General Dynamics Outflanked?

When I set out to write this article, it seemed to me that uber-armored-vehicle manufacturer General Dynamics (NYSE: GD  ) had indeed gotten itself outflanked.

On Tuesday, rival defense contractors Armor Holdings (NYSE: AH  ) and Lockheed Martin (NYSE: LMT  ) announced that they had been selected to compete for the contract to produce the new "joint light tactical vehicle" (JLTV) being commissioned by the U.S. Army and Marine Corps. From the name alone, it sounded an awful lot like a program designed to replace the already popular Stryker light armored vehicle that General Dynamics currently produces, having bought the business previously from General Motors (NYSE: GM  ) .

But this is a game far from finished -- not to mention irrelevant to the Stryker. In their press release, however, the companies made no mention of the other competitors, rather making this sound a bit like a done deal, in which "Lockheed will serve as prime contractor and systems integrator, providing the vehicle design and logistics. Armor will be responsible for vehicle assembly and will design and manufacture the armor subsystems."

That's true insofar as it goes -- and if they win. But it fails to mention that Armor Holdings and Lockheed face stiff competition in their bid. Further research reveals that at least two other contenders are vying for the JLTV business, notably Oshkosh Truck (NYSE: OSK  ) and . General Dynamics itself. In fact, as I dig through the military-news archives, it appears that General Dynamics was the first of these three teams to be chosen to bid on the program.

As for the program's relation to the Stryker, there really is none. Rather, the JLTV is aimed at replacing the ubiquitous but too-easy-to-kill High Mobility Multipurpose Wheeled Vehicle, better known as the Humvee, manufactured by privately held Renco subsidiary AM General. The three teams named above, and perhaps others, will be competing to produce a family of five "mission-role" JLTVs that can fulfill combat, command-and-control, utility, troop-carrier, and recon functions. The military hopes that the competing bids will eventually result in a tough-wheeled transport that boasts both greater payload than the Humvee and better survivability by virtue of having a thicker skin and increased ability for armor upgrades.

As for who will get the contract, we'll keep you updated as the competition progresses. At last report, the award is expected out sometime in Q2 2007.

What else has General D been up to lately? Find out in:

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Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.


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