Defense firms won't sit out vehicle competition

John Urias, Oshkosh Defense president, confirmed his firm would enter the contest, calling it “a natural move for us.” 

Navistar spokeswoman Elissa Koc told The Hill that firm has decided to enter the race as part of a team with BAE Systems. But Navistar officials “have not yet decided if we will enter the JLTV competition on our own with the International Saratoga vehicle,” Koc said.

She noted the company attended the military’s Nov. 18 JLTV industry day to explore the idea, and her email to The Hill contained a detailed description of a vehicle Navistar is considering entering into the competition on its own.

“We are currently in the JLTV competition with our partner BAE Systems with the Valanx,” Koc said, “and will move forward with that team regardless of our decision to enter the competition with a second horse.”

Karl Oskoian, a spokesman for General Tactical Vehicles (GTV), told The Hill on Tuesday in an email: “I can confirm that GTV intends to submit a proposal on the JLTV ... contract.” General Tactical Vehicles is the formal name of a partnership between AM General and General Dynamics.

In a statement late Tuesday, Lockheed Martin stopped shy of saying it would enter the race.

“Lockheed Martin has demonstrated a long-standing commitment to the JLTV program," a spokesperson said. "We are encouraged by the actions we have seen the Army and USMC take to secure JLTV funding. We have our proposal team in place, are assessing the draft request for proposal, and are taking full advantage of the various forums provided by the government to provide comment.”

For months, the Army was taking the lead in deciding what performance standards would be required for the vehicle. The result was a truck that Marine Corps brass felt was too heavy and, at $600,000 a vehicle, too expensive for the agile and budget-limited Leathernecks.

To keep the Marine Corps from walking away from the JLTV, 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 Marines’ liking.

Under the revised plans, the vehicles likely will cost around $300,000 apiece, according to military and industry officials.

But the services did something else that that left the industry teams wondering if sitting out the JLTV competition would be a better business move, according to one analyst.

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

Facing a budget squeeze, 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 to place more risk on contractors as Pentagon acquisition chief, has said that it’s 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 pass on major weapon competitions.

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

Congress has cooled to the JLTV in recent months. The Senate’s 2012 Pentagon appropriations bill would terminate the program, and the upper chamber’s Appropriations Defense subcommittee believes the services can meet their needs in other, cheaper ways.

—Updated at 6:03 p.m.