BAE Systems Leads To Pentagon Complaints On Protests

At a press conference yesterday to highlight the deployment of the Mine Resistant Ambush Protected - All Terrain Vehicle (MRAP-ATV) to Afghanistan the U.S. Department of Defense’s “Acquisition Czar” discussed protests of contracts. Under Secretary of Defense Ashton Carter stated that the Pentagon wanted fewer protests and that they must be based on realistic grounds and not “frivolous”.

The response was to a question from the media and seemed oriented towards BAE Systems who have filed three protests now over a truck contract awarded to Oshkosh. Oshkosh is the manufacturer of the MRAP-ATV.

Protests do add time to complete a contract and delays delivery of equipment that may be needed. Unfortunately for Under Secretary Carter many of the recent major protests have been upheld by the General Accountability Office (GAO). These include the KC-X, CSAR-X and even for IT and health insurance contracts. In the case of the CSAR-X the delay in awarding the contract and starting it led to the cancellation of the whole program. This means that is a replacement for the HH-60 and MH-60 Pavehawk aircraft comes about it will be several years after the original plan.

Protests are easy to file by the losers of the contracts. It does require some basis and the majority revolve around cost, best value and the application of the source selection criteria. In the case of the BAE Systems protest of the recent truck contract the company raised concerns that Oshkosh will be able to meet the delivery schedule at the lower cost they bid. BAE Systems recently purchased Armor Holdings who have been making the truck for the military for twenty years.

In the past there have been many occasions where the Pentagon has seen acquisition programs have suffered as the winner of the contest has bid low and then not been able to meet schedule and cost. This has often occurred with new systems requiring development and with the truck program the costs and risks are very well understood. Even so there may be issues with transferring the production to another company and factory.

If there are to be less contracts in the future which is probably going to happen if the defense budget does decline then there will be more protests. With fewer bigger systems to be developed and bought these contracts will be more critical to companies. They will have nothing to lose by filing protests, frivolous or not. In the worst case they will get another look at their proposal by the GAO or the Courts. In the best they might get a new contest.

This might be Carter’s attempt to get word out that the Pentagon does not want to see the KC-X protested. Unfortunately for the Air Force and Defense that is going to almost be a given. Northrop Grummand and Boeing are already arguing about the effect of the last protest on the upcoming contests. Both companies have Senators and Congressional Representatives talking up their bids and offering support. There have already been attempts to interfere in the contest through legislative means.

In the days when more then one system was being bought to do a mission protests were almost unheard of. In the Seventies new programs were just not being funded by Jimmy Carter. In the Eighties the Reagan defense budgets spread the money around among the companies. Under Clinton there were a great deal of protests as the “peace dividend” shrunk the budget and companies had to fight for work.

It is hoped that this situation will arise again in the future but there is a good chance that with less work available there will be. Ashton Carter’s wishes to the contrary or not.