WASHINGTON The U.S. Army and Marine Corps on Wednesday awarded Humvee maker AM General as well as Lockheed Martin Corp (LMT.N) and Oshkosh Corp (OSK.N) contracts valued at $56 million to $66 million to work on prototypes for a new truck to replace the workhorse Humvee.
The multibillion-dollar Humvee-replacement program is one of few new development programs available to U.S. companies as the Pentagon prepares for up to $1 trillion in cuts to planned spending over the next decade.
Lockheed, privately held AM General and Oshkosh beat out Navistar International Corp (NAV.N), General Dynamics Corp (GD.N), and Britain's BAE Systems (BAES.L), who had also bid for the 27-month Joint Light Tactical Vehicle development contracts.
The decision by the two military services, posted late Wednesday on a government contracting site, foresees initial funding of $99.5 million on the program, with the remaining funds to be spent in fiscal years 2013 and 2014. The Army issued a request for proposals on January 26 for the program.
AM General, which had previously been teamed with General Dynamics, and Oshkosh had entered the competition only in March, along with Navistar, which was initially part of a team with BAE Systems.
AM General's overall contract was valued at $64.5 million; Lockheed's was valued at $66.3 million and Oshkosh -- which also built a mine-resistant, all-terrain vehicle for the military's use in Afghanistan, was valued at $56.4 million.
Current plans call for the Army to buy up to 50,000 of the new vehicles, with the Marines set to buy 5,000 more.
AM General welcomed the announcement, saying it would produce 22 prototypes of its "Blast Resistant Vehicle - Off road" or BRV-O, which it said was based on over a decade of the company's investment in research, development and testing.
Navistar said it was disappointed by the news, but said there could be an opportunity to compete for a production contract once the engineering and manufacturing development phase was completed. A spokeswoman said she was not aware of any plans by the company to protest the government's decision.
No immediate comment was available from the other companies.
The Army's announcement on Wednesday said the losing bidders could proceed to develop vehicles at their own cost and risk, but needed to let the government know of any such plans within 30 days.
(Reporting By Andrea Shalal-Esa; Editing by Muralikumar Anantharaman)