"We are consistently delivering against the agreed-upon schedule," BAE spokeswoman Alicia Gray said in an email. "This platform brings tremendous capability" and "goes a long way toward addressing the Army's artillery modernization priority. BAE Systems stands ready for the Army's green light on full-rate production."

As recently as April, program officials had been privately pessimistic about BAE's production capability in their annual Selected Acquisition Report for Pentagon officials and congressional committees marked "For Official Use Only."

"At this time the Army does not have confidence when BAE will be able to deliver a quality product repeatedly," according to the document. The "Army chief of staff does not recommend certifying the PIM program until BAE demonstrated the ability to produce quality vehicles on schedule."

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