March 11 (Bloomberg) -- General Dynamics Corp.’s bid for a contract valued at about $6.5 billion to make trucks that would protect troops in Afghanistan from roadside bombs was rejected. Designs from rival BAE Systems Plc cleared the U.S. military’s first round.

General Dynamics’ offer of a modified version of its RG-31 truck for the MRAP All-Terrain Vehicle, or M-ATV, “was not accepted,” Ken Yamashita, a spokesman for the Falls Church, Virginia-based company, said in an e-mail today. He didn’t say why, and Pentagon spokeswoman Cheryl Irwin said she couldn’t comment.

The Army has said it wants to buy as many as 10,000 all- terrain vehicles that can navigate Afghanistan’s undeveloped road network. Rejection of the General Dynamics-led bid means the company’s only remaining chance for the contract is through a partnership with Force Protection Inc. The pair face competition from at least three other bidders that have confirmed their vehicles passed the first round of competition.

“This is a large opportunity and, in this competition, you just want to win,” said Cai Von Rumohr, a Boston-based analyst with Cowen & Co. who rates shares of General Dynamics “buy” and doesn’t own any. “You would prefer to win with your own vehicle, but either win would be greatly appreciated” by investors.

The bid with Force Protection probably offered General Dynamics the better chance of the two entries, he said.

BAE Designs

BAE Systems Plc, based in London, said it submitted two different designs that passed the first round of testing and the company received $1 million contracts for prototypes of each. One truck, the U.S. Combat Systems M-ATV, was derived from experience on the RG-33 truck used in Iraq, BAE spokesman Steve Field today. BAE also received a contract for its Global Tactical Systems M- ATV, which is derived from the company’s Caiman vehicle, program spokesman Ruben Maestas said in an interview today.

General Dynamics’ remaining bid is part of a joint venture called Force Dynamics, which today announced it received a $1 million contract for its Cheetah vehicle.

General Dynamics fell $1.19, or 3.2 percent, to $36.41 at 4:15 p.m. in New York Stock Exchange composite trading, the largest decline in the 11-member Standard and Poor’s 500 Aerospace & Defense Index. The shares have dropped 56 percent in the past year.

Last week, Oshkosh Corp. and Navistar International Corp. said they separately passed the first round of the M-ATV competition.

Prototype Testing

Bidders interested in the M-ATV contract submitted their offers in January and were required to deliver two prototypes of each vehicle design for testing last month.

Any “production-representative vehicle” that met basic requirements received an award to pay for the vehicles for further government testing, Irwin said in an e-mail. She said she couldn’t comment on which vehicles were accepted or rejected in the initial stage.

The Army has said it plans to award the final M-ATV contract by June. While the service has said it prefers a single supplier, the request for proposals left open the possibility it may “place production orders with multiple” producers.

To contact the reporter on this story: Edmond Lococo in Boston at elococo@bloomberg.net.

Last Updated: March 11, 2009 17:29 EDT