GAO

United States General Accounting Office

Report to the Honorable 

Tom Harkin, U.S. Senate

October 1999 DEFENSE 

ACQUISITIONS

Army Purchased Truck 

Trailers That Cannot 

Be Used as Planned

GAO/NSIAD-00-15

Page 1 GAO/NSIAD-00-15 Defense Acquisitions

United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-283452 Letr

October 27, 1999

The Honorable Tom Harkin

United States Senate

Dear Senator Harkin:

The Army has purchased 6,700 3⁄4-ton High Mobility Trailers as companion 

trailers for the High Mobility Multipurpose Wheeled Vehicles, 11⁄4-ton 

trucks. The Army is buying two types of trailers. A cargo trailer that will be 

used to carry loose cargo, such as ammunition boxes, and a chassis trailer, 

which will be used to permanently attach towed equipment, such as power 

generators. The trailers’ unit price has significantly increased and generally 

they cannot be used as planned until modifications are made to the trailers 

and the trucks that tow them. The Army plans to acquire 

18,412 more of the trailers. In response to your request, we (1) determined 

factors leading to the substantial increase in the contract unit price of the 

trailers, (2) identified reasons the trailers cannot be used as planned and 

the cost to the Army for required modifications, and (3) assessed the 

Army’s acquisition strategy and plans to procure additional trailers.

Results in Brief The Army has paid a much higher unit price for the High Mobility Trailers 

than it originally expected primarily because it awarded a $50.6-million, 

5-year, multiyear contract to produce 7,563 trailers and then decided not to 

fund the fourth year of the contract. A program official said that the Army 

did not fund the fourth year of the contract because of other higher funding 

priorities. The multiyear contract required the cancellation of the fourth 

and fifth years of production if the fourth year was not funded. Rather than 

cancel the final 2 years of the contract, the Army and the contractor agreed 

to a restructured contract. At the time the contract was restructured, the 

contractor was more than a year behind the original delivery schedule and 

had incurred additional costs in modifying the trailer to meet requirements. 

The restructured contract reduced annual production quantities; extended 

production a year; and increased the price of each cargo trailer by 

57 percent, from $6,710 to $10,521, and each chassis trailer by 50 percent, 

from $3,560 to $5,334. The increase in unit price was attributed primarily to 

spreading overhead costs over fewer units, allowing for higher labor and 

material costs, and an increase in the contractor’s profit percentage. 
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Most of the 6,700 High Mobility Trailers the Army has purchased are (1) not 

usable because of a safety problem and (2) not suitable because they 

damage the light and heavy trucks towing them.1

 In addition to damaging 

the truck, the Army found that the trailer drawbar could break, causing a 

safety problem. If it breaks, the trailer can disconnect from the truck or 

overturn. The Army has placed all 5,696 cargo trailers and 854 of the 

chassis trailers into storage until they are modified to correct the problem. 

The modifications to correct the trailer drawbar problem caused additional 

problems with the trailer brakes and additional damage to the trucks. Since 

it had accepted the trailer design, the Army determined that it would pay 

for the required modifications. To make the trailers usable and suitable, the 

Army needs to make three modifications to the trailers and one 

modification to each type of truck. It has identified two of the trailer 

modifications that will cost an additional $640 for each trailer and a truck 

modification that will cost an additional $250 for each heavy truck. 

However, it has not yet identified the other trailer modification or the light 

truck modification.

The Army’s acquisition strategy underestimated the risks. The Army, based 

on its belief that only minor modifications to an existing trailer design were 

required, entered into a multiyear production contract without 

demonstrating that the design would meet its requirements. Further, the 

contract required the contractor to design, produce, and deliver trailers 

within 150 days of contract award. The Army subsequently found that the 

contractor could not meet the contract’s original delivery schedule, the 

trailers initially did not pass testing, and the initial trailer design required 

significant modifications. It plans to award a competitively bid, 5-year 

requirements contract sometime after fiscal year 2002 begins to acquire 

more High Mobility Trailers. The Army is in the early stages of planning for 

this contract and has not worked out many of the details. It is revising the 

trailer specifications and as a result, the new contract may include a new 

trailer design. 

This report contains a recommendation to the Secretary of Defense to 

require the Army, before beginning production of the follow-on trailers, to 

demonstrate the design will meet requirements and will not damage the 

1

The light trucks are the High Mobility Multipurpose Wheeled Vehicles that were produced 

with a frame cross member instead of a rear bumper and can tow up to 3,400 pounds, 

including the trailer and its load. The heavy trucks are the High Mobility Multipurpose 

Wheeled Vehicles that were produced with a rear bumper and can tow up to 4,200 pounds, 

including the trailer and its load.
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trucks. In its comments to the report, the Department of Defense 

concurred with this recommendation. 

Background In 1987, the Army decided it needed a new companion trailer for the High 

Mobility Multipurpose Wheeled Vehicle to provide improved off-road 

mobility and carry heavier loads compared to the then current M101 series 

3⁄4-ton military trailer. The Army found that the M101 series trailer lacked 

stability because its wheels did not have the same tire track width as the 

High Mobility Multipurpose Wheeled Vehicle and its suspension was not 

adequate. As a result, the trailer had a tendency to overturn, even at low 

speeds, in soft soil and rough terrain.

The new trailer (see fig. 1) was designed to be compatible with both the 

light and heavy High Mobility Multipurpose Wheeled Vehicles. Differences 

in the two trucks required that two cargo versions of the trailers be 

produced. The light cargo trailer was to carry at least 1,500 pounds and the 

heavy cargo trailer was to carry at least 2,500 pounds. The new trailers also 

included a chassis version that was to carry at least 2,700 pounds. The 

Army required the trailers to have the same track width and tires as the 

truck and inertia brakes, called surge brakes, which are actuated by forces 

between the tow hitch of the truck and the drawbar of the trailer. The 

trailer was to be capable of being towed at speeds up to 20 miles per hour 

cross-country, 35 miles per hour on secondary roads, and 55 miles per hour 

on primary roads.
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Figure 1: The High Mobility Cargo Trailer

Source: Raytheon E-Systems Richardson.

On October 27, 1993, the Army awarded a $50.6-million, multiyear, firm 

fixed-price, 5-year production contract, with options, to Electrospace 

Systems, Inc., Richardson, Texas, to produce 7,563 trailers for active, 

guard, and reserve Army units. Electrospace subcontracted with Silver 

Eagle Manufacturing Co., Portland, Oregon, for the actual production of the 

trailers. Silver Eagle based its new trailer design on a High Mobility 

Multipurpose Wheeled Vehicle trailer it had designed earlier for an Army 

demonstration program. Silver Eagle had previously sold 15 of these 

trailers for demonstration programs, both inside and outside the Army. 

Electrospace and Silver Eagle had to modify the earlier military trailer to 

meet the new requirements. Electrospace became part of Raytheon 

E-Systems, Inc., in June 1996.

The contract was restructured, effective on December 27, 1996. The Army 

fielded the first 740 trailers to Army Reserve and National Guard units. The 

contractor produced 6,700 trailers at a total price of $57 million under the 
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restructured contract. The contractor had delivered all the trailers required 

by the restructured contract by the end of July 1999.

Contract Unit Price of 

Trailers Increased 

Significantly

The Army has paid a much higher unit price for the High Mobility Trailers 

than it originally expected, primarily because it awarded a multiyear, 5-year 

production contract that required it to fully fund each year by a specific 

date or cancel the remaining production years and then decided not to fund 

the fourth year of the contract. Rather than cancel the remaining 

production years, the Army and the contractor decided to restructure the 

contract. The restructuring reduced the number of trailers to be produced 

and allowed the contractor to reprice the trailers based on then-current 

costs. This resulted in a 57-percent increase, from $6,710 to $10,521, in the 

unit price of the cargo trailers and a 50-percent increase, from $3,560 to 

$5,334, in the unit price of the chassis trailers. 

In developing its fiscal year 1997 budget request, the Army decided not to 

fund the High Mobility Trailer program. A program official said that the 

Army cited higher funding priorities as the reason for not funding the trailer 

program. The funding was required for the fourth year of the 5-year 

production contract. Under the terms of the multiyear contract, if the 

required funds were not available by the required date, the Army would 

have to cancel the remainder of the contract and pay the contractor for 

reasonable and necessary costs incurred and a reasonable profit on those 

costs. The contract limited these costs to no more than $1.1 million for 

cancellation of the contract’s fourth and fifth production years.

Rather than cancel the contract, the Army and the contractor negotiated a 

restructured contract, effective December 27, 1996. According to program 

office officials, they believed the benefits of continuing the contract 

outweighed the costs of cancellation. On December 23, 1996, 4 days before 

the restructure, the Army informed the contractor that the trailers had 

successfully completed the testing to show that they met contract 

performance requirements. At that time, the contractor was more than a 

year behind the original delivery schedule and had incurred additional 

costs in modifying the trailers to meet requirements. However, the Army 

did not allow the contractor to recoup the additional costs on the 

restructured contract.

Under the restructured contract, the original fourth and fifth years of 

production were terminated and a lower total production quantity was 

established and spread over 3 years of production. The original contract 
B-283452

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called for 4,534 trailers to be produced in the last 2 program years. The 

restructured contract reduced this number to 2,300 trailers to be produced 

over 3 years. The restructured contract allowed the contractor to increase 

its unit prices to $10,521 per trailer for the two cargo trailer versions, an 

increase of 57 percent over their original unit price of $6,710, and to 

$5,334 per trailer for the chassis trailer version, an increase of 50 percent 

over its original unit price of $3,560. The negotiations leading to the 

restructured contract attributed the increased unit price to spreading 

overhead costs over fewer units, allowing for higher labor and material 

costs, and increasing the contractor’s profit percentage.

Trailers Are Not Usable 

With Trucks Until the 

Army Modifies Them

Most of the 6,700 High Mobility Trailers the Army has purchased are (1) not 

usable because of a safety problem and (2) not suitable because they 

damage the trucks towing them. The Army found that the trailer drawbar 

could break causing a safety problem. If it breaks, the trailer could 

disconnect from the truck or overturn. The Army has stored all 5,696 cargo 

trailers and 854 of the chassis trailers until they are modified to correct the 

problem. The modification to correct the trailer drawbar problem caused 

additional problems with the trailer brakes and additional damage to the 

trucks. Because it had previously accepted the trailer design, the Army 

determined that it would pay for the required modifications identified since 

the acceptance. The Army will pay an additional $640 per trailer for 

required trailer modifications but has not yet determined the modification 

needed to correct the trailer’s brakes. The Army also will pay $250 per 

heavy truck for a modification, but it has not determined the required 

modification for the light truck. Because the Army has not determined all 

the required modification, the total program or unit cost to the Army for the 

trailers is unknown.

In July 1995, the Army Operational Evaluation Command performed an 

operational assessment of the trailers using data generated during 

production testing. It found that (1) the trailer demonstrated the potential 

for causing catastrophic failure in the truck due to cracking of the truck’s 

rear cross member and (2) the heavy truck jack was not compatible with 

the trailer, which did not have a requirement to have a tire jack of its own. 

The Command assessed the trailers as effective but not suitable for Army 

use primarily because of the damage to the truck. It recommended that the 

cause of the truck damage be investigated and corrected before approving 

the trailers for full fielding. 
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Although the trailers damaged the trucks towing them during testing, the 

Army concluded that the design met contract performance requirements. 

The program office did not believe the truck damage was a major problem 

because only three of the trucks were damaged during testing. Rather than 

correcting the truck damage problem before fielding, the Army, on 

December 23, 1996, informed the contractor that the trailers had 

successfully completed testing and that it would accept all trailers built to 

their designs. The Army fielded the first 740 trailers to Army Reserve and 

National Guard units without correcting the problem.

To prevent the trailer from damaging the trucks, the Army developed 

bumper and cross member modifications. In testing the truck 

modifications, on November 14, 1997, the trailer drawbar broke. In 

analyzing the drawbar design, the Army determined that the drawbar had 

no margin of safety when the trailer was fully loaded and the drawbar was 

bending when going over a bump or rough spot. Since it had accepted the 

trailer design, the Army determined that it would pay for the required 

modifications.

On March 3, 1998, the U.S. Army Tank-automotive and Armaments 

Command issued a safety-of-use message requiring the Army to stop using 

all High Mobility Trailers, except about 150 chassis versions with 

generators mounted on them. These trailers were excluded because their 

operational weight was lower than that of the cargo trailers and would not 

break a drawbar. Since the message, the Army has been accepting trailers 

from the contractor and immediately placing them in storage at various 

locations around the country until the necessary modifications can be 

made. It has 5,696 cargo trailers and 854 chassis trailers in storage.

To correct the drawbar problem, the Army developed a new drawbar with a 

steel center bar to replace the trailer’s original all aluminum drawbar. It 

began testing trailers modified with the new drawbar on May 8, 1998. The 

modified drawbar was stiffer that the original drawbar, and the Army found 

that it accelerated the wear on the surge brake actuator housing2

 and 

caused more damage to the trucks than the original drawbar.

2

The surge brake actuator housing is located on the trailer drawbar and contains the surge 

brake actuator, which is basically a piston that the truck slowing down or accelerating 

moves to compress or expand hydraulic fluid that, in turn, cause the trailer brakes to engage 

or disengage.
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On July 8, 1999, the Army completed its latest test of truck and trailer 

modifications. Some of the modifications were successful and some were 

not. The trailer drawbar modification was successful because it did not fail 

during testing, and the heavy truck bumper modification kept the trailers 

from damaging the heavy trucks. However, the trailer brake actuator and 

light truck modifications were not successful since the surge brake 

actuator housing cracked and parts wore out and the trailer continued to 

damage the light trucks.

A program official said that the heavy truck trailer will need a heavier surge 

brake actuator and the light truck will need additional reinforcement to its 

rear cross member. As of September 27, 1999, the Army had not decided on 

the surge brake actuator housing modification or the light truck 

modification needed to correct the problems. The program official also 

said that most of the stored trucks would not be retrofitted with the 

drawbar and surge brake modifications until the surge brake problem is 

corrected and demonstrated either through modeling and simulation or 

actual testing. However, he added that because units had to turn in their 

older trailers before being issued the new trailer, the program office is 

seeking approval to immediately retrofit the modified drawbar onto the 

740 fielded trailers. The retrofit will allow the units to use the trailer up to 

10 miles-per-hour cross-country as long as they inspect the trailers and 

trucks more often. 

The final unit cost of the trailers cannot be determined until the Army 

identifies all of the trailer and truck modifications needed to make the 

trailers suitable for Army use. Since the Army will pay for these 

modifications, these costs should be added to the contract unit price of the 

trailers to obtain the total unit cost for the trailers. The Army has 

determined that each trailer needs (1) a jack adapter costing $60 that will 

allow the heavy truck tire jack to be used on the trailers and (2) the 

drawbar modification estimated to cost $580. These will increase the unit 

cost to $7,350 for cargo trailers and $4,200 for chassis trailers bought 

before the contract was restructured and $11,161 for cargo trailers and 

$5,974 for chassis trailers bought after the contract was restructured. The 

modification cost to solve the surge brake actuator problem should be 

added to these costs once the Army identifies the required modification.

In addition to determining the cost of the trailer modifications, the cost to 

modify the trucks needs to be determined to arrive at the Army’s total cost 

for the trailer program. The Army estimates the modification on the heavy 

trucks will cost $250 per truck. However, the Army has not determined the 
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modification for the light trucks. Also, the Army has not determined the 

number of trucks that need to tow the trailer and therefore would need the 

modifications. The Army was surveying the units that have the trucks to 

determine their requirements for towing the trailer.

Army’s Acquisition 

Strategy 

Underestimated Risks

The Army, based on its belief that only minor modifications to an existing 

trailer design were required, entered into a multiyear, 5-year production 

contract without demonstrating that the design would meet its 

requirements. The Army subsequently found that the contractor could not 

meet the original delivery schedule, the trailers initially did not pass testing, 

and the initial trailer design required significant modifications. The Army is 

in the early stages of planning for the follow-on purchase of trailers. The 

follow-on contract may include a new trailer design. 

The Army awarded the multiyear production contract because it believed 

that its High Mobility Trailer requirements could be met by making minor 

modifications to an existing Silver Eagle trailer. Its market investigation 

prior to contract award determined that both Silver Eagle and another 

manufacturer had existing trailers that met 92 percent of the Army 

requirements. However, this determination was based upon the 

manufacturers’ statements, not on Army tests. The trailer contract, 

awarded to Electrospace, required the contractor to design, produce, and 

deliver the first 12 trailers for testing within 150 days of contract award. 

The contractor was from 4 to 6 months late in delivering the first 12 trailers, 

which were initially unable to meet the contract requirements because of 

excessive wear to the axle and surge brake actuator. The contractor 

replaced the original axle with a stronger one and modified the trailer’s 

surge brake actuator. The Army tested the modified trailers and, while it 

determined that the axle problem had been fixed, it raised continuing 

concerns about wear to the surge brake actuator. However, rather than 

requiring further modifications to the brake, the Army accepted a surge 

brake system warranty from the contractor. On December 23, 1996, the 

Army informed the contractor that the trailers had successfully completed 

the testing to show that they met contract performance requirements and 

that it would accept all trailers built to the same configuration as those that 

had successfully completed testing.

The Army plans to acquire 18,412 more High Mobility Trailers and to 

continue the trailer program with the award of a 5-year requirements 

contract. Originally, the Army planned to award this contract in March 

2000; however, problems with the trailers and an Army decision not to fund 
B-283452

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the program in fiscal year 2001 will delay the contract award until October 

2001 at the earliest.

The Army is in the early stages of planning for this contract and has not 

worked out many of the details of the follow-on production, but it is 

revising the trailer specifications. For example, the program office has 

considered allowing the next contractor to produce the new trailers with a 

brake system other than an inertia brake system. The current surge brake 

system resulted from the requirement that the original trailers have an 

inertia brake system. As a result of revising the trailer specifications, the 

new contract may include a new trailer design.

Conclusions The Army’s acquisition strategy for High Mobility Trailers underestimated 

the risks of entering into a multiyear, 5-year production contract before 

demonstrating that the trailer’s design met its requirements. As a result, the 

trailers cannot be used as planned, and the Army and the contractor have 

incurred substantial additional costs to fix problems. The Army’s plan for 

the follow-on purchase of trailers may include a new design, but it is not 

clear yet if the Army plans to demonstrate, prior to production, that the 

new design will meet its requirements. 

Recommendation To ensure that the Army does not again acquire trailers that need 

substantial modifications before being fielded, we recommend that the 

Secretary of Defense require the Army, before proceeding with follow-on 

production of the trailer, to demonstrate the design will meet requirements 

and will not damage the trucks.

Agency Comments In commenting on a draft of this report, the Department of Defense 

concurred with the recommendation, stating that before proceeding with 

the follow-on procurement of the trailer, the Army will perform testing to 

demonstrate that the trailer design meets operational requirements and will 

not damage the truck towing it. The Department added that the Army has 

reviewed the original trailer strategy and its execution to develop an 

improved strategy for the follow-on trailer procurement. In addition, the 

Department stated that the Army is refining the trailer performance 

specification and developing a more rigorous testing plan that will evaluate 

trailer and truck performance as an integrated system.
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Scope and 

Methodology

To identify the factors leading to a substantial increase in the trailer’s 

contract unit price and the reasons the Army cannot use most of the trailers 

until modifications are made, we reviewed the original market 

investigation report, the Army’s acquisition strategy, contract files, program 

schedules, test plan and reports, and other program documents. We 

discussed implications of the documentation with program and test 

officials. 

To assess the Army’s acquisition strategy and plans to procure additional 

trailers, we reviewed the High Mobility Trailer acquisition strategy and 

plan, Army budget documents, and other program documents. We 

discussed the evolving plans with Army program officials involved in 

planning the follow-on trailer contract.

In performing our work, we obtained documents and interviewed officials 

from the Offices of the Secretary of Defense and the Army, Washington, 

D.C.; the U.S. Army Tank-automotive and Armaments Command, Warren, 

Michigan; and the U.S. Army Aberdeen Test Center, Aberdeen Proving 

Ground, Maryland.

We conducted our review between May and September 1999 in accordance 

with generally accepted government auditing standards.

Unless you publicly announce its contents earlier, we plan no further 

distribution of this report until 30 days from its issue date. At that time, we 

will send copies of the report to Senator John W. Warner, Chairman, and 

Senator Carl Levin, Ranking Minority Member, Senate Committee on 

Armed Services; Senator Ted Stevens, Chairman, and Senator Daniel K. 

Inouye, Ranking Minority Member, Subcommittee on Defense, Senate 

Committee on Appropriations; Representative Floyd D. Spence, Chairman, 

and Representative Ike Skelton, Ranking Minority Member, House 

Committee on Armed Services; and Representative Jerry Lewis, Chairman, 

and Representative John P. Murtha, Ranking Minority Member, 

Subcommittee on Defense, House Committee on Appropriations. We will 

also send copies of this report to the Honorable William S. Cohen, 

Secretary of Defense; the Honorable Louis Caldera, Secretary of the Army; 

and the Honorable Jacob J. Lew, Director, Office of Management and 

Budget. We will make copies available to others on request.
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If you or your staff have any questions concerning this report please call 

Robert J. Stolba or me on (202) 512-4841. Major contributors to this report 

are Lawrence Gaston, Jr.; Stephanie J. May; and William T. Woods.

Sincerely yours,

James F. Wiggins

Associate Director

Defense Acquisitions Issues
Page 13 GAO/NSIAD-00-15 Defense Acquisitions
Page 14 GAO/NSIAD-00-15 Defense Acquisitions

Appendix I

Comments From the Department of Defense ApendxiI
Appendix I

Comments From the Department of Defense

(707416) Letr Page 15 GAO/NSIAD-00-15 Defense Acquisitions

Now on p. 10

See p. 10
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