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As Iraq Debate Begins: Armored Vehicles Hampered By No-Bid Contracts

July 12, 2007

In May, Representative Louise Slaughter (NY-28), Chairwoman of the Rules Committee, requested a report on the contracting for armored vehicles and up-armoring equipment headed to Iraq. The Pentagon Inspector General has just released the report, entitled “Procurement Policy for Armored Vehicles.”

Read the report (pdf) >>

Armored Vehicles Chronically Late
Renae Merle – Washington Post, July 12, 2007

The Pentagon inspector general’s office has found that a program to deliver special armored vehicles to protect military personnel in Iraq from roadside bombs has been marred by delays and questionable contracting practices that may have endangered troops.

The office examined $2.2 billion worth of contracts for armored vehicles and kits to upgrade them, according to a report made available to The Washington Post yesterday. Investigators found, among other things, that the Marine Corps issued $416.7 million in sole-source contracts to Force Protection of Ladson, S.C., for armored vehicles. A sole-source contract is a deal awarded without competitive bidding, usually because the Pentagon determines the firm is the only one able to deliver a service or because it needs an item quickly. Yet the report found that Marine officials knew of other potential bidders and that some advocates of competition were overruled.

The contracts continued even though Force Protection “did not perform as a responsible contractor and repeatedly failed to meet contractual delivery schedules for getting vehicles to the theater,” the report said. Under one contract issued in 2005, Force Protection failed to deliver 98 percent of 122 mine-resistant vehicles on time despite getting $6.7 million from the Marines to upgrade its production facilities.

Rep. Slaughter spoke about the report on the floor this morning, opening debate on the rule for the Responsible Redeployment from Iraq Act:

Rep. Slaughter:
“The results were sadly predictable. The companies failed to meet demand, and sent critically important equipment over late. Some of the armor our soldiers were sent had cracks that had been painted over instead of fixed. In certain instances, two left doors were sent for the same vehicle. Troops already fighting a deadly foe had to use their precious time and energy to improvise and come up with ways to turn useless equipment into something that could protect them. Our soldiers have been asked to endure terrible hardships – some of which, I am ashamed to say, have been the direct result of the practices of this Administration.”

Rep. Slaughter also issued a release giving an overview of the findings:

Each manufacturer fell far behind delivery schedules, while Armored Holdings also produced inadequate and faulty equipment.

Furthermore, the sole-source contracts were assigned even though senior military officials objected at the time to the process being used, advocating instead for competitive bidding.

The release also included a summary of specific findings:

FINDINGS

Force Protection, Inc.

    DoD awarded 11 sole-source contracts, valued at $416.7 million, to Force Protection, Inc., for armored vehicles.

    Senior Defense Department officials strongly supported a competitive procurement for the JERRV armored vehicle contract, but were overruled by a team overseen by the Deputy Secretary of Defense. (Page 14)

    A key Market Research document indicated that another contractor could potentially meet the contract requirements and in much less time than FPI required. (Page 16)

    DoD had not completed tests on the JERRV armored vehicle by the time the first award was given, so the test results were not available as a basis for making the sole-source award. (Page 17)

    FPI’s performance on the first JERRV and Cougar contract failed to meet “Responsible Prospective Contractors General Standards,” which requires that a contractor be able to comply with required or proposed delivery schedules. (Page 18)

    FPI failed to meet the delivery requirements for the first JERRV contract even though MCSC officials paid FPI $6.7 million to help upgrade and expand their production facility to meet the urgent delivery requirements. (Page 23)

    FPI did not meet the Fair Acquisition Regulation definition of an acceptable contractor. (Page 23)

    Despite FPI’s late deliveries on the first JERRV contract, FPI was awarded a second contract in May 2006 for 79 JERRVs, and a third contract in November 2006 for 200 JERRVs. (Page 23)

Armored Holdings, Inc. (Acquired Simula in 2003)

    DoD awarded Armor Holdings, Inc. 4 sole-source contracts, valued at $1.8 billion, for armored vehicles and armor kits.

    Simula, which produced the armor kits, did not meet the Federal Acquisition Regulation requirements as a responsible prospective contractor, because it did not have the necessary production control procedures, property control systems, and quality assurance measures in place to meet contract requirements for the kits. (Pages 32-34)

    The DoD contracting official did not review and verify Simula’s production capabilities and quality control processes before awarding the sole-source contract. The official could not provide documentation of any market research or investigation of Simula’s production to support sole-sourcing to Simula. (Page 34)

    Simula failed to deliver approximately 34 percent of the kits in accordance with contract delivery schedule. The DoD issued 64 corrective action requests to Simula documenting discrepancies found in the kits. (Page 35)

    The Army received incomplete kits with missing and unusable parts, increasing installation time and requiring additional reinspection of kits in theater. Incomplete kits and late delivers increased the risks to soldiers’ lives. (Page 35)

    In August 2004, kits arrived in theater with two left doors instead of one right and one left door, brush guards bent the wrong way, and cracked lower brush guards. In November 2004, installation personnel in theater discovered kits with missing thick cab side plates. Also in November 2004, installation personnel in theater discovered HEMTT kits with two right side brackets for holding the grill slants in the front of the truck instead of a left side and a right side bracket. Installation personnel had to cut the brackets apart and re-weld them to put them on trucks, unnecessarily increasing installation time and using extra resources. In December 2004, HEMTT and PLS kits arrived in Germany with several missing parts, prompting the contracting officer to write a letter to Simula requesting that Simula ship the missing parts immediately. (Page 43)