Military

Pentagon Dismisses Lockheed Protest Over Tactical Vehicle Program

Paul Ausick

Published: December 15, 2015 3:12 pm

Last Updated: January 13, 2020 4:03 pm

In late August, the U.S. Army awarded a $6.7 billion firm, fixed-price production contract to Oshkosh Corp. (NYSE: OSK) to build approximately 17,000 Joint Light Tactical Vehicles (JLTVs) to replace the legacy Humvees currently in use. Lockheed Martin Corp. (NYSE: LMT) protested the award, and on Tuesday the Government Accountability Office (GAO) dismissed the protest.

Oshkosh said it is resuming work on the JLTV production contract, but the protest dismissal is procedural, not final. According to a press announcement from Oshkosh, Lockheed’s protest was dismissed because the defense giant notified the GAO that the company intends to file a protest with the U.S. Court of Federal Claims. When the Army received notice of Lockheed’s intention, the stop-work order was lifted and the Pentagon told Oshkosh to get back to work.

Oshkosh’s contract win beat both Lockheed and Humvee maker AM General, builder of more than 280,000 of the iconic vehicles over the past 30+ years. The Marine Corps will get 5,500 JLTVs, and up to 40,000 will be acquired by the Army through 2040. Excluding the R&D costs, the Oshkosh JLTV will cost the Pentagon about $250,000 per copy.

Overall the contract could be worth up to $30 billion if the Department of Defense buys all 55,000 or so of the JLTVs that it currently expects to purchase. In its protest filing Lockheed said:

After evaluating the data provided at our debrief, Lockheed Martin has filed a protest of the award decision on the JLTV program. We firmly believe we offered the most capable and affordable solution for the program. Lockheed Martin does not take protests lightly, but we are protesting to address our concerns regarding the evaluation of Lockheed Martin’s offer.

The Court of Federal Claims is the exclusive U.S. court for resolving bid protest litigation. The contract itself is now Oshkosh’s.

Oshkosh shares traded up about 0.3% after the announcement, at $39.35 in a 52-week range of $32.56 to $55.69.

Lockheed’s shares traded down about 0.5%, at $215.53 in a 52-week range of $181.91 to $227.91.