A Contract Is Awarded, and Humvee Hilarity Ensues

For months, we waited for the Pentagon to get its act together. Months ... all to decide who would get to build prototypes for America's Next Top Humvee. Could it all be for naught?

Well, two weeks ago, the Pentagon issued its long-awaited decision on the Joint Light Tactical Vehicle program -- a program that probably will exceed $20 billion. In its decision, the Pentagon anointed as the winners:

  • General Dynamics (NYSE: GD  ) /AM General.
  • Navistar (NYSE: NAV  ) /BAE Systems.
  • Lockheed Martin (NYSE: LMT  ) /BAE Systems (yes, this defense contractor's so nice, they named it twice).

And the losers? They're sore.

Let the litigation begin
The ink on the Pentagon's announcement was hardly dry before losing bidders Boeing (NYSE: BA  ) and Textron (NYSE: TXT  ) complained to the Government Accountability Office. Northrop Grumman (NYSE: NOC  ) , and Oshkosh (NYSE: OSK  ) have also filed their own protest.

The specifics of the complaints vary: Boeing/Textron cite "discrepancies" in how "systems maturity, logistics, and costs" were evaluated. Northrop/Oshkosh further allege that the rules of the competition were changed midgame. (Do tell.) Yet the effects of the challenges are likely to be identical: Because the GAO has 100 days in which to review each complaint, any such review will delay the completion of October's awards and effectively hand the ultimate decision on who gets the loot to the incoming Obama administration.

First, let's ignore all the lawyers
What are the merits of Boeing's and Northrop's complaints? It doesn't really matter. Boeing's and Northrop's partners have a real presence in ground warfare. Both Textron and Oshkosh are highly regarded manufacturers of light and medium armored vehicles. Then again, so are their rivals: BAE, General D, Force, and Navistar are all key players in the Pentagon's MRAP program, for example.

Foolish takeaway
But the challenges' real import lies not in whether they change the occupants of the JLTV winners' circle. More important, to my mind, is that by delaying the start of the program yet again, these challenges increase the risk of major delays in JLTV.

Leave aside any musings on whether a Democratic White House is inherently hawkish, dovish, or otherwise fowl. The longer this process drags on, the more likely it is that some new priority or emergency may take precedence over the JLTV program in Congress.

Learn everything you ever wanted to know, and maybe even a little that you didn't, about the JLTV program:

Fool contributor Rich Smith owns shares of Oshkosh, Boeing, and Force Protection. The Motley Fool owns a disclosure policy and is not afraid to use it.


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