Contract Financing of the Family of Medium Tactical Vehicles Program

This report is the third of three reports addressing the acquisition of the Family of Medium Tactical Vehicles (FMTV). The first report addressed the Army conditional acceptance of incomplete vehicles. The second report addressed matters concerning the performance of Stewart and Stevenson Services, Incorporated (the Contractor) and the Army funding of the FMTV Program. This report addresses progress payments and the Contractor material management and accounting system. The Army medium tactical vehicle inventory, which consisted of approximately 95,460 2-1/2-ton and 5-ton vehicles, was costly to maintain and operate. Also, the 2-1/2-ton vehicle had key operational limitations. The Army planned to modernize the medium tactical vehicle inventory through the FMTV Program. The FMTV Program features non-developmental items whereby existing commercial components are modified as required and integrated into vehicles intended to meet military needs. The FMTV Program was stmctured to acquire 85,401 medium tactical vehicles by FY 2021. The Army estimated that the total cost of the Program would be $16.3 billion (then-year dollars). In October 1991, the Army awarded a 5-year, firm-fixed-price contract, valued at $1.2 billion, to the Contractor, for the production of 10,843 vehicles. As of October 31, 1995, the FMTV Program was about 18 months behind the original schedule.