US Army Upholds $3 Billion Cargo-Truck Contract For Oshkosh
February 12 2010 - 08:40PM
Dow Jones News
The U.S. Army on Friday upheld a $3 billion cargo-truck contract
awarded to Oshkosh Corp. (OSK) following a review of protests filed
over the Army's evaluation of bids for the contract.
Oshkosh said the Army lifted the stop-work order issued in
September in response to objections raised by BAE Systems (BAESY,
BA.LN) and Navistar International Corp (NAV). The Wisconsin-based
specialty-truck builder expects to begin production of the trucks
later this year.
"We are very pleased the Army affirmed its original decision
that Oshkosh Corp.'s bid clearly represents the best overall value
for the Army, the taxpayers" and soldiers, said Oshkosh Chairman
and Chief Executive Robert Bohn in a written statement.
In August, Oshkosh was awarded a five-year contract to supply up
to 12,415 trucks and 10,926 trailers valued at $3.02 billion. The
Army's initial order is for 2,568 trucks worth about $281
million.
The trucks are part of the Army's long-running Family of Medium
Tactical Vehicles, or FMTV, program. The FMTV series features up to
17 different truck models for a variety of uses with payloads from
2.5 tons to five tons.
In December, the U.S. Government Accountability Office upheld
two protest issues of limited scope dealing with Oshkosh's
production capacity and Navistar's past performance as a defense
contractor. The GAO recommended that Army re-evaluate those parts
of the companies' bids.
The GAO, however, dismissed the majority of the issues raised in
the protests, including complaints that Oshkosh's price for the
trucks is unrealistic and exposes the Army to production disruption
if the company is unable to cover its production costs.
The Army on Friday didn't provide details about its
re-evaluation process but noted that a peer review of its process
was conducted by the Secretary of Defense's office.
The loss of the FMTV contract is likely to be particularly
disruptive for BAE, the incumbent contractor for the trucks. The
company has said as many as 3,200 workers in Texas, Michigan and
Ohio could lose their jobs when BAE quits building the trucks.
BAE's Texas-based Land & Armaments Group and Stewart &
Stevenson Services --a company acquired by BAE--have built more
than 56,000 FMTV trucks since 1991.
"BAE Systems is disappointed with the Army's decision," said Bob
Murphy, president of the Land & Armaments Group, in a written
statement. "Our goal now is to work with the Army to ensure a
low-risk transition of FMTV production and secure an uninterrupted
supply of these critical vehicles to our soldiers."
Representatives Navistar didn't immediately respond to requests
for comments.
Oshkosh's stock on Friday closed down 2.9%, or $1.18, at $38.33
a share. Navistar ended down 0.2%, or nine cents, at $39.11. BAE
shares in New York closed down 2.76%, or 61 cents, at $21.50.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
Oshkosh (NYSE:OSK)
Historical Stock Chart
From Feb 2024 to Mar 2024
Oshkosh (NYSE:OSK)
Historical Stock Chart
From Mar 2023 to Mar 2024