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Army Worries Over BAE Vehicle Production Draw Secretary’s Visit

Sept. 13, 2018
At stake is whether BAE will be able to meet the Army’s accelerated schedule to deploy a brigade of its new Armored Multi-Purpose Vehicles to Europe.

U.S. Army Secretary Mark Esper is sending a message in person Thursday to BAE Systems Plc, visiting its factory in York, Pennsylvania, to press the defense contractor to resolve potential delays in producing key military vehicles.

At stake is whether BAE will be able to meet the Army’s accelerated schedule to deploy a brigade of its new Armored Multi-Purpose Vehicles to Europe. The service also wants to buy 576 howitzers and ammunition carriers built by the London-based contractor. And that’s on top of orders for a new Marine Corps combat vehicle and another for the Japanese military.

Esper has told reporters he wants to assess on the ground “how they’re making sure that we have good quality control across all of the programs, and then what are they doing on the management side to make sure” there’s no repeat of quality issues that have marred production of the new self-propelled howitzer.

The Army’s concerns were prompted by a previously undisclosed “BAE Manufacturing Capacity Assessment” that was requested by the service and produced by the Defense Contract Management Agency. The report, dated May 30, said the Pennsylvania facility’s production potential appears “to be inadequate because of welding and machining capability” as demand from the U.S. Army and Marine Corps and the Japanese Ministry of Defense is expected to increase to about 600 vehicles in 2021 from about 200 this year, according to a summary.

European Deterrence

The new personnel carrier is intended to replace the decades-old M113. Last year, the Army boosted the initial number of vehicles it wants to 551 from 289. It has set a goal to start deploying them overseas by late next year as part of the Pentagon’s European Deterrence Initiative to counter Russia.

The May assessment also raised questions about BAE’s capability to hire and train an adequate workforce to support the surge in vehicles, according to the summary.

BAE spokeswoman Alicia Gray said the report evaluated “the capacity of our facilities to produce and modernize certain numbers of armored combat vehicles, including the capacity to handle volumes well above the Army’s currently funded, contracted and stated requirements.”

It “was concluded prior to the maturation of actions already implemented to enhance capacity,” she said. The company has “implemented many of the report’s recommendations in our capital investment strategy, and we are confident in our ability to meet current and future production requirements,” she said. “BAE Systems has a strong capital investment strategy that prepares our facilities to handle current and future workloads.”

Welding Flaws

The company has said it resolved welding issues with the new self-propelled howitzer, called the Paladin Integrated Management system. Bloomberg News disclosed in July that the Army delayed approving full-scale production of the system, citing the need to improve quality before proceeding with additional contracts options valued at about $1.3 billion.

Lieutenant Colonel Michael Andrews, a Pentagon spokesman, and Army spokeswoman Ashley John said in a joint statement that the study was initiated to evaluate the York facility’s “capability and capacity” to “ensure the needs of the U.S. Army and U.S. Marine Corps are met as multiple platforms progress through production.”

There were no “stark conclusions” about BAE’s manufacturing capability, and the assessment “identified many of the same issues that we have seen in production start-ups of combat vehicles,” they said. The assessment “enabled actions to be taken on many issues prior to their maturation into major problems.”

By Tony Capaccio

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Licensed content from Bloomberg, copyright 2016.

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