Iranian air-defense shoots at rogue quadcopter in Tehran:
The 14 variants in the Family of Medium Tactical Vehicles (FMTV) form the core of the USA’s new state-of-the-art medium military transport truck fleet. Which in turn forms the core of the “mature logistics capability” seen in the Iraqi theater and elsewhere. FMTV trucks are all automatic transmission, and range from 2.5-ton cargo and van models to 5-ton cargo, tractor, van, wrecker, tanker, specialty, and dump-truck models in various 4×4 and 6×6 configurations. Some models also have attached trailers that increase their carrying capacity. Even so, the use of common engines, transmissions, drivelines, power trains, tires, cabs, etc. create over 80% parts commonality between FMTV models. Where possible, commercial components are used for added savings.
There have been 3 main phases of the FMTV program, including the last “SO23” open competition in 2003. All told, more than 50,000 FMTV trucks in various models have been delivered to the US Army. A bridging order to BAE continued production in Sealy, TX from 2008 through 2010, but the 4th phase re-compete saw a new firm begin FMTV production – alongside heavy truck production for the Army (FHTV) and Marines (LVSR), and medium trucks for the US Marine Corps (MTVR).
Under the new contract, Oshkosh Corp. has been awarded a competitive, 5-year requirements contract to build up to 12,415 trucks and 10,926 trailers, and provide associated support and engineering services. The total estimated contract value at award was $3.023 billion.
BAE Systems subsidiary Stewart & Stevenson won the initial FMTV competition to begin producing these trucks, and has retained the manufacturing contract through previous rebuy competitions, a merger with Armor Holdings, and Armor Holding’s absorption into BAE. The current FMTV rebuy program is a 5-year requirements contract award for up to 23,000 vehicles and trailers, as well as support services and engineering. The addition of support services is significant, and can amount to a notable portion of the contract’s full value over time.
Subsequent reports indicate that for this re-buy program, BAE Systems submitted a bid 20% lower than the current FMTV price, despite a supply chain for FMTV that is 60% directed source (i.e. sub-contractors and parts specified by the government). Oshkosh’s bid was reportedly 33% below the current FMTV price.
In addition to their role as the backbone of the US Army’s truck fleet, FMTV trucks serve as the base for key weapons systems like the future MEADS air-defense system and the new HIMARS air-portable multiple rocket launchers, and as the base for some blast-resistant vehicles like BAE’s Caiman. These designs are excluded from the FMTV re-buy.
Even without these specialty variants, FMTV production has ramped up sharply over the last few years. Initial rates of production were approximately 2,400 trucks per year, but that rate has now accelerated to 7,200 (about 32/day) and was expected to reach over 8,000 per year (about 42/day) at BAE’s plant in Sealy, TX during FY 2009.
Heavy use in theater and casualties of chance or battle have contributed somewhat to this production ramp-up, but other factors also play a major role. One is the desire to grow the US Army by over 60,000 soldiers. The importance of logistics means that more soldiers will need more trucks, especially as the regular army focuses on assuming more of the sustainment role that has traditionally been assigned to the National Guard and Reserves. Meanwhile, those military reserve forces are driving 30 and even 40 year old trucks that are reaching the end of any useful life cycle, and must be replaced quickly.
These factors mean that the FMTV’s production pace is unlikely to abate much, creating high hurdles for Oshkosh to meet. Fortunately, intellectual property rights are not an issue, as the government owns the blueprints. On the other hand, even “build-to-print” contracts usually end up accommodating contractor-specific systems and improvements. FMTV design had been frozen at the A1P2 version prior to this recompete, in order to ensure a level playing field, but a successful award opens the door to a new development and enhancement schedule. That was part of initial and ongoing discussions with the US Army, as Oshkosh prepared to ramp up its own FMTV production. So far, the transition is going well.
Budgets and production orders under this new contract include:
The current FMTV rebuy program is a 5-year firm-fixed-price requirements contract award that was originally intended for up to 23,000 vehicles and trailers, as well as support services and engineering. It has now surpassed those totals. Unless otherwise noted, US Army TACOM Life Cycle Management Command in Warren, MI, manages the contracts, and Oshkosh Corp. in Oshkosh, WI is the contractor. Bids for the original contract were solicited on the World Wide Web, with 3 bids received.
FY 2015-2017
January 18/17: Israel’s Defense Ministry has contracted Oshkosh Defense to provide 200 FMTV tactical trucks. Valued at $200 million, the deal comes after vigorous field testing by Israel of six trucks to ensure the firm’s Family of Medium Tactical Vehicles (FMTV) meets Israeli requirements. It’s expected that this order will be added too, as Tel Aviv begins the replacement of the nearly 60-year old tactical trucks currently used by its logistics branch.
September 24/15: Oshkosh Defense has been handed a $47 million modification to add an additional 184 medium tactical vehicles to a $4.7 billion Foreign Military Sales order in 2009, with the new vehicles headed for Iraq. The vehicles are scheduled for delivery by February 2017.
FY 2012
April 13/12: A $60.1 million firm-fixed-price contract modification for FMTVs. Work will be performed in Oshkosh, WI, with an estimated completion date of Sept 30/14 (W56HZV-09-D-0159).
April 2/12: A $294.7 million firm-fixed-price contract for FMTV support services. Oshkosh, on the other hand, says the contract will buy “more than 2,500” FMTV trucks and trailers for the U.S. Army, and adds that the US Army has now ordered “more than 29,000” FMTV trucks and trailers from them. From a program standpoint, that would be on top of previous orders to Armor Holdings and its eventual buyer, BAE Systems.
Work will be performed in Oshkosh, WI, with an estimated completion date of Sept 30/14 (W56HAV-09-D-0159). See also Oshkosh release.
March 30/12: The Pentagon’s Selected Acquisitions Report ending Dec 31/11 includes FMTV, and isn’t good news for Oshkosh:
“Program costs decreased $1,965.7 million (-10.5%) from $18,731.4 million to $16,765.7 million, due primarily to a quantity decrease of 7,463 trucks from 87,839 to 80,376 trucks (-$1,266.1 million) and associated schedule, engineering, and estimating allocations
Feb 23/12: Oshkosh Defense unveils its “FMTV Enhanced Protection & Mobility Demonstrator” (EPMD) at AUSA Winter. The prototype vehicle utilizes the same Oshkosh TAK-4 independent suspension system that equips USMC trucks, and which is retrofitting many Army MRAPs. That change will improve mobility, while a custom-fitted Oshkosh Underbody Improvement Kit (UIK) improves protection against land mines.
These changes are important on a business level, because Oshkosh was depending on sales of upgrades and improved versions, in order to offset its unprofitable base bid (vid. Jan 9/12). Now the question becomes whether the US Army will bite.
Feb 3/12: Proxy battle win. Oshkosh’s 8-K/A filing says that all 13 of the corporation’s nominated Board members were elected, and all 6 of the Icahn Group’s nominees were defeated.
Icahn came close to getting a seat on the Board for his group, and that 13th seat had to wait for the full count, but overall, it’s a pretty stinging rebuff. The company nominee with the fewest share votes was Harvey N. Medvin, at 40,619,097; 5 of his 12 colleagues received over 79 million share votes. The Icahn nominee with the most share votes was Samuel Merksamer, at 39,016,262; 3 of his 5 colleagues received less than 15.5 million share votes, and those 3 were the only nominees to have more “withheld” votes than affirmative votes.
Jan 17/12: A $17.1 million firm-fixed-price contract modification to buy FMTV air conditioning install kits. Work will be performed in Oshkosh, WI, with an estimated completion date of Oct 31/13 (W56HZV-09-D-0159).
Jan 17/12: Oshkosh touts endorsements of its Board of Directors slate from independent proxy advisory firms Glass Lewis & Co. (Glass Lewis) and Egan-Jones Proxy Services (Egan-Jones). Voting is Jan 27/12.
Jan 9/12: Proxy battle – I choose you, Pikachu! The proxy skirmish with Icahn turns into a war – and the FMTV contract is a prominent feature. Icahn’s SEC DFAN14A materials express concern about the coming FHTV re-bid, and identify Oshkosh’s FMTV win strategy as 1 of 2 devastating strategic mistakes (the 2006 JLG acquisition being the other) that have consumed management’s attention and driven down profitability, even as other business segments have floundered and need focus:
“We believe that the FMTV represents the single largest problem with the future of this company… We believe this unprofitable contract represents management’s unrealistic attitude and poor planning, as well as the board’s lack of oversight on a product that represents over half of segment revenue.”
Oshkosh management’s filing points to the JLG acquisition as key to its M-ATV MRAP win, cites growing market share in defense, and asks for shareholders to wait for its markets to pick up. It directly attacks Icahn’s Board candidates as, in effect, a bunch of dependent puppets with little relevant experience in its key segments of defense or construction, and poor records with other companies. Management adds that Mr. Icahn has tried to circumvent Wisconsin’s business combination statute for shareholder protection, alleges that he had offered no substantive ideas to Oshkosh management when asked (though his DFAN14A has clear positions), and states that he refused to discuss his analysis behind the Navistar merger recommendation. In its 8-K filing, however, Oshkosh management make a concession, by pledging to “report profit on its Family of Medium Tactical Vehicles contract for the first quarter of fiscal 2012.”
The facts of the matter do make it appear that the Army played its FMTV hand well, and Oshkosh chose a strategy that failed at every point. As BAE surmised at the time, given the value of Army-specified sub-contracts, Oshkosh’s bid could not be profitable, and has not been. Worse, the Army chose not to be interested in enhancements, which would have restored some profit for Oshkosh; they also front-loaded FMTV purchases, before price-escalation clauses in the contract could kick in. Though this acquisition approach drove down short-term costs, in the long term, it could actually backfire on the Army by destroying 2 key suppliers. With BAE’s Sealy, TX truck plant largely emptied of work and staff, an analysis from the Lexington Institute sounds a cautionary note for the US Army, and wonders if its procurement victory will prove as pyrrhic as Oshkosh’s:
“[Oshkosh] finds itself in this predicament because it made some ill-timed acquisitions at the top of the sub-prime real estate boom (most notable lift-maker JLG), and then sought to compensate for its error by bidding very aggressively on Army truck contracts… workers would not be the only victims of the [proposed Navistar merger]… [A commercial suppliers strategy] ignores the loss of control implied for the Army customer. When you are by far the biggest source of demand for a company’s products, then you can pretty much dictate the terms of the relationship. When you are only one of many customers, you have less influence… The fact that submerging Oshkosh into the Navistar culture will give the Army fewer competitive options in the future is fine with [Icahn]; that’s how you get pricing power.”
It all comes to a head on Jan 27/12. See: Oshkosh 8-K | Oshkosh management’s SEC DEFA14A filing (see esp. pp. 38-44) | Icahn Group DFAN14A arguments | The Street | Reuters | Lexington Institute analysis.
Jan 5/12: A $27.3 million firm-fixed-price contract modification for more FMTVs. Work will be performed in Oshkosh, WI, with an estimated completion date of June 30/13. The original bid was solicited through the Internet, with 3 bids received by US Army Contracting Command in Warren, MI (W56HZV-09-D-0159).
Jan 5/12: A $7.6 million firm-fixed-price contract modification to support FMTVs. Work will be performed in Oshkosh, WI, with an estimated completion date of Oct 13/13. The original bid was solicited through the Internet, with 3 bids received by US Army Contracting Command in Warren, MI (W58HZV-09-D-0159).
Dec 6/11: Navistar/Oshkosh merger? Billionaire Carl Icahn owns 10% of Navistar, and 9.51% of Oshkosh, so his comments that the 2 companies should merge draws a lot of attention. He tells CNBC:
“I definitely think it would be a good merger. I think there would be a lot of synergy. I own stock in both and I think shareholders of both companies would benefit.”
Both Boards of Directors are maneuvering defensively around Icahn. Navistar agreed to put its Board up for election each year, but agreed not to propose his own slate of directors at the annual meeting. Things are a bit more open at Oshkosh, where Icahn is proposing Board slates, and has been increasingly critical of existing management.
Nov 10/11: A $19.1 million firm-fixed-price contract for 129 FMTVs; 11 armor B-Kits; 20 FMTVs; and 20 FMTV “High Mobility Artillery Rocket System B-Kits; with install for United Arab Emirates.” Work will be performed in Oshkosh, WI, with an estimated completion date of June 30/13 (W56HZV-09-D-0159).
The wording above is somewhat unclear, but Oshkosh has now confirmed that the UAE order is just 20 trailers and armoring B-kits. The UAE has an active HIMARS program, which began with their September 2006 DSCA request. As a Feb 3/09 announcement from BAE suggested, the UAE had already bought its FMTV chassis.
FY 2011
Sept 29/11: A $30 million firm-fixed-price contract modification for 452 FMTV family trucks, and 86 up-armoring B-kits. Work will be performed in Oshkosh, WI, with an estimated completion date of June 30/13 (W56HZV-09-D-0159).
According to DID’s records, based on announced contracts, this brings the total number of FMTV trucks ordered under this new contract to 23,665, plus 2,806 trailers, and 127 up-armoring B-kits, at a cost of about $3.69 billion.
Aug 1/11: A $904.2 million firm-fixed-price contract modification to procure 6,963 FMTV truck variants. Work will be performed in Oshkosh, WI, with an estimated completion date of June 30/13 (W56HZV-09-D-0159). See also Oshkosh release.
Aug 1/11: James Hasik’s new research service offers a timely memorandum, asking how much money Oshkosh is losing on its FMTV contract: “Just how much money is Oshkosh losing on the FMTV contract? And should the customer care?.”
That has long been suspected, as over 60% of the FMTV truck’s cost is fixed-price, mandatory “directed source” items from subcontractors, and Oshkosh’s bid was reportedly 33% below the SO23 contract’s FMTV price. Using information from past orders, such as those listed here, he gets average current contract costs of $181,000 per truck and $71,000 per trailer, which seems to match up with order totals so far. Further estimates involving relative truck production rates, relative value, and announced margin rates for the defense division:
“…give us estimates of -21% as the FMTV margin in Q2 2011, -15% as the FMVT [sic] margin in Q3 2011… with some slightly different assumptions, I got margins of -10% and -6%.1 As the FMTV contract will account for at least $150 million of Oshkosh Defense’s business over the next five years, taking losses can’t be shrugged off… as Charlie Szews has taken personal control at Defense, the problem has clearly been recognized. And indeed, if the overall margin is improving with increasing volume, then they’re not losing money on every truck. It’s not as though the value of the bill of material exceeds the sale price. There’s a positive contribution margin, so there’s hope that things might work out… Today, we have the beginnings of ex post measures – actual, if inferred, performance on the contract. Losing 15 percent on a $295 million gig means that you’re spending $347 million to get that 295; in short, that’s a $52 million quarterly loss. Yet quite apart from the commercial business, Defense is still grossing about a billion dollars quarterly, and the bonanza of the M-ATV work is almost at an end. So that bid on the FMTV contract, which now seems to have been hazardous, should still not prove fatal. Oshkosh may yet turn it around, but even if it doesn’t, only Oshkosh’s shareholders will suffer.”
While Hasik’s concern is focused on whether the contract would endanger Oshkosh as a company, there’s also an industrial base issue, wherein a supplier bids below cost, in order to drive a competitor out of business and secure a monopoly or near monopoly position with respect to American production facilities. That’s precisely the situation in the Boeing/Airbus tanker competition, which will also cost taxpayers above and beyond the bid price. It’s likely that as the defense business contracts under spending cuts, we’ll see more of this behavior. It isn’t clear that the US DoD has thought about this issue, and determined the best guidelines for responding.
July 25/11: A $30.5 million firm-fixed-price contract for 185 FMTV trucks and 1 armor B-kit. Work will be performed in Oshkosh, WI, with an estimated completion date of April 3/13 (W56HZV-09-D-0159).
June 14/11: A $7 million firm-fixed-price contract for 44 FMTVs. The contract runs until March 31/12 (W56HZV-09-D-0159).
April 20/11: A $71.8 million firm-fixed-price contract for 417 FMTVs of different types. Work will be performed in Oshkosh, WI, with an estimated completion date of March 31/12 (W56HZV-09-D-0159).
April 15/11: The Pentagon’s Selected Acquisitions Report ending Dec 30/10 includes FMTV program changes – but they cost adjustments are downward:
“Family of Medium Tactical Vehicles (FMTV) – Program costs decreased $1,895.2 million (-9.2 percent) from $20,626.6 million to $18,731.4 million, due primarily to reductions in costs resulting from the award of a new competitive re-buy contract (-$2,308.6 million), acceleration of the procurement buy profile (-$328.9 million), and a change in the model mix (-$230.4 million). There are additional decreases for fielding and non-recurring costs (-$236.7 million) and other support (-$149.1 million) due to early completion of the program. These decreases are partially offset by a quantity increase of 4,654 trucks from 83,185 to 87,839 trucks (+$786.5 million) and associated schedule, engineering, and estimating allocations
Feb 28/11: A $25.2 million firm-fixed-price contract for 315 FMTV medium trucks, 3 B-Kits, and program support. Work will be performed in Oshkosh, WI, with an estimated completion date of March 31/12 (W56HZV-09-D-0159).
According to DID’s records, based on announced contracts, this brings the total number of FMTV trucks ordered under this new contract to 15,604.
Feb 14/11: The Pentagon issues its FY 2012 budget request, even as the new 112th Congress is forced to debate a FY 2011 budget, in order to repair the failure of the 111th Congress to pass one. The FY 2010-2011 requests were around $1.4 billion, but FY 2012’s request drops sharpy to $448 million for a total of 2,442 more FMTV trucks).
Dec 3/10: A $413.2 million firm-fixed-price contract for 1,800 family of medium tactical vehicles for the US Army National Guard. Work will be performed in Oshkosh, WI with an estimated completion date of March 12/13 (W56HZV-09-D-0159).
Dec 3/10: A $100.1 million firm-fixed-price contract for 1,800 family of medium tactical vehicles for the US Army National Guard. Work will be performed in Oshkosh, WI with an estimated completion date of March 12/13 (W56HZV-09-D-0159). DID is investigating the discrepancy in these figures.
Nov 19/10: As final deliveries from BAE Systems continue, and initial deliveries from Oshkosh begin, the U.S. Army is busy testing the new FMTV trucks at Aberdeen Proving Ground, MD, and Yuma Proving Ground, AZ. Lt. Col. Shane Fullmer, the Army’s product manager for medium tactical vehicles:
“Testing is going very well. The process involves 20,000 miles of reliability and durability testing – plus performance testing which is everything from [performance on] slopes to speed, endurance and payload capability… Given what we’ve seen to date, we are in good shape to easily meet our reliability requirements.”
The trucks are also subject to live fire blast testing, and performance testing including fording, hill grade/ payload tests, pull capability for tractors, etc. Testing is expected to conclude in the spring of 2011. US Army.
Nov 19/10: A $797.9 million firm-fixed-price contract for 4,773 FMTV trucks – though the Oshkosh release says that 590 trailers are part of that total, meaning truck orders are just 4,183. Work will be performed in Oshkosh, WI, with an estimated completion date of March 31/12. Oshkosh is more exact: deliveries are scheduled to begin in September 2011, and finish in August 2012. (W56HZV-09-D-0159).
Based on announced contracts listed in this article, the current rebuy program has issued $2.1 billion in contracts so far, to buy 13,239 trucks, 1,156 trailers, and 37 armoring b-Kits.
FY 2010
Sept 10/10: A $260.1 million firm-fixed-price contract for the production of 2,060 FMTVs. Work is to be performed in Oshkosh, WI with an estimated completion date of March 31/12. (W56HZV-09-D-0159). Oshkosh release
Sept 3/10: A $20.5 million firm-fixed-price contract for 122 FMTV vehicles by March 31/12, with work to be performed at Oshkosh, WI (W56HZV-09-D-0159).
Aug 16/10: A $201.5 million firm-fixed-price contract for 1,288 FMTV trucks. Work is to be performed in Oshkosh, WI, with an estimated completion date of March 31/12 (W56HZV-09-D-0159).
July 2/10: A $105.6 million firm-fixed-price contract for 621 FMTV trucks, and 43 trailers. Work will be performed in Oshkosh, WI, with an estimated completion date of March 31/12 (W56HZV-09-D-0159).
July 2/10: A $30.9 million firm-fixed-price contract for 167 FMTV trucks, 37 armor b-kits, and 119 trailers. Work will be performed in Oshkosh, WI, with an estimated completion date of March 31/12 (W56HZV-09-D-0159).
May 27/10: Oshkosh Defense ships its first FMTV trucks and trailers to the U.S. Army, including a Long-Term Armor Strategy (LTAS)-compliant cab. The 2 trucks represent 2 different FMTV variants and their trailers, and were shipped ahead of schedule. The original timeline had Oshkosh Defense beginning to deliver full production units in October 2010. Oshkosh Defense.
May 10/10: Oshkosh Corp. in Oshkosh, WI receives a $410.1 million firm-fixed-price contract for 2,230 FMTV family trucks, and 404 trailers, for deliveries scheduled between March and December 2011. To date, Oshkosh Corporation has received orders valued at more than $690 million under the new FMTV contract, and the company will begin supplying initial trucks to the Army this month for performance and durability testing. Production deliveries will begin in October 2010, and the contract’s formal completion date is March 31/12. (W56HZV-09-D-0159).
As part of its efforts, Oshkosh Corporation has also broken ground on a new 150,000-square-foot, state-of-the-art electrocoat (E-coat) facility in Oshkosh, WI, to support the FMTV program, and possibly other programs. The E-coat facility will help ensure corrosion protection, one of the FMTV fleet’s key attributes in order to meet its demanding time-of-service requirements; competitor BAE Systems had an operational E-coat facility of its own in Sealy, TX, but that may now be closed. Start-up of Oshkosh’s facility will begin in late summer 2010, and the firm is also moving into a new building in Warren, MI for FMTV System Technical Support (STS) work. The firm expects to hire up to 190 new employees. See also Oshkosh Defense release.
April 27/10: The Oshkosh award may end up complicating life for the M142 HIMARS rocket launcher program, fielded by the US Army and Marines, and by several foreign militaries. The Army has 2 more years of buying HIMARS, but there’s a 14-month lag from contract award to delivery. The Army planned to procure its last 44 BAE chassis for the HIMARS system in FY 2011 under its bridging contract, but BAE is expected to discontinue FMTV production during the period of time it would take to build the chassis.
Col. Dave Rice, program manager for precision fires, rocket and missile systems, added that BAE’s Increased Crew Protection (ICP) cab for the HIMARS is a proprietary design. The Army will “have to see if the cab changes are militarily significant,” and then decide what to do. Gannett’s Army Times.
April 23/10: A bnet columnist criticizes Michigan for awarding Oshkosh a tax break, in order to do what it had to do anyway:
“As part of the contract, Oshkosh Defense agreed to establish a technical center in Michigan that will eventually employ up to 200 people. The office will be located on the site of the closed Detroit Arsenal Tank Plant. The Army office that manages vehicle acquisition is located in the area, so it makes sense for Oshkosh to have people nearby.
And there’s the rub. The state gave Oshkosh a $6.4 million tax credit to help build the facility. This is part of a “renaissance zone” program to revitalize older, existing industrial sites. Oshkosh won’t pay taxes until 2011 at the earliest and then it might well be at a reduced rate.
The question is: Does Oshkosh need the help? The company would have needed an office, anyway, to manage both the MRAP-ATV and the FMTV contracts. So it appears that Michigan is essentially paying some of Oshkosh’s costs. Considering that the state is running a $1 billion budget deficit (after $1 billion in spending cuts), it’s hard to justify giving Oshkosh tax breaks to do something it was already planning to do.”
New / Old kid in townFeb 12/10: Oshkosh keeps the award. US Department of Defense:
“The Department of the Army announced today that it has re-evaluated the contract award decision for its Family of Medium Tactical Vehicles (FMTV) originally made on Aug. 26, 2009. This change was based on Government Accountability Office’s (GAO) recommendations. Accordingly, Oshkosh Corp. has been awarded a competitive, five-year requirements contract for production of up to 12,415 trucks, 10,926 trailers, and associated support and engineering services. The total estimated contract value at award was $3.023 billion… From Dec. 21, 2009, to Jan. 22, 2010, the Army re-evaluated the proposals in accordance with the GAO’s recommendation. Subsequently, there was an Office of the Secretary of Defense peer review affirming the Army’s reevaluation process.”
Oshkosh celebrated the award in a corporate release, while BAE Systems was forced to notify its investors:
“…the Group will include in its 2009 accounts an impairment of goodwill and other intangible assets amounting to [GBP] 592 million relating to the Armor Holdings Inc. transaction and specifically the FMTV product line.”
The news is a major blow to BAE Systems’ $4.53 billion acquisition of Armor Holdings. With its core FMTV business about to end, MRAP production finished, and the M-ATV competition lost to Oshkosh, much now rides on the JLTV competition. At the same time, BAE Systems’ UK facilities recently announced potential job losses in its submarine business, and a minor trimming of its Nimrod-related workforce.
Dec 14/09: Congress’ Government Accountability Office issues its decision, recommending that the Army reevaluate the offerors’ capability evaluation factor, and make a new selection decision. GAO managing associate general Michael Golden said that:
“Our review of the record led us to conclude that the Army’s evaluation was flawed with regard to the evaluation of Oshkosh’s proposal under the capability evaluation factor, and the evaluation of Navistar’s past performance… We also denied a number of Navistar’s and BAE’s challenges to the award to Oshkosh, including challenges to the evaluation of Oshkosh’s price.”
By statute, the Army now has 60 days to inform the GAO of its response to the GAO’s recommendations. BAE Systems welcomes the decision, while looking forward “to reviewing the full GAO report and its recommendations so we can fully consider the implications for our business and our options…” Oshkosh Corporation Chairman and CEO Robert G. Bohn said in their corporate release that challenges to the evaluation of the Oshkosh Corporation price had been denied, adding that:
“It is important to realize that today’s decision did not recommend proposal revisions nor did it recommend termination of our contract… We believe that when these narrow issues are reconsidered, the Army’s decision to award Oshkosh Corporation the FMTV contract will be maintained.”
See: Redacted GAO decision [PDF] | Navistar release | Oshkosh release | The Hill.
Nov 19/09: Oshkosh discusses its efforts to secure tax breaks from the city of Oshkosh, as it plans to expand its manufacturing facilities by adding a new 150,000-square-foot electrocoat (E-coat) painting facility for FMTV production. The company plans to break ground on the new E-coat facility in December 2009, with start up beginning late summer 2010. Oshkosh | The Northwestern.
The financing package would have the city provide up to $5 million in tax incremental financing (TIF), while the state would provide $35 million in tax credits and other assistance for the plant. The TIF district is pending approval by the Oshkosh Common Council. BAE Systems promptly weighs in, of course:
“BAE Systems has two electrostatic E-Coat stations at our Sealy, Texas facility, one for large parts and one for small parts. As outlined on p. 41 of the redacted second supplemental protest document, the Army’s FMTV re-buy solicitation provided that: “An offeror that currently has existing facilities that can be utilized, or modified to build FMTV vehicles may be determined to be less risky than an offeror that has to acquire facilities to produce vehicles on the contract.” E-Coat is a requirement to build FMTV and is at the heart of its corrosion protection. Parts must be completely immersed in electrophoretic paint emulsion, at which point an electrical charge is run through both and then the parts are drained entirely.
As we read of our competitor seeking taxpayer assistance to build a new E-coat facility – in a very short time frame – to meet the requirements of the FMTV contract, we find it totally inconsistent with the source selection criteria to believe that BAE Systems, with two E-coat facilities in current operation, is considered equal in risk with a company that doesn’t have this essential capability and is looking for the taxpayers to pay for it.”
Nov 18/09: BAE Systems holds a teleconference to discuss their protest, and the recent GAO hearings. A GAO decision is expected by Dec 14/09, which is the 100th day, in conformance with GAO rules.
One clarification up front is that FMTV variants used as part of other weapons system, such as HIMARS rocket launchers, SLAMRAAM air defense systems, MEADS air defense systems, and the FMTV Low-Velocity Airdrop version used by airborne forces, were all removed from the re-buy competition in February 2009. Program managers for those systems will apparently make those decisions, but BAE does have some unique intellectual property in those vehicles’ current designs. If lack of production orders causes BAE to shutter their Sealy, TX facility, the firm would have to begin production of those variants elsewhere at added cost; alternatively, any competitor selected instead would have to replicate and test the vehicles’ mission-specific design features, either at its own expense or at the government’s. The derivative Caiman MRAP was never part of the FMTV re-buy, and remains BAE’s intellectual property.
In response to questions from DID regarding the applicability of Oshkosh’s rapidly fielded and produced M-ATV MRAP as a risk-evaluation precedent, BAE representatives made several points. The core of those points was that M-ATV was an internally-held design, whereas FMTV is a government-held TDP (technical documentation), which does not include all of the know-how needed to build the vehicle, and has a much longer and more involved process for changes. In conjunction with a production schedule that resembles M-ATV’s aggressiveness, and the production of only 1 FMTV prototype from Oshkosh to date, BAE believes this represents added risk.
BAE Systems also believes there’s a question around the FMTV A1 LTAS-compliant (Long Term Armoring Strategy) cab design, which is currently BAE’s design. Competitors must re-design that cab, and replicate and test the A1P2 cab’s level of protection, which is just being fielded now. An Aug 13/09 Oshkosh release says that Oshkosh has done this design work at its own expense, but the release does not mention testing; BAE’s protest includes their observation that a design which requires testing and verification adds production and design risk.
Finally, with respect to reports from sources like the Lexington Institute (vid. Nov 4/09 entry), BAE representatives confirmed that Oshkosh’s $3 billion total evaluated price bid underbid the current FMTV price in the neighborhood of 30%, but add that BAE’s re-buy bid price was lower, too. The government, “for whatever reason,” published Oshkosh’s contract bid on their web site, down to variant level pricing. BAE systems knows the trucks very well, and fully 60% of the trucks’ value is directed source, which means the winning contractor must use those suppliers. BAE representatives do not believe that Oshkosh’s prices are realistic, and display similar skepticism regarding some of the elements of Oshkosh’s insourcing claims.
Oshkosh Defense was contacted regarding BAE claims, but chose not to respond.
Nov 18/09: The Greater Houston Partnership business advocacy umbrella organization releases the results of their study, which claims that the region would lose 3,400 direct jobs and 6,766 indirect jobs if Oshkosh retains the contract, with other effect spreading beyond to the state of Texas. The Partnership is joining other Sealy FMTV Task Force members in calling on the Army to put the contract out for a re-bid – in effect, a do-over. PR Newswire release.
Nov 17/09: BAE Systems releases a redacted version of its protest to the public, following agreement from the GAO and even Oshkosh. Its core allegation is that the buy was not best value, but became a solely price-based competition that disregarded risk factors. The protest also cites other past GAO cases that it believes to be analogous. Redacted FMTV Protest [PDF, 6.5 MB].
Nov 9-10/09: The GAO holds hearings regarding the FMTV protest. GAO hearings usually held when there are conflicting factual issues, and the dispute cannot be resolved merely from submissions. This is longer than usual for such hearings, but reports indicate that an array of Army witnesses were called.
Nov 4/09: Loren Thompson of The Lexington Institute predicts that the GAO will overturn the Army’s decision:
“Let’s revisit what happened in that competition, and ask whether a protest seems warranted…[The Army] made the award after concluding that incumbent BAE Systems and Oshkosh were essentially equal in all non-cost selection criteria, but that Oshkosh offered a more attractive price… On price, the Army accepted a bid from Oshkosh that is 30% below the price BAE Systems is currently charging for the vehicle – even though Oshkosh, with no direct experience in manufacturing the product, must turn out a vehicle with the same performance specifications and features, using many of the same suppliers. When challengers to an established producer offer such huge price reductions to win a contract, it is standard procedure to conduct a rigorous analysis of how realistic the challenger’s price is. Yet there is little evidence the Army made any such effort… leveling of non-cost factors… allowed… a “best value” award solely on the basis of price. But unlike BAE, Oshkosh did not have all production facilities or tooling in place; its workforce was not experienced in building FMTV trucks; it did not have established relationships with all suppliers; and it did not have a validated design for the required armored cab in the vehicle. So to say the rivals represented equivalent risk is simply not believable – especially given the very aggressive price targets Oshkosh’s bid required it to meet. GAO will see this award for what it was, and act accordingly.”
See: Issue Brief | Subsequent elaboration.
Oct 16/09: BAE Systems files another supplemental protest to the GAO:
“…after finding additional concerns with the source selection process during the U.S. Army’s Family of Medium Tactical Vehicles (FMTV) rebuy competition… BAE Systems is increasingly convinced the service’s source selection evaluation was flawed and that the Army did not follow its own stated objective to conduct a best-value FMTV competition based on a clear-cut set of criteria… BAE Systems is requesting that a redacted version of the supplemental protest be made available publicly. In order for release of a redacted supplemental protest, all parties involved in the matter must agree to its release.”
FY 2009
Sept 11/09: BAE Systems files a supplemental protest.
Sept 4/09: Both BAE Systems and Navistar Defense file GAO protests (file# 401865.2, 401865.1) regarding the FMTV award to Oshkosh. BAE:
“BAE Systems has filed a protest with the U.S. Government Accountability Office (GAO), asking the agency to review the decision by the U.S. Army to award a contract to a competitor for the Family of Medium Tactical Vehicles (FMTV) rebuy program. After a detailed analysis of the information provided by the Army, before and during the formal competition debrief, the Company believes that the Army did not properly evaluate the proposals, consistent with the Government’s stated requirements, and the Army failed accurately to assess the various risks associated with the different proposals.”
The GAO protests will put the FMTV re-buy contract on hold until a decision is rendered. A decision is expected by Dec 14/09.
Aug 26/09: Oshkosh wins the FMTV production re-compete, and an initial $280.9 million order for 2,568 trucks and trailers, plus OY 01 data, additional care and storage, component first article test, first production vehicle inspection test, production verification test, live test family medium tactical vehicles winch, armor B-kits, and federal retail tax. Work is to be performed in Oshkosh, WI, with initial test vehicle deliveries are planned for mid-2010, followed by production vehicle deliveries later in that year. With an estimated completion date of April 30/10 for this order. Bids were solicited on the World Wide Web with 3 bids received by TACOM LCMC Warren, AMSCC-TAC-ATB in Warren, MI (W56HZV-09-D-0159).
Wisconsin Governor Jim Doyle is quoted as saying that the total contract could be worth up to $2.6 billion and create 2,000 production jobs in the state. That’s definitely conservative, with other analysts placing the value closer to $4.5 billion, plus maintenance. Through the state’s Enterprise Zone program, Wisconsin will provide up to $35 million in tax credits over the next 12 years to support the project. In response to the win, Oshkosh CEO Robert Bohn reportedly said that “We’ve been known for a long, long time as a manufacturer that delivers on time and I think that helped us.” While it certainly didn’t hurt, BAE Systems had its own strong delivery record, including the top ranking among MRAP vehicle suppliers. It is very likely that the key differentiators lay elsewhere; tellingly, Oshkosh would not comment on pricing.
Over the past 17 years, Armor Holdings/BAE Systems has delivered more than 56,000 FMTV trucks and trailers, which have maintained a 94% average operational readiness rate in both Iraq and Afghanistan. BAE’s financial planning assumed FMTV-related sales and maintenance activities of about $2 billion in each of 2009 and 2010, dropping to less than $1 billion per year from 2011 onward. BAE announced that it “will continue to fulfill these commitments and consider its options as it carefully reviews the Army’s latest decision.” Translation: a protest is possible. Its absence would be surprising in the current climate, given the contract’s potential value.
FMTV bridge buys and maintenance efforts will continue using BAE Systems on Sealy, TX over 2009 and 2010, per the existing bridge-buy contract and partnership with Red River Army Depot. During this period, Oshkosh will make preparations, discuss final design details with the US Army, and ramp up production.
The long-term earnings hit, and implicit questions regarding the current value of its $4.5 billion Armor Holdings acquisition in 2007, sent BAE’s stock sliding. With MRAP production ended, MRAP-ATV going to Oshkosh, and its FMTV mainstay removed, BAE Systems’ American land vehicle strategy has taken a series of body blows that make the future JLTV competition even more important to the firm. Oshkosh stock has gone in a different direction, in the wake of a sole-source award to continue producing the US Army’s FHTV heavy trucks, its status as the ongoing manufacturer of the US Marines’ medium (MTVR) and heavy (LVSR) truck fleets, and a recent multi-billion win in the blast-resistant M-ATV competition that will also make them a contender for the larger JLTV Hummer replacement buy. See: Oshkosh Defense | BAE Systems | Milwaukee Business Journal | Bloomberg | UK’s Financial Times | Reuters.
May 27/09: BAE Systems submits its bid for the FMTV re-compete. Their corporate release touts over 17 years of experience, during which their 2,700 person facility in Sealy, TX has manufactured more than 53,000 FMTV trucks and trailers in 21 variants.
BAE is touting the strength of its workforce and its embedded knowledge that goes beyond the blueprints, and into production processes, efficiency, and proven flexibility. The delivery record for FMTV and its derivative Caimin MRAP vehicles has been excellent; indeed, Caimin was the #1 MRAP vehicle in its ratio of on-time to promised deliveries. Then, too, there is the specialized infrastructure like BAE’s Sealy e-coat facility, and privately developed off-blueprint additions like “miles to go on this tank” indicators and other enhancements.
May 27/09: Oshkosh submits its bid for the FMTV A1P2 re-buy contract. Their main competitor is a Sealy, TX incumbent with a formidable performance record of its own. In that situation, Oshkosh’s required priorities are twofold: (1) Avoid anything that might tip the scales against them, even slightly. That means driving perceived performance risk as close to zero as possible, and creating a net zero for political risks; and (2) produce a proposal that offers credible improvements in price and/or performance, against a very strong competitor.
In discussions with DID, the firm outlined the core of its case. Assuming a level playing field, the key criteria for this contract are price and past performance. Oshkosh believes they have a very credible, fact-based price derived from their own experiences building about 10,000 MTVR medium trucks for the Marines, and the fact that almost 90% of FMTV suppliers are already Oshkosh suppliers.
In terms of past performance risk, they pointed to the fact that their integrated production line has conducted simultaneous production of 10 models, totaling 29 variants – a record that matches well with the FMTV re-buy’s high mix/ low individual volume schedule. Oshkosh also touts its performance in the area of engineering and logistics support, which has become an integral aspect of the FMTV program. Their work with MTVR and the Army’s FHTV heavy truck family gives them a very wide field support network, and the firm cites its fast delivery and fielding of up-armored heavy trucks after the Army confirmed its LTAS armoring strategy. They’re building on that record with their FMTV related risk-reduction investments, which include an internally-financed design for an LTAS-compatible FMTV cab.
If Oshkosh wins, production would mostly take place on the firm’s existing campus in Oshkosh, WI, with some sub-contracting to current subcontractors. That kind of concentration generally improves price and efficiency numbers, but lowers political leverage. The other potential political strike is the “industry consolidation” card, which notes the risks of placing all medium and heavy truck production (Army’s FMTV & FHTV, USMC’s MTVR & LVSR) with one supplier and, for the most part, one campus. Oshkosh’s response is to cite the number and range of large firms involved in the MRAP and JLTV programs, and to state their belief that there has been a fundamental industry change over the past few years. Oshkosh Defense release.
Additional ReadingsCitizens want to know what the EU is doing to reduce the consumption of plastic bags given the negative impact on marine wildlife and the environment.
In the EU, plastic carrier bags are considered as packaging under Directive 94/62/EC. The use of plastic carrier bags result in littering and an inefficient use of resources. Moreover, the unmanaged disposal of these bags leads to environmental pollution and aggravates the widespread problem of litter in water bodies, threatening aquatic eco-systems worldwide.
Legal frameworkRichard Carey / Fotolia
The Directive 94/62/EC on packaging and packing waste, and the successive amendments, aim to harmonise national measures concerning the management of packaging and packaging waste in order, on the one hand, to prevent any impact thereof on the environment of all Member States as well as of third countries or to reduce such impact, thus providing a high level of environmental protection, and, on the other hand, to ensure the functioning of the internal market and to avoid obstacles to trade and distortion and restriction of competition within the Community.
Directive (EU) 2015/720 amending Directive 94/62/EC, defines measures to reduce the consumption of lightweight plastic carrier bags, including imposing charges or setting national maximum consumption targets.
Objective of EU directive on lightweight plastic bagsDirective 2015/720 entered into force on 26 May 2015 and deadline for transposition in Member States was by 27 November 2016.
The objective of the directive on lightweight plastic bags is to limit negative impacts on the environment, in particular in terms of littering, to encourage waste prevention and a more efficient use of resources, while limiting negative socio-economic impacts. More specifically, the proposal aims at reducing the consumption of plastic carrier bags with a thickness of below 50 microns (0.05 millimetres) in the European Union. There is an exemption for very light bags, intended for the protection of fresh produce.
The measures must include either one or both of the following:
By 27 May 2017, the Commission should present a report to the European Parliament and to the Council, examining the impact of the use of ‘oxo-degradable’ plastic carrier bags on the environment and present a legislative proposal, if appropriate.
Parliamentary questionsMEPs have put several parliamentary written questions to the Commission on plastic bags. In its answer of 16 June 2015, the Commission stated that the ‘directive requires Member States to implement a predefined maximum national consumption objective and/or to put in place instruments ensuring that lightweight plastic carrier bags are not provided free of charge. The measures adopted by Member States have to be proportionate, non-discriminatory and non-protectionist.’
In its answer of 13 June 2016, the Commission sets out that it ‘is preparing an implementing act laying down the specifications for labelling or marking home-compostable lightweight plastic carrier bags. Furthermore, studies are being carried out on behalf of the Commission on the impact of the use of oxo-degradable plastic carrier bags on the environment and on the life cycle impacts of alternatives to very lightweight plastic carrier bags. Results are expected in the second half of 2016’.
In an answer of 1 July 2016, the Commission also explains that ‘Measures to be taken may involve the use of economic instruments and marketing restrictions. Measures may vary depending on the environmental impact of the lightweight plastic carrier bags when they are recovered or disposed of, their composting properties, durability or specific intended use’.
Further informationMore details on packaging and packaging waste is available from the European Commission. The European Parliamentary Research Service keysource product highlights links to the views of stakeholders entitled ‘Plastic Bags, Forever?’.
Do you have any questions on this issue or another EP-related concern? Please use our web form. You write, we answer.
Aster 30 Block 1 NT:
The latest European Defence Matters magazine is now available with a special focus on the European Defence Action Plan (EDAP) presented by the European Commission in November 2016.
NEW: the magazine is from now on available ONLINE in a user-friendly, state of the art responsive lay-out and accessible via all your devices: smartphone, tablet or desktop! Check it out HERE
An eventful and turbulent 2016 has triggered a new ‘momentum’ for European defence cooperation which crystalized into three major defence initiatives: the EU Global Strategy and its security and defence implementation plan, the EU/NATO Joint Declaration and its follow-up as well as the European Defence Action Plan which was adopted by the Commission on 30 November.
The latter topic, the Commission’s European Defence Action Plan (EDAP), is the headline story in this 12th issue of European Defence Matters. Over several pages, we summarise and analyse the main content of the Action Plan and speak to one of its authors, Commission Director General Lowri Evans (DG GROW). The defence industry’s reaction to EDAP is also reflected as are the views of the European Parliament’s rapporteur on the Defence Union, Urmas Paet, who we met for an interview.
Saab CEO Håkan Buskhe, who is our guest for the ‘Industry Talk’, gives insight into his company’s strategy and how he sees the defence industry developing in the coming years.
In another interview, we talk to Lt. General Erhard Bühler who is not only the Head of Directorate General for Planning in the German MoD, but also the chairman of the EDA Steering Board in capability directors composition.
European Defence Matters N°12 also offers you extended articles on two colorful EDA highlights of 2016. First, the European Defence Agency’s Annual Conference which has established itself as ‘must be event’ for the whole EU defence community. Secondly, the 10th EDA Helicopter Training Exercise (‘BLACK BLADE’) which took place in the second half of November in Belgium and mobilized 14 helicopters and 400 staff from 4 Member States.
A final word on the new ONLINE format of European Defence Matters which will make your reading experience even more comfortable:
Enjoy navigating, enjoy reading!
More information:
American president-elect Donald Trump has said that no more detainees should be transferred out of America’s war on terror detention camp in Guantanamo Bay. He takes office on 20 January 2017, which leaves the Obama administration just a few days to get men cleared for transfer out of Cuba. Among those waiting to see if their cases go through in time are three Afghans, money changer Wali Mohammed, chokidar Abdul Zahir and seller of plastic flowers Bostan Karim. All have been in detention since 2002 and, AAN’s Kate Clark reports, the cases against them were always among the flimsiest.
When Obama came into office in 2009, he vowed to close Guantanamo down. Congress blocked this, stopping him from transferring detainees to the American mainland for trial or incarceration. His only success has been in reducing the population; it should be down from 242 in 2009 to, if all goes to plan, around 40 by 20 January 2017 when he leaves the White House. Anyone remaining after that, it would seem from Trump’s statements on Guantanamo, is likely to be there a very long time. During the election campaign, he praised the detention camp, saying he would like to bring more detainees there. (He also praised waterboarding, although he said it was not “tough enough” and even if it did not work, he would authorise it because “they deserve it anyway for what they do to us.”) Then, on 3 January 2017, Trump tweeted that no more detainees should be transferred; they were “extremely dangerous people,” he said and “should not be allowed back onto the battlefield.”
Prisoners cleared for transfer
In mid-December 2016, there were still 22 detainees who had been cleared for transfer by a body known as the Periodic Review Board – which can also order the continuing detention or military trial of detainees. The New York Times reported that the US government had found countries willing to take 17 or 18 of them:
The effort was part of a burst of urgent, high-level diplomatic talks aimed at moving as many as possible of Guantánamo’s 22 prisoners who are recommended for transfer. By law, the Pentagon must notify Congress 30 days before a transfer, so the deadline to set in motion deals before the end of the Obama administration was Monday [19 December 2016]. By late in the day, officials said, the administration had agreed to tell Congress that it intended to transfer 17 or 18 of the 59 remaining detainees at the prison; they would go to Italy, Oman, Saudi Arabia and the United Arab Emirates.
Four prisoners were transferred out of the detention facility on 5 January 2017 – all Yemenis bound for Saudi Arabia. The deadline for the others is now approaching fast. Trump’s assessment that these men are extremely dangerous belies the facts, at least for Wali Mohammed, Abdul Zahir, and Bostan Karim. An earlier in-depth investigation by AAN, “Kafka in Cuba: the Afghan Experience in Guantanamo” (which contains sourcing for all the information cited in this dispatch) uncovered just how thin the cases against these three men were. None had been detained on the battlefield. Two had been handed over by Pakistan and the third detained by US forces from his home after a tip-off which proved to be wrong; their case files contain very little, or no evidence of wrongdoing, but rather fantastical allegations, based on hearsay, double hearsay (X said Y said Z was a terrorist), testimony obtained through torture and unverified and unprocessed intelligence reports known as IIRs, some from foreign intelligence services, including the Pakistan’s ISI. Such reports typically bear cautions such as: “WARNING: THIS IS AN INFORMATION REPORT, NOT FINALLY EVALUATED INTELLIGENCE.” There are also some gross factual mistakes in the files. It looks likely that Wali Mohammed and Zahir were victims of mistaken identity. Details of their cases and the other two Afghans still in Guantanamo can be found in an annex at the end of this dispatch.
Prisoners due to remain
If the 17 or 18 detainees do manage to get out before 20 January, that will still leave four or five other men also cleared for transfer, including (according to The New York Times article cited earlier) an Algerian, a Moroccan and a Tunisian, whom the administration is “reluctant to repatriate for reasons having to do with their home countries.” The US will not release people without security guarantees and assurances that they will not be tortured; it is not clear what the problem is in these men’s cases. There is also, reported the paper “a stateless Rohingya man whom no country [has] offered a home.”
The Periodic Review Board had recommended that ten of the other remaining detainees should stand trial in military tribunals in Guantanamo. All have been charged and one has already been convicted. The remaining 27 detainees, who include two Afghans, Harun Gul and Muhammad Rahim(1) have been called ‘forever prisoners’. The Periodic Review Board has ordered them to remain in detention without trial; they are considered too dangerous to release, but the US authorities do not have court-worthy evidence against them.
Both Harun and Rahim are accused of being facilitators for al Qaeda and have been detained since 2007. Harun was captured in Afghanistan probably by the National Directorate of Security, the NDS (the US said it did, the NDS said it did not), and Muhammad Rahim in Pakistan by the ISI. Again, neither was detained in battle; their cases are also based on intelligence. There is far less information in the public domain about their cases than the Afghans detained in earlier years. Neither has had the opportunity to publically defend himself, even in the limited ways open to those men detained earlier.
From court documents, Harun Gul looks to have possibly been a low-level Hezb-e Islami commander, in charge of a handful of men in Nangarhar in the post-2001 era, but allegedly also working as a courier for al Qaeda. In June 2016, the Periodic Review Board encouraged him to continue to “work with his family and representatives on his future plans and be forthcoming with the Board in future reviews.” It sounded like a hint that if he was more organised, the Periodic Review Board might assess his case differently and decide that rather than him continuing to be a ‘forever prisoner’, it could recommend his transfer. Harun Gul had another review on 11 January 2017, but the Periodic Review Board will not decide on his case for months, not until long after the new president takes office.
The fifth Afghan still in Guantanamo, Muhammad Rahim also from Nangarhar, was the last person ever to be rendered and tortured by the CIA and brought to Cuba. The US accuses him of having worked with al Qaeda leader Osama bin Laden. He is the only Afghan in Guantanamo that has been classed as ‘high value’ by the US authorities. His case is so secret his lawyer has complained he cannot say why he thinks his client is innocent because that would reveal classified information. Although the US has not revealed the evidence against Rahim, the sources of that evidence can be seen in court documents from 2010 and they are the same as in the other cases AAN has investigated: hearsay, double hearsay, testimony obtained under torture and unverified and unprocessed intelligence reports.
Prospects for the five Afghan detainees
There are no prospects, at the moment, of Rahim being cleared for transfer. The Periodic Review Board’s assessment of him was unequivocal: “…his indifference to the impact of his prior actions, and.. his extensive extremist connections provide him a path to re-engagement.”
The Board might change its recommendation for Harun from continuing detention to transfer, but if it does, this will be after Trump takes office. His lawyer, Shelby Sullivan-Bennis of human rights organization Reprieve, is trying to stay optimistic, despite the looming Trump presidency. She told the Associated Press it was still possible Trump would retain some current policies on Guantanamo once his administration had studied them, “At this point, we are all just keeping our fingers crossed for the best outcome.”
As for the three Afghans cleared for transfer, even if they do get out of Guantanamo, the impact of a decade and a half in prison will remain. A secret assessment of Zahir from 2008, published by WikiLeaks, revealed that he had “chronic lower back pain, sciatica,” and had gone through “hunger striking not requiring enteral feeding, and has a history of major depressive episodes.” His lawyer, Shayana Kadidal, described his life as “irretrievably damaged.” Wali Mohammed’s only son was killed in a road accident as he drove from Pakistan to Kabul to try to reclaim his father’s shop in Kabul’s money market. AAN was told by other money changers that a “strongman” had sold the shop and pocketed the proceeds. Most of our clients, Kadidal has said, “leave [Guantanamo] not angry but rather broken and depressed.”
The Guantanamo detention camp is now into its 16th year (it was opened on 11 January 2001) and will soon be into its third American president. Obama inherited it from Bush and, despite his election promises to close down the facility, will soon bequeath it to Trump. Afghans were, by far, the largest national group there, comprising more than a quarter of the 781 men ever held. Among the 220 Afghan detainees were a scattering of Taleban, but also farmers, taxi drivers, shopkeepers, a few children and one Shia Muslim. Three Afghans died in custody. Almost all of the rest were eventually freed. Whether, at the end of this week, two or five Afghans remain in Guantanamo now depends on last minute work by the Obama administration and host countries to complete the transfers.
Annex: The Afghans still in Guantanamo
Haji Wali Mohammed, a 53 years old money changer from Baghlan, has been detained for more than 15 years. He was picked up by the ISI in Pakistan in January 2002, he believes, because a tribal jirga had just ruled he was owed money by a man who was an ISI agent, and handed over to the Americans. According to his own detailed account, he was tortured by Pakistan and then by the Americans in Bagram, Kandahar and Guantanamo. The US accused him of being a financier for al Qaeda, the Taleban and Hezb-e Islami. It has never provided evidence that he was doing anything other than running a legal business; money changers in the Central Money Market have always worked with the Kabul government, including the Taleban’s, to ensure the supply and stability of the currency. Indeed, Wali Mohammed had been something of a failure as a money changer, losing half a million dollars in a shared arbitrage scheme with the Central Bank; he was heavily in debt when detained.
When ruling on his petition for habeas corpus, the judge, despite having allowed the government to present evidence kept secret from Wali Mohammed and his lawyer, dismissed the US government’s assertion that Wali Mohammad had “hobnobbed constantly with U.S. enemies and flew all over Europe at bin Laden’s command.” She found it “not credible” that Wali Mohammed could have acted as al Qaeda’s money manager after he had lost so much of the Central Bank’s money, although she did think he had been financing the Taleban and Hezb-e Islami. At the time of his arrest, Hezb-e Islami was not a party to the conflict, nor was it listed as a terrorist organisation, so this accusation should, anyway, have been irrelevant. Wali Mohammed has had the backing of all the other money changers in the Central Money Market in Kabul; they wrote to the US authorities arguing for his release. This was a significant show of support as they represent all parts of the country and strands of opinion.
Wali Mohammed was cleared for transfer on 26 September 2016. His lawyer, contending he had been a victim of mistaken identity, said he had been “very unlucky – most of all in having an extremely common name.”
44 year old Abdul Zahir was detained from his home in Logar by the US military and CIA after a tip-off that he possessed “weapons of mass destruction” in July 2002. Years later, in 2015, it was revealed the Americans had found only salt, sugar, and petroleum jelly at his home. Nevertheless, he ended up in Guantanamo. He had worked as a choki dar (an unarmed guard or doorman) and translator for an Arab commander with al Qaeda, Abdul-Hadi al-Iraqi, before 2001. Although such employment was not uncommon or particularly controversial in the hard-pressed economic times of the Taleban regime, the US contended he had been ideologically committed and was “a trusted member of al Qaida.”
Zahir was also in a car in 2002 from which a grenade was thrown at western civilians. One, a Canadian journalist, was seriously injured. Zahir was put on military trial at Guantanamo in 2006, on charges of “conspiring to commit war crimes, aid the enemy and attack civilians,” although the prosecutor accepted he had not thrown the grenade. The trial collapsed: already in shambles – the applicable law had not been decided and there was no-one to translate for Zahir – it was finally halted after the Supreme Court ruled that the president lacked the constitutional authority to hold such trials.
In July 2015, the Periodic Review Board recommended he be transferred and made a sort of admission that mistakes had been made. It said he had had a “limited role in Taliban structure and activities,” and had “probably [been] misidentified as the individual who had ties to al-Qaeda weapons facilitation.”
Bostan Karim, a seller of plastic flowers from Khost, was accused of being the leader of an al Qaeda IED cell. He was detained by Pakistani police in 2002 on a bus as he travelled to Miram Shah after another passenger, Wazir, had passed a broken Thuraya satellite telephone to Karim; the police had been taking Wazir off the bus for questioning and he said he gave the phone to Karim because he feared the police would steal it. Both men ended up in Guantanamo, although Wazir was released in 2007. The Pakistanis and Americans later asserted – for reasons which are incomprehensible – that the phone was being used as a detonator for IEDs. They did not explain why a terrorist would be taking a detonator out of Afghanistan. Nor did they say why possession of a satellite phone, then in common use in Khost, was evidence of wrong-doing. The judge in Karim’s petition for habeas also agreed the phone was evidence that Karim was an al Qaeda terrorist.
Karim’s fate came to be bound up with his former business partner, Obaidullah, whose house in Khost had been raided a month earlier by the US military and CIA after a tip-off. Obaidullah was tortured and ‘confessed’ that both he and Karim were in the same al Qaeda IED cell. He was also sent to Guantanamo. There was some other evidence against Obaidullah, although it fell away substantially during his habeas petition and appeals. There was never any evidence at all that Karim was an insurgent. However, the case against each man came to prop the other’s up. The judge in Obaidullah’s habeas petition said that his “long-standing personal and business relationship with at least one al Qaida operative [Karim],” was one reason why he must also have been a member; the judge in Karim’s case quoted his fellow judge who had said that Obaidullah was more likely than not “a member of an al Qaeda bomb cell committed to the destruction of [US] and Allied forces,” as evidence against Karim.
Karim had also been a missionary with Jamat al-Tabligh, an organisation with millions of followers in south Asia which proselytises among Muslims, urging them to lead better lives. It has endured a historical and sometimes violent antipathy from militants, including the Afghan and Pakistani Taleban, who dislike its view that now is the time for preaching (dawa), not war (jihad). US intelligence, however, classes Jamat al-Tabligh as a “terrorist support entity” and Karim’s membership and Obaidullah’s occasional attendance at meetings additional proof of them having been terrorists. Karim told one of his review boards at Guantanamo:
First of all, I am not a member of the Taleban and I’m not a member of al-Qaida. I’m a business man. I have two stores. In one store, I sell plastic flowers. In the other store, I rent furniture and dishes for special occasions. I am a missionary; I go house-to-house, village-to-village, spreading my religion.
Bostan was also ‘accused’ of having an uncle who was a member of Hezb-e Islami in the 1980s. At the time, it was actually America’s favourite faction among the mujahedin whom it then supported in their fight against the Soviet occupation of Afghanistan. In one of the bizarre mistakes that litter the files of the Afghan detainees in Guantanamo, the file describes Hezb-e Islami in the 1980s as “one of the seven Al Qaida terrorist groups operating in Pakistan.” It was of course one of the seven Afghan, mujahedin groups fighting in Afghanistan. At that time, al Qaeda had yet to be founded.
Karim was cleared for transfer by the Periodic Review Board on 2 June 2016. (Obaidullah was released two months later in August 2016 and sent to the United Arabic Emirates where he is believed to be in a ‘de-radicalisation’ programme and still in some form of detention.)
Harun Gul, a 35 year old from Nangarhar, was detained in Afghanistan in 2007 and accused of being a Hezb-e Islami commander and facilitator for al Qaeda. Of all the Afghans, the least is known about his case. However, one document presented to the court in Muhammad Rahim’s petition for habeas corpus quoted notes from Harun’s interrogation (Harun testified against Rahim, although possibly under torture). The notes said Harun Gul had been in charge of six armed groups in Nangarhar province, each with three to five men, and a total operational budget for each group of 20,000 to 40,000 Pakistani rupees (roughly 200-400 US dollars) every one to three months. This does not read like the “senior commander of Hezb-e-Islami/Gulbuddin” the US claimed to have captured. The US said Harun admitted to serving as a courier for the senior leadership of al Qaeda. However, he has described being tortured, and said his captors in Afghanistan “blindfolded, shackled, and hung him by the arms while they were still cuffed behind his back, stripped and tortured him…. kept [him] alone and naked in a cell without even a bucket as a toilet.” He has said that, during interrogations in Guantanamo, he was “shackled for up to twelve hours without water or food in a position that allowed him to neither fully stand nor sit, preventing any sleep.”
On 14 July 2016, the Periodic Review Board recommended his continuing detention, although also hinting that he might be cleared for transfer if he was more forthcoming.
Muhammad Rahim from Nangarhar is accused of having been a facilitator and translator for Osama bin Laden. He was detained by Pakistan in February 2007 and handed over to the CIA; it appears the ISI said he might know the whereabouts of bin Laden. Rahim was rendered to Afghanistan and tortured. In all, he was subject to eight sessions of sleep deprivation, including three which lasted for more than four days and one, the last, which lasted for almost six (138.5 hours). The interrogation was such a failure that the CIA held an internal enquiry, concluding that the fact they had known nothing about Rahim prior to questioning him had been the problem. Nevertheless, when it transferred him to Guantanamo, the CIA announced to the world that it had captured “a tough, seasoned jihadist” who had “bought chemicals for one attack on U.S. forces in Afghanistan,” a man who was “best known in counter-terror circles as a personal facilitator and translator” for bin Laden and who had “helped prepare Tora Bora as a hideout for bin Laden in December 2001.”
His case is classified, so it is difficult to assess it, but court documents show he apparently admitted to working with al Qaeda commanders before 2001 and up to their escape from Tora Bora into Pakistan. However, all the serious allegations both before and after 2001 are sourced to unverified and unprocessed intelligence information reports and, to some extent, other detainees’ testimony, including Harun’s.
Like Harun, Rahim has been given no chance to defend himself publically. He has, however, written a series of funny and apparently perceptive letters to his lawyer which have been published. In them, he jokes about the local wildlife in Cuba, discusses pop culture and American television and calls Donald Trump an idiot and, rather than a war hero, a “war zero.”
On 9 September 2016, the Periodic Review Board, 9 September 2016, accepted the US military’s case against him and recommended his continuing, indefinite detention.
(1) Readers may have noticed two spellings for Mohammad used in this piece. They are as per the original US documents.
A new EDA project aimed at setting a roadmap for future activities designed to transpose the ‘Circular Economy’ concept into the defence sector has been launched this Friday 13 January. During a kick-off meeting held at the EDA premises, the first steps of this ambitious project were discussed with experts from the ‘Circular Economy Research Initiative’ of the Cambridge Judge Business School (CJBS) which is the contractor for this project. The project will result in a study scheduled to be finalized by end of October 2017.
The CJBS researchers will be working closely with the EDA project team in order to perform the initial assessment of possible constraints and opportunities that could derive from applying the Circular Economy concept and principles to the defence sector. Both teams will then establish a roadmap for follow-on actions and propose suitable alternatives in areas where problems may arise.
Circular Economy is a new policy domain that was launched by the European Commission in late 2015 with a communication entitled “Closing the loop: Commission adopts ambitious new Circular Economy Package to boost competitiveness, create jobs and generate sustainable growth”. Then, on 30 November 2016, the European Commission adopted the European Defence Action plan which paved the road for the Circular Economy principles to be applied to the defence sector. As Commission Vice-President Jyrki Katainen wrote in EDA’s European Defence Matters magazine recently, “the transposition of the circular economy principles in the defence sector can benefit the European industry and economy in many ways.”
Indeed, the Circular Economy’s underlying principles are not unfamiliar to the defence sector which has managed to follow a similar path over the years, for instance by applying a through-life management approach. Therefore, it was deemed important that a proactive step be taken in view of assessing the possible alignment or gaps between the flagship initiative of the European Commission and the defence framework. In this respect, the EDA thinks that an assessment of the feasibility of a transposition of the Circular Economy concept into the defence sector could be beneficial. In particular, introducing the Circular Economy principles at an early stage of the research and technology (R&T) phase could produce more systematic and structural benefits. A positive outcome from project study could be highly beneficial for the Member States. The benefits for the defence industry (of which a large part are small and medium enterprises) will be also be explored.
The EDA expects that this initial assessment will shed some light on the potential benefits and challenges of applying the Circular Economy package to the defence sector. Moreover, it should allow to identify topics, opportunities and areas that require further assessment and analysis. These topics will be dealt with in the follow-on actions that EDA will take for establishing the work strand in the area of Circular Economy in defence and enable a smooth and beneficial transition.
The project team of the Circular Economy Research Initiative of the University of Cambridge Judge Business school consists of Dr Khaled Soufani, Dr Mark Esposito and Dr Tse Terence. The EDA project team is composed by Dr Panagiotis Kikiras, Mr Giorgos Dimitriou and Ms Patricia López Vicente.