Boeing Gets the Boot

Sorry, Boeing (NYSE: BA  ) . No JLTV for you.

On Tuesday, the news came down: Boeing's challenge of a Pentagon award to build America's Next Top Humvee has been definitively rejected. The Government Accountability Office denied the protests from Boeing and partner Textron (NYSE: TXT  ) , which had challenged the Pentagon's decision to award a trio of $60 million Joint Light Tactical Vehicle (JLTV) prototype contracts to:

  • General Dynamics (NYSE: GD  ) and partner AM General.
  • Navistar (NYSE: NAV  ) and BAE Systems.
  • Lockheed Martin (NYSE: LMT  ) along with BAE Systems (again).

Likewise, a joint protest from Northrop Grumman and partner Oshkosh (NYSE: OSK  ) got the big poke in the eye from on-high. Along with losing bidder Force Protection (Nasdaq: FRPT  ) , it looks like they'll be warming the bench for the next few decades as one or more of the Pentagon's favorites rakes in the tens of billions of revenue dollars that stand to be poured into the JLTV program.

Oh, well
Like I said before, it's never been easy to fathom the government contracting process. But I have to tell you, folks -- even though I'm a Boeing shareholder, I'm kind of glad to see the GAO put this protest to bed so quickly.

Over the past eight years, you see, the Pentagon has been plagued by numerous instances of indecision. It still can't seem to make up its mind about whom it wishes to build the new KC-X midair refueling tanker (and that's not the only thing protested recently). It's also awarded translation contracts to one firm, only to suspend them pending multiple challenges by another, finally resolving the matter only when the two pugilists agreed to team up and split the contract.

Change is good. So's hope
As far as JLTVs go, is it the right decision? Is the General Dynamics/AM General machine clearly better than the Textron-Boeing truck? I dunno. I hope so. But right or wrong on the JLTV matter in particular, the GAO under President Obama is getting off to a good start. It's backing the people who make the decisions, making its own judgments quickly, and not waffling.

The way I see it, there's a reason coaches aren't allowed to challenge a ruling on the field after the next play has started. In investing as in football, there's something to be said for finality, because the market abhors uncertainty. Knowing "who won," on the other hand -- knowing that for a fact, and not having to worry about whether a decision made is truly a final decision -- will only make our lives easier as investors.

Even if it's not always our company that wins the prize.

Fool contributor Rich Smith owns shares of Boeing and Force Protection -- two of the losers from this week's news. Try any of the Fool’s market-beating newsletter services -- free for 30 days -- and we’ll show you how to roll with the punches and emerge a wealthy winner in the long run. The Motley Fool has a disclosure policy


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  • Report this Comment On February 20, 2009, at 3:57 PM, dieselman2000 wrote:

    Amazing, DoD overturns a contract based on pressure from Senators and Boeing because one of the winning bidders was a foreign entity, then they turn around and award 90 billion of the JLTV contracts to a British firm.

    Genius at work.

  • Report this Comment On February 20, 2009, at 7:18 PM, MATV09 wrote:

    Rick Smith once again proves decieving in his analysis. Its true Boeing has been denied its protest. But thats real old new, that has little or no bearing on MATV, because even Boeing knew the protest was DOA.

    What concerns me and should concern any reader is that Rick continues to deny that Force Protection is General Dynamic's M-ATV partner. The joint venture is called Force Dynamics and they released this news only days ago. Rick spends enough time on the Yahoo Message Boards to know this.

    Force Dynamics, LLC Appoints Damon Walsh as Program Director

    Tuesday February 17, 2009, 7:30 am EST

    LADSON, S.C.--(BUSINESS WIRE)--Force Dynamics, LLC, a joint venture between Force Protection, Inc. (NASDAQ: FRPT - News) and General Dynamics Land Systems Inc., a business unit of General Dynamics Corp. (NYSE: GD - News) today announced that it has appointed Damon Walsh as Program Director in charge of the venture’s submission in response to the U.S. Army Tank-automotive and Armaments Command (TACOM) solicitation for the Mine Resistant Ambush Protected All Terrain Vehicle (M-ATV). Force Dynamics submitted Force Protection, Inc.’s Cheetah vehicle in response to the solicitation. The Cheetah brings a new level of mobility and weight-reduction to the MRAP category, combining an unprecedented level of survivability and maneuverability.

    Ricks "fantasies" about a NAV M-ATV victory will cost his readers almost as much as it will cost him.

    Circle this post.

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