General Dynamics vs. BAE: The $5.2 Billion Transport Battle Begins

BAE's Bradley. Photo: U.S. Air Force via Wikimedia Commons. 

"Will it survive sequestration?" For the Army's Armored Multi-Purpose Vehicle, or AMPR, this question has often been met with doubt. But, on Nov. 26, the Army released the final performance specifications for the AMPR's engineering and manufacturing development phase, or EMD. Considering this contract could be worth billions, this is good news for General Dynamics (NYSE: GD  ) or BAE Systems (LSE: BA  ) .

Bradley vs. Stryker
Since the Vietnam era, the Army has relied on the M113 as one of its most widely used armored multi-purpose vehicles. Unfortunately, the M113 is now old and outdated, and the Army is looking to replace it with the new AMPR. To be more specific, over 13 years, the Army wants to purchase 2,907 new AMPRs at $1.8 million apiece. As such, the purchase price alone could be around $5.2 billion.  

General Dynamics Stryker. Photo: U.S. Military via Wikimedia Commons.

The next phase of development is the EMD phase, which is where the Army will award $458 million to one contractor, which will then build 29 prototypes that the Army can test. Following that, the Army will award one contractor the three-year low-rate initial production, or LRIP, contract, worth an estimated $1.68 billion. Following a successful LRIP, full-rate production of the AMPR will begin. More importantly, only one defense contractor can take home the final prize. Consequently, according to Defense News, "BAE is offering a variant of its turretless Bradley, while General Dynamics is offering either its wheeled double V-hull Stryker, or a newer tracked version of the Stryker." 

What to watch
The Army said it plans to award the AMPR EMD contract in May, but there have been a number of delays on this program. Still, the Army said it's committed to procuring a new AMDR. That's great news for either General Dynamics or BAE, because the AMPR is a very lucrative contract, and whoever wins will see a welcome boost to its bottom line. Right now it's too early to predict a winner, as both contractors have significant experience when it comes to armored personnel carriers. Consequently, this is something investors should keep a close eye on.

General Dynamics rewards its long-term investors through dividends
If you're looking for more long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2747740, ~/Articles/ArticleHandler.aspx, 9/29/2016 9:56:46 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 40 minutes ago Sponsored by:
DOW 18,143.45 -195.79 -1.07%
S&P 500 2,151.13 -20.24 -0.93%
NASD 5,269.15 -49.39 -0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 12:05 PM
BA $523.24 Down -0.76 -0.15%
BAE Systems CAPS Rating: No stars
GD $155.61 Down -0.40 -0.26%
General Dynamics CAPS Rating: ****