Companies Continue To Chase Contract For New Military Truck
April 14 2011 - 02:29PM
Dow Jones News
Companies vying to provide a replacement for the U.S. military's
Humvee utility truck are digging in for the next phase of the
competition, undeterred by anticipated cuts in defense spending
that threaten to undermine the truck program.
Two finalists are expected to be selected early next year for a
four-year engineering and manufacturing development phase of the
Joint Light Tactical Vehicle, or JLTV, program. The winner of this
phase could receive a production contract for more than 60,000
vehicles worth $30 billion.
The U.S. Defense Department has indicated the selection won't be
limited to the three teams of companies chosen in 2008 for the
technology development portion of the program, giving companies
bounced out of the competition three years ago an opportunity to
get back into the program.
"This program is probably going to be the biggest acquisition of
wheeled vehicles" by the military, said Kevin Thomas, director of
defense programs for truck maker Navistar International Corp.'s
(NAV). "It's going to be a very robust competition and I anticipate
there will be good number of companies."
Specialty truck builder Oshkosh Corp. (OSK), which scored two
big contracts for military trucks in recent years, is determined to
take advantage of its second chance at JLTV. Oshkosh and its
partner Northrop Grumman failed to make the cut for the technology
development phase of the program.
"It's effectively a whole new competition now," Oshkosh Chief
Executive Charles Szews said.
Oshkosh hopes to leverage its successful development of an
all-terrain patrol truck for U.S. forces in Afghanistan into a
improved entry for the JLTV competition. The Wisconsin company has
built 8,100 of the all-terrain trucks since 2009. Szews' optimism
is further bolstered by what he considers as disappointing results
from the three teams awarded $20 million each provide JLTV
prototypes under the technology phase of the program
"None of them met the weight requirement. None of them met the
mobility requirement and the pricing they offered exceeded the
[government's] budget," Szews said.
Analysts expect military truck builder Force Protection Inc.
(FRPT) to consider another run at JLTV as well, after being
excluded from the early phase of program. The South Carolina
company has already supplied the Army and Marine Corps with large
armored trucks. In late 2010, the U.K.'s armed forces ordered 200
of the Force Protection's Ocelots, a light armored patrol truck
that could be adapted for JLTV. Force Protection did not respond to
repeated calls for comments.
The teams that already have provided trucks for testing are
Navistar and a York, Penn.-based affiliate of U.K. defense
contractor BAE Systems PLC (BA.LN, BAESY); AM General, the builder
of the Humvee; General Dynamics (GD) Land Systems; and Lockheed
Martin (LMT) and BAE Systems' Armor Holdings unit in Texas.
Thomas said teams that have supplied JLTV prototypes have an
edge over companies such as Oshkosh because the military's
requirements for next phase of the program will be based in part on
performance tests and technology gleaned from the prototypes.
"We've gotten a lot smarter than we were when we delivered the
vehicles," Thomas said. "For the past two years we've been having
face-to-face meetings with the government."
The military's interest in a new all-purpose truck grew out of
the Humvee's shortcomings under combat conditions in Iraq and
Afghanistan. The lack of armor on the vehicles made them highly
susceptible to insurgents' roadside bombs. When armor plating was
added, the Humvee became too heavy for its engine.
Engineers for alternative vehicles have struggled to hold down
costs and maintain the Humvee's agility while providing maximum
protection against bomb or rocket attacks.
The Marine Corps has already complained that the prototype
trucks are too heavy for its rapid-deployment missions, according
to defense analysts. Moreover, analysts believe the cost of the
prototypes is above the $350,000 per vehicle base price set by
government. That figure could grow to $500,000 per vehicle when
communications gear and other equipment are added. The Army is
particularly sensitive to the trucks' cost because the service also
is pursuing funding to replace its Bradley armored troop carrier.
The cost of the so-called ground combat vehicle is pegged at $10
million a vehicle.
"You have to ask yourself whether the money is going to be a
available for such a pricey vehicle," said Loren Thompson, a
defense analyst for the Lexington Institute, public policy
consulting firm in Virginia. "Something is going to go away. The
ground combat vehicle and the JLTV are in jeopardy because of
defense budget austerity."
After nearly a decade of elevated spending for the wars in Iraq
and Afghanistan the federal government is expected to scale back
defense appropriations in the coming years to counter bulging
budget deficits. President Obama has proposed saving $400 billion
from defense programs by 2023.
Thompson predicted a plan to significantly modify some 40,000
existing Humvees will gain momentum as the military looks for
lower-cost options for replacing the Humvee, which has been in
service since the early 1980s. Navistar's Thomas said he's
confident that JLTV won't be abandoned.
"This program has continued to move forward and that's
indicative of the need for this type of vehicles," he said. "The
program is staying alive for that reason."
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
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