Companies jockey for huge US military truck program

WASHINGTON Mon Nov 12, 2007 3:42pm EST

WASHINGTON Nov 12 (Reuters) - U.S. and foreign defense contractors are jockeying for position as the Pentagon moves toward launching a mammoth competition to replace some 170,000 Humvees in the U.S. military fleet.

Defense analysts and industry sources say the Joint Tactical Light Vehicles contract is worth well over $10 billion and possibly three to seven times more, depending on the final cost of the vehicle chosen for the Army and Marine Corps to use for the next three to four decades.

The replacement vehicles will become the workhorse of the two services and will be used to carry troops and equipment, with an eye to protecting them better from roadside bombs than the current fleet of Humvees.

"It is a very lucrative program," said defense consultant Jim McAleese. "Whoever wins this, they're going to build the light tactical vehicle for the Army for the next 40 years."

The Pentagon expects to release a formal request for proposals for technology development of the new trucks by the end of March 2008.

Several of the Pentagon's top contractors are gearing up to bid for the work, including No. 1 Lockheed Martin Corp (LMT.N) which teamed with Britain's BAE Systems Plc (BAES.L), which acquired Armor Holdings this year. Also expected to bid are No. 2 Boeing Co (BA.N) with partner Textron Inc (TXT.N), and No. 4 General Dynamics Corp (GD.N), which has teamed with Humvee maker AM General.

BAE, which has a big stake in a U.S. project worth more than $20 billion that is sending armored Mine Resistant Ambush Protected (MRAP) vehicles to Iraq, also has a separate bid for the new contract. BAE is teaming up with rival MRAP maker Navistar International Corp's NAVZ.PK International Military and Government LLC.

Specialty truck maker Oshkosh Truck Corp (OSK.N) is also participating in the competition.

The Army and Marine Corps had hoped to begin production of its Humvee replacements by 2010, but the Pentagon recently decided to return to its original 2012 target.

That decision followed a move by acting Pentagon arms chief John Young in September to require development of prototypes before the government moves into the costly system design and development phase of new programs.

"Competing teams producing prototypes of key system elements will reduce technical risk, validate designs, validate cost estimates, evaluate manufacturing processes, and refine requirements," Young wrote in a memo explaining the policy.

Defense analyst Paul Nisbet with with JSA Research, lauded the move. The military's failure to test prototypes with the MRAP program resulted in a range of problems, including equipment that did not work as expected, he said.

In the MRAP program, which was rushed through by Congress, the Pentagon is "ending up with half a dozen different vehicles that are going to be a logistical nightmare," Nisbet said.

He said it made more sense in the case of the Humvee successors, which were not as urgently needed, to "slow the process down and buy one type of basic vehicle" to be built by one manufacturer, or possibly two sharing the same design.

McAleese expected the Pentagon to whittle the field to two or three teams that would build a prototype and eventually settle on one manufacturer for the new vehicles.

Teams with experience mass producing vehicles and leading other big programs would probably have a competitive edge, he said.

Lockheed executives acknowledged their company is better known for advanced fighter jets, but said its experience integrating communications and sensors would give it an edge in the truck competition.

In addition, Lockheed's design has a V-shaped hull that offers troops similar protection to the much heavier -- and far less transportable -- MRAP vehicles, said Steve Ramsey, executive vice president of Lockheed's Systems Integration. (Reporting by Andrea Shalal-Esa; editing by Andre Grenon)