I simply love the Joint Light Tactical Vehicle (JLTV). Let me extol the virtues of the vehicle, and suggest that the Army Department be sent enough money to mobilize industry for its wartime production. After all, the US Defense Department's Under Secretariat for Acquisition and Sustainment has asked for ideas on what could be produced quickly to support the Ukrainian war effort. Call this idea mine, just to be fulfilled by the automotive industry.
Would the Ukrainians want JLTVs? The Defense or State Department should ask them, but I strongly suspect so. Before the war, the Ukrainian Army repeatedly asked for used Humvees. Today, the Ukrainian Army is finding Russian landmines all around the areas from which the Russian Army had withdrawn. No one should want to drive a Humvee, even an armored one, over a landmine.
In contrast, the essential awesomeness of the JLTV is that it offers the protection of a Mine-Resistant, Ambush-Protected (MRAP) vehicle in a comparatively compact, off-road four-by-four truck. I can say something about this because I wrote my dissertation about the MRAP (and slightly on the JLTV). I then turned that into a book about the MRAP (and slightly on the JLTV). Therein, I showed how the MRAP was an excellent example of automotive-industrial mobilization for war in the 21st century. (I admit to having questioned the Army's procurement objective, at least once about ten years ago, as the business in Iraq and Afghanistan was once-and-again winding down, though in a news article that is probably now lost to even the web archives.) Now, I will explain why the JLTV is today a far better candidate around which to mobilize the US automotive industry, and particularly for the Russo-Ukrainian War.
That's because as military technology has changed, the nature of war is now meaningfully different. In this context, the JLTV offers not just protection from land mines, small arms, and the endless artillery fragments of the Russian Army. On the offense, the JLTV can also carry lots of the lightweight instruments of the ongoing destruction of the Russian Army, Air Force, and Navy: Javelin anti-tank missiles, Stinger anti-aircraft missiles, and in the Nemesis robotic configuration of the US Marine Corps, even Kongsberg's anti-ship Naval Strike Missiles. Alternatively, it can tow a large mortar or light howitzer, or its ammunition trailer.
Indeed, the US Marine Corps is effectively planning to rely on the four-wheeled JLTV and the eight-wheeled Amphibious Combat Vehicle (an evolution of IVECO's SuperAv) as the main conveyances for its missile-armed tank-killing teams. After shedding all its under-protected Humvees, two years ago the USMC shed all its tanks, figuring that what Turkish drones had done to Armenian tanks in 2020 was enough evidence that tanks could be countered without one's own tanks. That's a debatable point, but it's also possible that all of what's good enough for the Marines might just be some of what's good enough for the Ukrainians. All the same, as I acknowledge above, I'd let the latter decide, with their far greater combat experience of late.
How many JLTVs could be produced how fast? Even now, the US is buying about two thousand JLTVs annually, and as such, it could get these to Ukraine much more quickly than American tanks. (Though send the old M1A1 tanks too!) It could keep sending JLTVs long after NATO runs out of old Soviet-built tanks to send. The JLTVs also require no specialized driver training, and they run on mostly commercial parts, including a Duramax pickup-truck engine from General Motors.
That said, incumbent producer Oshkosh could do more, if asked. According to the US Army's recent budget justification documents for its fiscal year (FY) 2023 spending request, Oshkosh's "preferred minimum sustaining rate" is 2,880 JLTVs annually. That sounds precise, but the number is analytically problematic in two ways. The first problem is that the Defense Department's procurement people may not fully understand what this means. The department often asks contractors to state their minimum sustaining rates of production—even using the three letter acronym (TLA) "MSR" to describe that figure. Trouble is, Defense doesn't cleanly define MSR. The Defense Logistics Agency publishes a definition of MSR that's actually just that of a Break-Even Quantity (BEV), which isn't quite the same thing, unless one really thinks that the cost curves are completely flat.
Perhaps more readily understood in the budget book is the "1-8-5" rate—the number of JLTVs that Oshkosh could build using one shift per day, working an eight-hour day, five days each week. That's said to be 3,600 annually, which indicates slack capacity today. Oshkosh's claimed maximum rate annually is twice that (7,800), which suggests that the company would just add a second shift on the line. Since early in 2021, the JLTV has been built on a standalone line; before that, Oshkosh built JLTVs alongside other military vehicles on one of its famously flexible production lines.
Indeed, Oshkosh's whole production system is still quite flexible. The Army's budget book notes how the service ordered 2,039 JLTVs in FY 2021, but just 1,190 JLTVs in FY 2022. Remember that Oshkosh is currently the design agent and sole source of JLTVs. The average price of the JLTV in FY 2021 was $253,574, but in FY 2022 it was $268,164. The relevant inflation rate was about 4.7 percent across the year, at least according of the estimates of the Office of Management and Budget. This means that Oshkosh kept the real-dollar price of the JLTV to an increase of just about 1 percent even as its monopsonistic customer cut its purchases by about 42 percent. That's impressive.
Note, of course, that with a price curve that flat, the MSR could equal the BEV, but the preferred MSR—well, I have little idea what that means, except that prices should not increase up to that point, or it wouldn't be a minimum anything. Whatever it means, even the FY 2021 quantity is considerably less than that preferred number. So while we do not have an explicit word from the company, all this suggests that Oshkosh could increase its production greatly without encountering scale diseconomies that would lead to serious unit price increases. Whether Oshkosh could do so quickly is another question, as all-too-little in military seems to be moving quickly in military production these days. The MRAP experience suggests that great rate increases could be accomplished within a year, thought that came at a time in which the US automotive industry had recently laid off a great many skilled production workers. Could Oshkosh do more than adding another shift? What if we really wanted to equip the Ukrainians with many thousands of the best light armored vehicles available anywhere?
Here's the idea: to really increase production, bring on another manufacturer. The Army is already planning to announce the winner of its re-competition in September of this year. That re-competition seems to bring an unexpected and unwelcome change: an expected increase in price. Ethan Sterenfeld of Inside Defense recently asked me what to make of the Army's anticipation of higher prices for the JLTV next year ("JLTV costs could rise under follow-on contract," 22 April 2022), as stated in those budget books. It's understandable, I argued: the Army's program office is just conservatively assuming an upset of the incumbent later this year. In planning for that possibility, it should assume that initial prices could be higher, though descending a learning curve, with offers of lower prices in the out-years.
That's possible, though any challenger's Year Two on the contract would effectively be Oshkosh's Year Seven. Beating that learning curve would truly be impressive—though Oshkosh itself did just that in 2009, when it took the FMTV A1P2 rebuy production contract from BAE Systems. Possible is not assured, so it's not clear that every firm that has expressed interest in the next phase of JLTV will assuredly bid.
That's where enters my idea to intensify competition while mobilizing industry. Award two production contracts, both for the thousands of vehicles annually. Ask Oshkosh to move towards full rate production on 1 –8–5 scheduling. To be sure, the supply chain response will take time, so make that request now. Run that competition, but to select a second source from the best bidder that's not Oshkosh. That is, tell the prospective bidders—General Motors, Navistar Defense, AM General, and anyone else interested— that they're not competing against the formidable Oshkosh in the short run. At least one more might make the investment in competing that had been hitherto hesitating to make, guaranteeing a real competition. The result will be two lines at two firms building JLTVs, in continuing competition with one another, over five years, to produce war-winning vehicles faster and cheaper for Ukrainians who so need them.
James Hasik is a senior research fellow in the Center for Government Contracting at George Mason University, and a senior fellow in the Defense Technology program at the Center for European Policy Analysis.
Right now we at Oshkosh production are being sent home early if we chose . So we be more than happy to have the extra work.
Posted by: M smith | 21 January 2023 at 08:58