Oshkosh wins Army contract on $30 billion Humvee successor

Oshkosh Corp. beat out a bid by a Grand Prairie-based unit of Lockheed Martin for an initial contract Tuesday from the U.S. Army for its new Joint Light Tactical Vehicle, a $30 billion program.

The Army plans to purchase about 55,000 multipurpose land vehicles for its troops and the Marine Corps through 2040 as a better-armored replacement for the Humvee. Lockheed Martin and AM General, the Humvee’s maker, were the other two competitors for the contract.

The initial contract, including options, is valued at $6.75 billion for about 17,000 vehicles, the Army said in a statement.

Oshkosh, based in the Wisconsin town of the same name, jumped on the news in extended trading, rising 10 percent to $42.55 at 4:59 p.m. in New York. The shares rose 1.5 percent at the close. The win was striking because Oshkosh, the 99th- largest U.S. government contractor as of fiscal 2014, defeated Lockheed, the nation’s biggest, according to data compiled by Bloomberg .

“Oshkosh has been building tactical vehicles for the Department of Defense for 90 years, so no other company understands the role that tactical vehicles play in our troops’ lives better than Oshkosh,” Charles Szews, the company’s chief executive officer, said in a statement.

The Lockheed vehicles were developed in Grand Prairie by the company’s Missiles and Fire Control division, and would have been built at a plant in Arkansas.

In a statement, Lockheed said it was disappointed by the decision. “We believe we presented a very strong solution and await the customers’ debrief to hear more detail regarding the reasons behind this selection before making a decision about a potential protest,” the company said.

The losing bidders have 10 days to lodge a protest with the Government Accountability Office.

The Humvee entered service in 1985, when “improvised explosive devices (IEDs) and other anti-vehicle explosive devices were not a major factor in military planning,” according to a March 9 report by the Congressional Research Service.

Deadly attacks on Humvees during the Iraq war led to efforts to speed delivery of Mine-Resistant Ambush-Protected vehicles, or MRAPs. The JLTV is envisioned as a more mobile, lighter descendant of the top-heavy MRAP, which has limited off-road capabilities, essentially combining the mobility of the Humvee and the protection of the larger MRAP.

The Army required that its Hummer replacement be able to survive the most destructive improvised bombs, be mechanically reliable and maintainable with onboard diagnostics, all-terrain mobility, and linked into current and future tactical data networks, according to the CRS.

Army Secretary John McHugh told reporters in February that the JLTV was “an essential platform” that’s fully funded through 2020. A decision on full-rate production is scheduled for May 2018.

This story was originally published August 25, 2015 at 5:54 PM with the headline "Oshkosh wins Army contract on $30 billion Humvee successor."