BAE, General Dynamics in U.S. Army development deals

WASHINGTON Thu Aug 18, 2011 6:59pm EDT

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WASHINGTON (Reuters) - Teams led by BAE Systems Plc

(BAES.L) and General Dynamics Corp (GD.N) each won contracts on Thursday worth more than $439 million to develop technology for the first fleet of U.S. Army ground combat vehicles designed from scratch for battlefields characterized by roadside bombs.

An SAIC-led team that included Boeing Co(BA.N), Krauss-Maffei Wegmann and Rheinmetall was passed over.

BAE is partnered in its effort with Northrop Grumman Corp (NOC.N). General Dynamics is partnered with Lockheed Martin Corp (LMT.N) and Raytheon Co (RTN.N).

The rival teams are to "develop competitive, affordable and executable designs for a new Army Infantry Fighting Vehicle (IFV) over the next 24 months," the Defense Department said in a statement.

The Pentagon's top arms buyer, in a memo signed on Wednesday, approved the Army's technology development strategy and said that a fixed-price type contract with incentive fee was appropriate for this phase of the program.

BAE Systems Land and Armaments won a $450 million contract and General Dynamics Land Systems was awarded a $439.7 million deal for the same phase of the program, the Defense Department said in its daily contract digest.

The SAIC-led team was very disappointed by the outcome, said Melissa Koskovich, a SAIC spokeswoman. "Before we can evaluate where we go from here, we will ask the government for a complete debrief," she said.

Army Secretary John McHugh, citing the budget crunch facing the United States, said it was imperative to "continually address requirements as we build a versatile, yet affordable, next-generation infantry fighting vehicle."

The Army hopes to design, develop, build and test the new infantry fighting vehicle over the next seven years, the statement said.

The Army said it would update its "analysis of alternatives" for the vehicle and conduct separate technical and operational assessment of existing non-developmental vehicles.

Results from this assessment, along with contractors design efforts, will "facilitate a full and open competition for the next phase" of the program, the Army said.

The new ground combat vehicle will be the first designed from inception for battlefields characterized by roadside bombs, or improvised explosive devices, as the military calls them.

It will provide armor protection and the capability to maneuver cross-country with a nine-man infantry squad, Army Chief of Staff General Martin Dempsey said in the statement.

(Reporting by Jim Wolf, Editing by Carol Bishopric)

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