The first Chrysler bail-out; the M-1 tank.

• Author: Mendel, Richard

THE FIRST CHRYSLER BAIL-OUT

The M-1 Tank

On a July afternoon ten years ago, Lt.Colonel George Mohrmann sat at his desk on Capital Hill awaiting a phone call. As head of the Army's congressional liason office, he was ready to deliver a stack of sealed letters to members of Congress announcing the winning contractor in the multi-billion dollar competition to build the Army's M-1 tank.

The two competing contractors, Chrysler andGeneral Motors, offered a clear choice. Chrysler had built its tank around a radically different and unproven tank engine, the turbine; GM had used a more conventional diesel engine. The two tanks had undergone months of head-to-head trials at Aberdeen Proving Ground in Maryland. GM had won.

The Army, it seemed, was not going to risk addingthe M-1 to its growing list of overlysophisticated weapons that cost too much and don't work. "We were sitting there poised to deliver [the envelopes],' Mohrmann recalls. "The decision [to select GM] had been made. We were just waiting for the Secretary of Defense to be briefed.'

The call, however, was surprising. The Pentagontold Mohrmann not to deliver the letters. The next day, Defense Secretary Donald Rumsfeld ordered a whole new round of competition. A week later, Rumsfeld turned the M-1 tank program upside down. He mandated that the tank be redesigned to incorporate the turbine engine. Four months later the award--which promised to generate $20 billion in sales--went to Chrysler, and the Army was on its way to getting a weapon suited more for a paved interstate than a battlefield.

There was another mysterious element toRumsfeld's decision. He not only changed the tank's design to suit the turbine engine; he also demanded, against the strong advice of Army experts, that the tank incorporate a new main gun. Instead of the proven 105 mm gun selected by the Army, Rumsfeld moved forward with a controversial new 120 mm gun that was not only more costly, but more dangerous for soldiers to use. The new gun, together with the turbine engine, would increase the M-1's price by over a billion dollars.

That isn't another story about the Army's incompetentbureaucracy. "You can blame the Army for a lot of things,' says Anthony Battista, a staff member of the House Armed Services Committee, "but not for the troubles of the M-1.' Rather, it's a story of how outside factors can overwhelm military considerations in the Pentagon decision-making process, how narrow interests--in this case the ailing Chrysler Corporation and, by a strange twist, the U.S. Air Force--can outweigh the need for a reasonably-priced and effective military. The M-1 was never just a weapon; it was also a bail-out package.

Paperwork brigade

When the M-1 program began in 1972, the Armyhad already spent the better part of a decade and well over half a billion dollars trying to replace its M-60--with nothing to show for the effort. The MBT-70 program had been launched jointly with West Germany in 1963 to standardize the NATO tank force and take advantage of the latest technological gadgetry. With the two nations unable to cooperate, the program floundered for years and finally ended in 1970 after producing just a half dozen tanks. The Army then tried the XM-803, but like the MBT-70, this tank soon sank under the weight of its own sophistication. In late 1971, the House Armed Services and Appropriations committees killed the program.

Meanwhile the Soviet Union was producingnew and impressive tanks at an alarming rate. The U.S. Army was desperate, and facing such intense pressure from Congress that it agreed to try something new: good old-fashioned competition. Set a firm price, cut the red tape, and let the industry engineers make it work.

The approach sounds simple, but it was actuallya major departure from typical weapons development. A service usually spends years developing several hundred pages of formal performance requirements and systems specifications which it then circulates to defense contractors. The contractors respond with detailed engineering designs, and the service awards the proposal that looks best.

The winning proposal is then converted intoan equally voluminous development contract, which must be constantly updated as production difficulties aries and as the service changes its requirements. Each change is renegotiated with the contractor, resulting in cost overruns and schedule delays. Using this system, the Army gave GM the contracts for the MBT-70 and XM-803 before a single tank had been built.

But for the M-1, the Army replaced this paperworkbrigade with one remarkably simple document. Aside from some basic standards for size, weight, and reliability, there were essentially no performance requirements at all. Instead, the Army offered only a prioritized list of 16 performance categories, such as crew survivability, gun accuracy, and speed. The Army simply asked that each tank cost no more than $507,000 in 1972 dollars, and that only proven hardware be used. Each bidder would have to design, develop, and actually build a prototype M-1. The final award would be based not on paper promises, but on actual field tests conducted by the Army.

It was a simple message. "The Army told us,"You're the experts. You trade off and give us the best tank you can for the money,'' remembers Lou Felder, who was with the Army's MBT-70 project office and later became Chrysler's M-1 project manager. Even though his Chrysler tank came in second, Felder says "the initial competition for the M-1 . . . [was] probably the best development in the history of the Army.'

Scalding the troops

When the Chrysler and General Motors entriesfirst met at Aberdeen, the Army found that it had received two very good tanks, both exceeding the Army's...