Rails asset pipeline - issue compiling vendor assets

For reference see this gist: https://gist.github.com/1950329

My issue is that I’m deploying my application to heroku and the assets
under vendor do not appear to be compiled into application.js and

The application works fine in development environment on my local

A workaround has been to configure production.rb so that run time
compilation is allowed if the asset is not found, this is less than
ideal of course.

Anyone able to see anything wrong or suggest why vendor assets would
not be compiled?

Heroku app environment: ruby 1.9.2p290 (2011-07-09 revision 32553)
[x86_64-linux] Rails 3.2.1