Navistar, BAE win appeal in $3 bil. Army truck contract

BAE Systems Plc's and Navistar International Corp.'s protests of the Army's armored-vehicle production contract with Oshkosh Corp., valued at as much as $3 billion, were upheld today by the U.S. Government Accountability Office.

BAE, Europe's largest defense company, and Navistar appealed in September the Army's decision to award the contract for the Family of Medium Tactical Vehicles, or FMTVs, to Oshkosh. BAE's Armor Holdings unit has made about 50,000 of the trucks since winning the first contract in 1991. Loss of the FMTV contract may force BAE to fire 3,000 employees at its plant in Sealy, Texas, the London-based company has said.

"Our review of the record led us to conclude that the Army's evaluation was flawed," the GAO said in a statement today. The Army should reevaluate the proposals "in a manner consistent with the terms of the solicitation" and terminate Oshkosh's contract if it doesn't provide the best value.

The Army didn't follow its own procedures and failed to properly assess the risk of the other proposals, BAE said on Sept. 8.

Oshkosh won the contract Aug. 27 and received the first delivery order valued at $280.9 million. The Pentagon has suspended work on the contract pending GAO's decision. The Army may buy as many as 23,000 of the medium-duty FMTV vehicles and trailers, Oshkosh said in August. The contract may be valued at as much as $3 billion, according to Chris Chambers, vice president of BAE's Sealy plant.

Navistar International Corp., based in Warrenville, the other losing bidder in the FMTV program, protested the Army's decision on Sept. 3, company spokesman Roy Wiley said.

BAE rose 4.6 pence, or 1.3 percent, to 347.3 pence at 2:49 p.m. local time in London trading. Oshkosh declined $6.46, or 16 percent, to $34.50 in New York. Navistar rose $1.32, or 3.9 percent, to $35.60 at 10:52 a.m.