Sen. Tammy Baldwin (D-WI) says she still has questions for the Army following the award of the multibillion-dollar Joint Light Tactical Vehicle follow-on contract to AM General and a subsequent protest by competitor Oshkosh that was unsuccessful.
AM General was awarded the contract in February, which is worth more than $9 billion if all options are exercised. On March 6, Wisconsin-based Oshkosh filed a protest with GAO, alleging that the Army did not factor in problems with AM General’s production process, their low labor rates or their lack of experience in manufacturing JLTVs.
GAO denied Oshkosh’s protest on Monday, and the company responded by saying it will “assess the GAO’s findings and evaluate our next steps.”
Baldwin, a member of the Senate Appropriations defense subcommittee, wrote in a statement Tuesday that she is concerned about the Army’s decision to award the JLTV contract “to a New York private-equity-owned company that has never made these vehicles” and that it “poses a risk for our servicemembers and national security.”
Baldwin sent a letter to Army Secretary Christine Wormuth and Doug Bush, the service’s top acquisition official, on June 7 warning of AM General’s “very high credit risk as a result of the leveraged buyout of its private equity ownership group used to acquire the company -- and the impact of high leverage on the company’s ability to stand up a new production line in a timely fashion.”
Baldwin also wrote in the letter that AM General’s credit has been downgraded since being acquired by KPS Capital Partners in 2020, saddling the company with $675 million in debt.
“By increasing the chances of delayed delivery or a default, the award appears to pose a risk to the tactical wheeled vehicle industrial base and the fighting men and women who depend on it,” she wrote.
Baldwin also referenced reports from S&P and Moody’s Investor Service from December and January respectively that gave poor outlooks for AM General when it comes to its credit rating. She also expressed concern that when work for tactical wheeled vehicles is divided between two manufacturers, annual budget requests “will not provide enough work for both companies to sustain their workforce and supplier networks.”
“In the case of Oshkosh Defense, its workers and suppliers have seven years of successful JLTV production, continually incorporating lessons learned, data captured, process improvements and quality metrics to ensure the customer and the warfighter get the absolute best product possible. During that period, JLTV has been among those rare programs performing on schedule, under budget and delivering promised capabilities -- with no Nunn-McCurdy breaches. To date, the company has delivered over 20,000 vehicles to our men and women in uniform,” she wrote.
At the end of the letter, Baldwin asked a series of questions of Army officials, including the status of the tactical wheeled vehicle strategy that was due to be released in 2022, but has been delayed. On Tuesday, the senator reiterated that she has outstanding questions for the Army.
“I look forward to getting responses from the Army on my questions because the American people need certainty that our men and women in service are getting what they need, when they need it,” she wrote.