Defense insider: Industry has major concerns with revised JLTV plan

Lockheed Martin and the teams of General Dynamics and AM General, as well as BAE Systems and Navistar, have all pursued the JLTV tender.

To keep the Marine Corps on board, the Army agreed to re-write the specs for the new combat trucks, which will replace many of the ground services’ existing Humvees. The result was a cheaper, lighter vehicle more to the Leathernecks’ liking.

But the services did something else that, Thompson told DEFCON Hill, has the industry teams wondering if it sitting out the JLTV competition would be a better business move.

“One way they got the price down was to transfer some costs and risks to industry,” Thompson said. “It’s a question now whether any of the teams will even enter the competition.”

Annual Pentagon budgets are set to shrink. And Defense Department officials are getting tougher on contractors, demanding they shoulder more of the risk in developmental weapon programs.

Deputy Defense Secretary Ashton Carter, who led the charge on the tougher contracting push as Pentagon acquisition chief, has said this is the only way to get better deals for taxpayers, while forcing industry to meet design, schedule and cost goals.

The new contracting approach could hit defense firms’ bottom lines hard, Thompson said, ultimately leading industry executives to sit out major weapon competitions.

“Companies cannot stay in business losing money on these contracts,” Thompson said. “They will hoard the cash instead.”