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Anticipation, anticipation
Is keeping me waiting ...

-- Carly Simon, "Anticipation," 1971

Hmm? Excuse my reverie. The muzak made me nod off for a moment -- or four months, as the case may be.

Way back in May, I sounded the wake-up call for defense-industry investors regarding the Army's then-imminent announcement of the winners in its contest to build the Army's next Humvee -- the "JLTV." The military's original plan was to accept bids up until April 1, then pick two or more winners in June, and finally accept delivery of prototypes in September 2010. But plans change.

One out of three ain't bad ... right?
According to a report from Reuters last night, the Army has pushed its decision all the way from June into October. (Nice of them to tell us about this in August.) The September deadline for delivery is still in effect -- but only because that's September 2010.

However, the stakes involved haven't changed. Reuters dialed back the excitement over this deal a bit in its most recent update, calling it a contract for "$10 billion in new truck orders," but this same Reuters noted in November that the contract's value could ultimately reach $70 billion.

How do you figure?
Start with 170,000 Humvees in the various military motor pools. Multiply that by the most recent per-unit estimate of the cost to build these behemoths, which has risen to $400,000. That works out to $68 billion, easy -- not counting the effects of inflation between now and when production starts in 2012 ... and whenever it finishes. And that's not even counting potential sales to foreign militaries.

The players
The anticipation is painful, but with a lottery ticket as big as this one, I doubt anyone will drop out of the contest in a huff. To recap, major contestants currently include:

  • Lockheed Martin (NYSE: LMT  ) and BAE Systems
  • BAE again, this time with Navistar (NYSE: NAV  )
  • Boeing (NYSE: BA  ) , along with Textron (NYSE: TXT  )
  • Force Protection (Nasdaq: FRPT  ) and DRS Technologies
  • General Dynamics (NYSE: GD  ) and AM General
  • Northrop Grumman (NYSE: NOC  ) and Oshkosh

Foolish takeaway
Who will win when all is said and done (if ever)? My money's still on General Dynamics and -- more importantly -- partner and current Humvee-manufacturer AM General. For second place, BAE/Navistar seems to be a teacher's pet over at the Pentagon. Third and finally -- and according to the rumor mill, the reason the award was delayed, to give these upstarts time to squeeze into the winner's circle -- come Northrop/Oshkosh. Time will tell.

... Perhaps more time than we think.

Further JTLV-focused Foolishness:

Fool contributor Rich Smith owns shares of four companies that could benefit from JLTV contracts: Ceradyne, Oshkosh, Boeing, and Force Protection. The Motley Fool's disclosure policy doesn't technically require him to tell you all this -- about Ceradyne at least, since it isn't mentioned above -- but he figured you should probably know anyway.

Read/Post Comments (4) | Recommend This Article (3)

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.

  • Report this Comment On August 20, 2008, at 9:15 PM, frptwinsjltv wrote:

    Have you ever seen a Naviburn hit with an IED.I did in IRAQ and they catch fire.The DOD has learned a valuable lesson about bolt on armor from the Jews..Its burns ...

  • Report this Comment On August 20, 2008, at 9:25 PM, frptwinsjltv wrote:

    Navistar burn when hit with an IED..Here is the proof

  • Report this Comment On August 24, 2008, at 9:06 PM, frptwinsjltv wrote:

    HEY RICK steal this heading when the street finds out."JLTV GETS JOLTED TO 2010"...

  • Report this Comment On August 28, 2008, at 9:19 AM, TerpsFan39 wrote:

    We all know why Navijunk got the contracts. Trent Lott worked his contacts. He's out now but I'm sure he still has the phone number to call when he needs to get a deal done!

    He doesn't care about saving lives, he cares about jobs in his home state!

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