Lockheed Files Protest Over Loss of Humvee Replacement Contract

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 a statement issued Tuesday, 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.

Interestingly, Lockheed, the world’s largest defense contractor, decided to protest while far smaller AM General did not. Lockheed, which does not have a contract for a military ground vehicle, would like very much to acquire one, and this JLTV deal may have been the last for a while. Defense contracts worth $30 billion are not exactly thick on the ground, so it may be surprising that the smaller firm chose not to complain.

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So why isn’t AM General also upset at losing its hold on the Pentagon’s ground vehicle? AM General does not expect its business to collapse. In a statement released Tuesday the company said:

AM General continues to believe that [its vehicle] was the right choice for JLTV. However, we believe a protest would ultimately result in a distraction from our current growth business areas, including meeting the significant current and future needs of our customers in the United States and around the globe. Specifically, with approximately 230,000 HMMWVs currently serving as integral tactical vehicles of fleets around the world, AM General has a critical role in ensuring these vehicles remain mission ready and as capable as possible, to include the most innovative survivability and communications capability available only from AM General, now and into the future.

The JLTV does not and will not replace the [Humvee]. With the JLTV still subject to additional testing and several years away from fielding, the Army and Marine Corps have repeatedly emphasized the need to modernize and maintain the more than 160,000 HMMWVs in their service and ensure the vehicle can meet the requirements of future missions through at least 2050.

According to a report at Breaking Defense, AM General also announced Tuesday that it has received a $428 million contract to build Humvee ambulance versions for the Army, Reserve and National Guard to use in domestic disaster response. About $89.5 million will be spent at the beginning on 654 new vehicles.

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Lockheed, on the other hand, has nothing so it has nothing to lose by complaining about the award to Oshkosh. The defense giant acquired a wheeled-vehicle production line from BAE Systems and moved it physically from Texas to Arkansas in anticipation of winning the contract. What does Lockheed do with that line without a contract to build the JLTVs? Like we said, the defense giant has nothing to lose and everything to gain by protesting, no matter how slim the chances are that the Pentagon will reverse its decision.

Lockheed’s stock traded up about 0.8% early Wednesday morning, at $208.80 in a 52-week range of $166.28 to $213.34.