GAO orders review of $3 billion Army contract

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Posted: Dec 14, 2009 7:33 PM

The U.S. Army must re-evaluate a $3 billion contract awarded to the Oshkosh Corp. for 23,000 military trucks and trailers, congressional investigators said Monday.

Two companies that had bid for the deal and lost protested after Oshkosh won the contract. BAE Systems-Tactical Defense Systems LP and Navistar Defense LLC questioned whether Oshkosh could make the vehicles at the price it quoted.

The U.S. Government Accountability Office denied the price quote protest on Monday, but upheld some of the companies' other points, finding that the Army's evaluation of their bids was flawed. It directed the Army to reconsider the proposals of BAE and Warrenville, Ill.-based Navistar for their capability to fulfill the contract to build the vehicles, as well as their past performance.

The Army has 60 days to respond, according to the GAO.

The Oshkosh, Wis.-based company's chief executive, Robert Bohn, said Oshkosh believes its offer is still the best value and that it expects to keep the contract after the Army reviews the two remaining issues.

In separate statements, BAE Systems and Navistar officials expressed pleasure and confidence.

According to a BAE Systems statement, the Sealy, Texas-based subsidiary of the British company has already built more than 56,000 of the vehicles over the past 17 years and designed the new armor the contract specifies for the vehicles.

The Army awarded Oshkosh the contract on Aug. 26, with production scheduled to start in 2011. The contract work was expected to employ about 2,000 people.

The Greater Houston Partnership, a southeast Texas regional chamber of commerce, has said the BAE Sealy plant accounts for about 10,000 jobs at the plant and surrounding suppliers.

Sealy is 45 miles west of Houston. Warrenville is 25 miles west of Chicago.