July 27 (Bloomberg) -- Oshkosh Truck Corp.'s design for a blast-resistant truck was rejected by the Pentagon after testing raised questions about its ability to carry more armor and survive a bomb attack, said a government letter to the company.

The Marine Corps in a letter to Oshkosh Truck official Moss Ruedinger June 29 said explosives testing of select areas ``caused concern regarding overall vehicle survivability,'' and unspecified ``automotive'' and ``human factors'' also ``preclude safe vehicle operation.''

The Pentagon is awarding production contracts for at least 8,000 Mine-Resistant, Ambush-Protected vehicles, or MRAPs, in what is now a $12 billion program. Roadside bombs are the leading killer of U.S. troops in Iraq, and Defense Secretary Robert Gates has said the trucks are the military's top acquisition priority.

Design deficiencies detected in initial testing of the Oshkosh truck were ``borne out'' by a limited troop evaluation, the letter said. The government ``is convinced that remediation of this issue would require significant redesign,'' it said. ``The result would be an unacceptable delay to future production orders.''

Oshkosh continues to build the trucks and deliver them to the Marines, Joaquin Salas, a company spokesman, said today. He declined to comment on the letter. He also declined to comment on whether the company plans to submit a design for the second round of MRAP competition the Marines announced July 2.

Marine Corps Systems Command spokeswoman First Lieutenant Geraldine Carey had no comment on the letter.

Find a Partner

Shares of Oshkosh, Wisconsin-based Oshkosh fell 54 cents to $57.47 as of 4:02 p.m. in New York Stock Exchange composite trading.

In the letter, the Marine Corps encouraged Oshkosh Truck to consider using its production capacity in partnership with other companies to build blast-resistant vehicles.

Oshkosh today announced an agreement with Ceradyne Inc. and Ideal Innovations Inc. to develop, produce and market the Bull armored vehicle. The Bull would use an existing armor system created by Ideal and Costa Mesa, California-based Ceradyne, and be built on a ``combat-proven'' Oshkosh truck chassis, the statement said.

Oshkosh's Salas said no decision has been made on what truck chassis will be used for the Bull.

Powerful New Bombs

The Bull is intended to protect troops against explosively formed penetrators, or EFPs, a powerful new type of roadside bomb capable of piercing even heavily armored vehicles, the companies said in their joint statement. Ceradyne and closely held Ideal, which is based in Arlington, Virginia, announced development of the armor system in June. They haven't received a contract yet to produce vehicles for the MRAP program.

The Pentagon letter said Oshkosh's MRAP design had ``insufficient'' potential to carry new protection intended to blunt the new roadside bombs that use an explosive charge supplied to Iraqi insurgents by Iran and can punch through the toughest armor.

``This severely limits the government's options to expand the vehicle's survivability characteristics,'' the letter said.

MRAP trucks have a raised chassis and V-shaped hull that makes them four times safer than traditional flat-bottomed vehicles, according to the Marine Corps, which is heading purchases for all branches of the military.

`A Blank Check'

John Young, the Pentagon's top MRAP program official, told a congressional committee July 19 he has ``a blank check'' to buy as many vehicles as fast as possible. Congress has approved $5.4 billion for this fiscal year, including permission to shift $1.2 billion previously approved for other programs to MRAP purchases.

The money will increase production of MRAPs by 63 percent to a total of 3,900 by Dec. 31 from the 2,400 planned.

Oshkosh Truck received contracts for four test vehicles in January, and a production award in February for 100 trucks valued in total at more than $30 million.

The government intends ``not to order any additional items under this contract,'' the Marine Corps letter said.

The contract was for the manufacture of a vehicle called the Alpha, a 13-ton four-wheeled truck which can carry eight occupants. The vehicle was designed by closely held Protected Vehicles Inc. of North Charleston, South Carolina.

Building Alpha

Oshkosh was to use its ``production capability and engineering expertise'' to lead the team building the Alpha, the companies said in a February statement announcing the contract. The contract called for completing deliveries by the end of this month. Salas declined to comment on how many trucks have been shipped so far.

Protected Vehicles spokesman Drew Felty today declined to comment on both the status of the company's Alpha partnership with Oshkosh, and the meaning of the new Oshkosh venture for the Bull. He referred questions to Oshkosh.

Truck-building contracts worth more than $200 million each have been awarded to Ladson, South Carolina-based Force Protection Inc.; London-based BAE Systems Plc; Navistar International Corp.'s International Military and Government unit in Warrenville, Illinois; Armor Holdings Inc. in Jacksonville, Florida.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net; Edmond Lococo in Boston at elococo@bloomberg.net.

Last Updated: July 27, 2007 18:12 EDT