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Oshkosh Wins $30 Billion U.S. Army Contract to Build Humvee Replacement

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Oshkosh Corp. won 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 of the multipurpose land vehicles for its troops and the Marine Corps through 2040 as a better-armored replacement for the Humvee. The other two competitors for the contract were Lockheed Martin Corp. and AM General, the Humvee’s maker.

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, which ranked No. 1, 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.

Potential Protest

The losing bidders have 10 days to lodge a protest with the Government Accountability Office after they’re briefed on the decision, and Lockheed suggested that it may do so.

“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 in a statement.

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.

Funding for the Joint Light Tactical Vehicle program would double to $457 million in 2016 under the Pentagon’s pending budget request, top $1.3 billion by 2018 and hit almost $1.8 billion in fiscal 2020, according to Army budget documents.

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.

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