Marines Skirt Procurement Maze to Rush Tougher Trucks to Iraq
By Edmond Lococo
May 4 (Bloomberg) -- A suicide car-bomber pulled alongside a U.S. Marine Corps Buffalo mine-clearing truck in Iraq and detonated. Inside, Gunnery Sergeant Anthony Lindsey felt a bump.
``We got a flat tire and that was about it,'' Lindsey, 27, says of the 2006 blast near Habbaniyah. ``Those vehicles, outside of maybe a tank, are the safest things in Iraq.''
The Buffalo, an off-the-shelf Marines purchase, is an exception: Most armored trucks in Iraq can't withstand the latest enhanced homemade bombs. So the Marines are quickly buying more blast-resistant vehicles, rewriting Pentagon procurement practices as they go.
Instead of handing prototype awards to one or two contractors, the Marines signed deals with nine. Within 19 days, two companies with test vehicles won early-production contracts, including the Buffalo's builder, Force Protection Inc. A week later, three more got the go-ahead. The U.S. plans to spend $8.4 billion over two years for as many as 7,700 trucks. That's $1 million apiece, including electronics gear and services costs.
``It's unprecedented,'' Captain Jeffrey Landis, a Marine Corps spokesman, says of the purchasing push.
The Marines' effort is taking on urgency as the death toll of American soldiers in Iraq rises. Homemade bombs accounted for 57 percent of 2,698 U.S. combat deaths through April 21, according to the Defense Department. The attacks also led to 59 percent of the 24,912 combat injuries.
Compromises
To offer better protection with advanced trucks, the Marines will make some compromises. Conceding the battle for cost-efficiency by paying $1 million a vehicle is only one. The new trucks, for example, are being produced only for immediate use in Iraq and Afghanistan and won't serve longer-term needs.
The Cougar, the smallest of the three classes of trucks built by Ladson, South Carolina-based Force Protection, weighs 19 tons, or more than three times that of armored Humvees used in Iraq. That's too heavy to carry on amphibious ships or by helicopter, the Marine Corps deputy commandant, Lieutenant General Emerson Gardner, told Congress in February. They must be hauled by ocean freighters or transport planes.
In addition, multiple truck types at the front will lead to higher maintenance costs, says Jim Tinsley, an analyst at the Avascent Group, a Washington-based aerospace and defense consulting firm.
``You are not going to have any standardization of parts for repair,'' Tinsley says.
For some critics, though, the issue is still one of speed.
`Been So Slow'
``I'm encouraged to hear that the Marines will be ordering better-protected vehicles, but I continue to be outraged that the Pentagon has been so slow to respond to this obvious urgent need,'' Senator Edward Kennedy, Democrat of Massachusetts, said in an e-mail.
Among those who have briefed Kennedy is Brian Hart, founder of Black-I Robotics in Tyngsboro, Massachusetts, which develops bomb-disposal robots. He quit as a drug industry executive in 2004 to push Congress for safer vehicles and more body armor for troops after his son, Private First Class John Hart of the 173rd Airborne Brigade, was shot to death at age 20 in an unarmored Humvee in Taza, Iraq, in 2003.
``The problem I see is the attrition rate on vehicles is getting way up there,'' Hart says. ``The attrition rate is far in excess of the production rates.''
The U.S. went to war in Iraq in 2003 with unarmored Humvee trucks designed for non-combat transport. As casualties of roadside bombings mounted, the uproar that followed from parents of soldiers and from members of Congress pushed the military to equip vehicles with armor.
V-Shaped Hull
After insurgents began taking out armored trucks with more powerful bombs made from new combinations of artillery shells, the Marines started testing super-armored vehicles that Force Protection created without a Pentagon contract.
The Cougar and the Buffalo offered a new design. Their V- shaped hulls deflect explosive forces away from the underside of the truck rather than absorbing the blast along a flat bottom.
About 200 of the trucks have been sent to Iraq and Afghanistan since 2003. Vehicles such as the Buffalo -- at 13 feet (four meters) high and almost 22 tons -- have withstood more than 2,000 attacks with mines and improvised explosives.
``They are not a traditional government contractor,'' says Force Protection investor Don Cochran, 47, who says he holds about 160,000 shares. ``They raised their own capital and took their own risk to build Cougar and Buffalo with the intent if they built a good vehicle, the government would be a buyer.''
Four Times Safer
A Marine in a blast-protected vehicle is four times safer than in a Humvee, says the Marine Corps commandant, General James Conway. The Humvee's maker, AM General LLC, declined to comment.
The base price of Force Protection's two smaller trucks ranges from $510,000 to $570,000, compared with about $167,000 for the M1151 armored Humvee.
The Marines' truck push, involving the rapid awarding of contracts to multiple builders, is unique. Each of the three main vehicles currently used in Iraq are built by a single supplier: the Humvee by South Bend, Indiana-based AM General, which is closely held; the Stryker troop-transport by General Dynamics Corp. and the Bradley Fighting Vehicle by BAE Systems Plc.
The Humvee took more than five years to develop, from the time the Army issued specifications in 1979 until delivery of the first full-rate production models in 1985.
`It Takes Decades'
``It takes decades to get certain major weapons systems fielded,'' says Eric Hugel, a New York-based analyst with Stephens Inc., who rates General Dynamics shares ``equal weight'' and doesn't own any. ``Normally, it's not realistic to expect to get a new weapon in any quantity in any short timeframe.''
In the case of blast-resistant vehicles, the Marines' limited off-the-shelf purchases have shifted into a larger-scale Defense Department buying program, and the surge in demand is benefiting makers. Force Protection shares have jumped 10-fold in the past year to $23.81 yesterday as the company gained more orders than larger rivals, including London-based BAE and Falls Church, Virginia-based General Dynamics, the biggest U.S. armored-vehicle maker.
General Dynamics' 2006 sales of $24.1 billion dwarf Force Protection's revenue of $196 million. The Standard & Poor's 500 Aerospace and Defense Index gained 15 percent in the past 12 months.
In January, the Pentagon awarded nine companies a total of $34.6 million to deliver 36 test vehicles. So far, eight have delivered trucks and the ninth is on the way, Marine Corps spokesman Bill Johnson-Miles says.
Early Production Awards
Already, five of those companies have received early production awards totaling $683 million to build about 1,390 trucks. Force Protection has the largest share with $548 million, while BAE won $55.4 million. Other initial-production orders went to General Dynamics; Oshkosh Truck Corp. in Oshkosh, Wisconsin; and North Charleston, South Carolina-based Protected Vehicles Inc.
The other truck builders, which still can win production contracts once their test vehicles are tested, are Textron Inc. in Providence, Rhode Island; Armor Holdings Inc. in Jacksonville, Florida; General Purpose Vehicles LLC in New Haven, Michigan; and International Military and Government LLC in Warrenville, Illinois, a unit of Navistar International Corp.
``We are going to go on the max production rate if we find them successful,'' the Marines' General Conway says.
Delayed Funding Bill
The first round of purchases will come from about $800 million in already appropriated funds, says Johnson-Miles. Another $3 billion for the next round is contained in a war supplemental funding bill before Congress, he says.
``We cannot place orders without having funds on hand,'' Johnson-Miles says. ``There is still time to get funding before we are ready to place some more orders. It's not holding us up yet.''
Passage of the supplemental bill may be delayed as the White House and Congress, now controlled by Democrats, negotiate a compromise on the funding measure. President George W. Bush vetoed an initial measure this week because it sets timetables for the withdrawal of U.S. troops from Iraq.
To boost truck production rates, the smallest companies receiving awards are teaming with larger rivals. Force Protection formed a joint venture with General Dynamics in November to make more of the Cougars and signed up Armor Holdings as a subcontractor.
Leveraging Partners
On its own, Force Protection has a production capacity of about 140 vehicles a month and can produce more than 400 a month with partners, says Vice President Michael Aldrich.
Protected Vehicles, set up in 2005, has linked with Oshkosh on two blast-resistant truck models, says Kent Martin, 34, a Protected Vehicles director. The companies are producing the Golan, a four-wheeled 18-ton truck built with Rafael Armament Development Authority Ltd. of Israel, and the Alpha, a four- wheeled 13-to-14-ton vehicle that seats eight.
For Gunnery Sergeant Lindsey, the car-bomb in Habbaniyah was one of five he survived without injury while in blast- resistant trucks from November 2005 through March 2006.
The native of Augusta, Georgia, has spent the past year recovering from second- and third-degree burns over 60 percent of his face received in Iraq when he wasn't in one of the trucks.
He was wounded when a device hidden under a disarmed explosive detonated as his team removed road explosives on foot in Habbaniyah, about 15 miles (24 kilometers) west of Baghdad.
He is preparing to return from Camp Lejeune, North Carolina, to Iraq for his second tour. He says he's certain the trucks saved his life.
``I was never hurt in Iraq until I had to step out of one of these vehicles,'' Lindsey says.
To contact the reporter on this story: Edmond Lococo in Boston at elococo@bloomberg.net .
