The Army is procuring medium tactical trucks—the 2.5- and 5-ton payload classes—to replace most of its current fleet. The truck replacement effort is known as the Family of Medium Tactical Vehicles (FMTV) program. The program is currently nearing the end of its first full-production contract. The Army plans to continue production with the same contractor for new model FMTV trucks. In addition, the Army plans to develop a second source to produce FMTV trucks. After the second source is selected, the current contractor and the second source will share annual production. The FMTV program is one of the Army’s largest acquisition programs at a projected cost of $15.7 billion. From fiscal year 1991 through fiscal year 2022—a 32-year period—the Army plans to purchase 85,488 FMTV trucks to replace its aging medium truck fleet. The program consists of a family of 2.5- and 5-ton trucks based on a common truck cab and chassis. The 2.5-ton trucks, called light medium tactical vehicles, consist of cargo and van variants and a 2.5-ton trailer. The 5-ton trucks, called medium tactical vehicles, consist of seven variants—cargo, long wheel base cargo, dump, fuel tanker, tractor, van, and wrecker—and a 5-ton trailer. The program is nearing the end of its first production contract. The contract was awarded on October 11, 1991, to Stewart & Stevenson Services, Inc., Houston, Texas. It was a $1.2-billion, 5-year, fixed-price production contract for the first 10,843 FMTV trucks. It did not include the production of the 5-ton fuel tanker and van variants or the cargo trailers. These vehicles will be included in later production contracts. Because of funding problems, the fifth year of the contract was extended over 3 years. The Army expects the contractor to complete production under this first contract in December 1998. The Army plans to continue FMTV production with the current contractor. The new contracts will comprise new models, called A1 models, of the FMTV truck variants produced under the original production contract and FMTV trailers. The contract award, however, was delayed until the Army resolved a major problem discovered on fielded FMTV trucks. Under certain operating conditions, the FMTV trucks’ transmission flywheel housing can crack and, if undetected, can lead to a broken drive shaft. If the drive shaft breaks while the truck is operating at highway speeds, it can cause an accident. The Army decided not to award the follow-on production contract until this drive train problem was corrected and the correction was verified through testing. The Army successfully completed the testing of proposed correction to the drive train problem and the Secretary of Defense approved the award of the follow-on production contract in early October 1998. According to a project official, in order to maintain the planned production schedule while the drive train correction was being tested, the Army initially decided to separate the follow-on contract into two contracts—one that would be awarded immediately to produce new models of FMTV trucks and trailers to support a new production qualification test, and one that would be awarded after the drive train correction was verified for full-rate production of the trucks and trailers. A separate testing contract would allow the contractor to start preliminary work on the new design of the new models without actually starting production until after the drive train problem was corrected. Accordingly on June 2, 1998, the Army awarded Stewart & Stevenson a $9.2-million contract for 15 FMTV trucks and 8 trailers to support the production qualification test of the new truck models. After the drive train testing was successfully completed, the Army, on October 14, 1998, awarded Stewart & Stevenson a $1.4-billion, 4-year production contract for 6,430 trucks and trailers, with an option year for an additional 2,920 trucks and trailers. The 5-ton fuel tanker and van were not included in the follow-on contract. These variants were not produced under the original production contract and the Army planned to include them in the follow-on contract. A project official said that they were not included in the follow-on contract because they were not as ready for production as originally thought. In November 1998, the Army plans to award the Stewart & Stevenson a second FMTV production contract for these FMTV variants. This contract would be for enhancements to the designs of the 2 trucks, testing of the trucks, and production of 276 FMTV trucks—138 5-ton fuel tankers and 138 5-ton vans—at an estimated cost of $100 million. While the current contractor is producing under the follow-on contracts, the Army plans to develop a second source to produce FMTV trucks. Starting in fiscal year 2003, the Army plans to split FMTV truck production between the current contractor and a second source by competing production in 5-year increments. The winning contractor for each increment would receive a larger share of production under that increment. The Army plans to award the final 5-year production contract to one contractor in a winner-take-all competition in fiscal year 2018. Senator Harkin requested that we evaluate the Army’s future acquisition plans for the FMTV program. To evaluate the Army’s future FMTV acquisition plans, we interviewed Defense, Army, and contractor officials and reviewed the November 25, 1997, FMTV update to the FMTV acquisition strategy and plan, which provided a general description of the Army’s future FMTV plans. However, we had to rely mainly on oral testimony for this evaluation because the Army’s detailed plans were evolving at the time of our review and were therefore unavailable in written form. For example, at the start of our review, the Army planned to award one follow-on production contract to the current contractor; now the Army plans to award three follow-on contracts to the current contractor. Because the follow-on production contracts were being negotiated at the time of our review, we were unable to obtain copies of the contracts. Also, the Army had not finalized its detailed second-source plan; therefore, no written detailed second-source plans were available for our review. We interviewed the key project officials involved in developing the Army’s follow-on contracts and second-source plans. We evaluated planned production quantities contained in the FMTV selected acquisition report, dated December 31, 1997, to determine whether it would be reasonable to expect benefits from splitting these quantities between two contractors. As part of our evaluation of future FMTV acquisition plans, we evaluated the Army’s efforts under the current FMTV production contract. We interviewed Defense, Army, and contractor officials and reviewed various program documents, including the FMTV acquisition strategy and plan, the current production contract, source selection evaluations, budget documents, and selected acquisition reports. We determined whether the contractor was consistently producing trucks within the quality standards set by the Army for FMTV trucks by analyzing the first inspection acceptance rate of lots accepted by the government between July 1, 1997, and June 30, 1998, and charted the number and type of defects found in the first inspection of lots accepted in 2 recent months. We did not include lots of five trucks or less in this analysis. We did not visit units that received FMTV trucks because the Defense Office of Inspector General was planning to evaluate FMTV trucks in the field; the Inspector General’s audit was started but has been suspended because of higher priority congressional request work. To provide an indication of the kinds of problems identified on fielded FMTV trucks, we reviewed selected weekly reports of deficiencies detected during the FMTV trucks’ receiving inspections at the fielding locations and a summary of quality deficiency reports received by the FMTV project manager’s office as of December 11, 1997. When an FMTV truck is received in the field, it is inspected before it is issued to the unit. The Army does not summarize the results of these inspections. At the time of our visit, we selected and reviewed the most recent receiving inspection reports. The reports covered 45 trucks inspected at Fort Bragg, North Carolina, during 4 weeks in July-August 1997. Because the reports did not differentiate between major and minor deficiencies, a government plant representative office quality specialist reviewed the reports and indicated which deficiencies were major deficiencies. The results of our review cannot be projected to all fielded FMTV trucks because we were unable to define the universe of reports. The official who had the reports said that he did not have all of them. Once the trucks are issued to the units, individual soldiers are supposed to complete a quality deficiency report whenever a problem is found in their trucks. We reviewed a summary of 286 quality deficiency reports received by the project office by December 11, 1997. However, a project official said that he does not believe that all the deficiencies on the FMTV trucks are being reported. Each report would have to be investigated to determine whether similar deficiencies were being reported differently and the root cause of each deficiency. Such a determination was beyond the scope of our review. Our work was conducted at Defense and Army headquarters, Washington, D.C.; Defense Contract Management Command headquarters, Fort Belvoir, Virginia; FMTV project office, U.S. Army Tank-Automotive and Armaments Command, Warren, Michigan; Defense Contract Management Command, Stewart & Stevenson office, Sealy, Texas; and Tactical Vehicle Systems, Stewart & Stevenson Service, Inc., Sealy, Texas. We conducted our review between July 1997 and August 1998 in accordance with generally accepted government auditing standards. The current contract allowed the contractor to continue truck production even though the trucks were unable to pass testing and demonstrate that they met FMTV performance and reliability, availability, and maintainability requirements.