One of the two leading contenders to replace the Army's Bradley Infantry Fighting Vehicle has reportedly been disqualified, putting General Dynamics (NYSE:GD) in the pole position to win what is expected to be a multibillion-dollar procurement contest.

A joint bid by Raytheon (NYSE:RTN) and German defense conglomerate Rheinmetall (OTC:RNMBY) to offer Rheinmetall's Lynx vehicle in the competition has been disqualified just days after the Oct. 1 deadline to submit candidates, according to a report in Defense News. While details are unclear, it appears Rheinmetall was unable to get its Lynx prototype to the Army's Aberdeen (Maryland) Proving Ground in time.

The Rheinmetall Lynx in a forest setting.

Rheinmetall's Lynx FK41 fighting vehicle. Image source: Rheinmetall.

The companies involved haven't commented, and the Army said only "we are now in the competition sensitive source selection evaluation process." The Lynx and General Dynamics' design vehicle were set to be put through a series of operational tests and assessments, with the Army eventually intending to order upwards of 3,600 vehicles. Fielding was set to begin as early as 2026.

Here's what we know about the program so far.

Troubled from the start

The development of the original Bradley vehicle this competition is to replace was marred by cost overruns and controversy, and was eventually the inspiration of a critical book and the 1998 HBO movie The Pentagon Wars starring Kelsey Grammer. There has been just as much drama this time around.

Two previous attempts to replace the Bradley, namely one effort in 2009 and another in 2014, were cancelled. This latest attempt, known as the Optionally Manned Fighting Vehicle, or OMFV, has been put on a tight timeline that has led to complaints from potential vendors.

BAE Systems, maker of the current Bradley, in June surprised watchers by backing out of the competition due to "the requirements and acquisition schedule." South Korean contractor Hanwha, according to reports, was also interested in submitting a bid but eventually decided against it. Rheinmetall reportedly also sought an extension, in part because of the logistical hassles trying to get the Lynx from its facility in Germany to Maryland on the Army's tight deadline.

Some in the industry were surprised by the large number of mandatory requirements the Army included in the request for proposals, which could drive up development costs. The combination of the high-tech nature of the vehicle, coupled with the Army's tight schedule, made the vehicle a difficult reach for some contractors.

What now?

General Dynamics hasn't said much about its bid, last month telling reporters it "was purpose-built to address the desired system lethality, survivability and mobility as substantiation of our response to the Army's request for proposal," using tech from other platforms and "years of investment in advanced capabilities to include a 50mm cannon."

The GD bid is likely at least inspired by the company's Griffin vehicle, an established platform that also has a variant in development for the British Army. A version of the Griffin was also submitted in a separate light tank competition, meaning General Dynamics could offer the Pentagon some level of spare part and maintenance compatibility that will hopefully help to drive down overall sustainment costs.

General Dynamics Griffin prototype firing its main weapon.

General Dynamics' submission was likely at least inspired by its Griffin prototype, shown here firing at a range. Image source: General Dynamics.

That compatibility is purely speculation, however, as General Dynamics did stress this submission is "purpose built" and likely contains numerous redesigned elements.

Even if it is the only bidder in this round, General Dynamics is not guaranteed a production contract, which isn't expected until fiscal 2023 at the earliest. Raytheon/Rheinmetall or others could submit a design into that final competition but would be doing so without the extensive feedback General Dynamics will get from the Army during the evaluation phase and with design modifications funded at the companies' expense.

A missed opportunity

Raytheon traditionally has not been a platform manufacturer, instead focused on supplying the advanced electronics, sensors, and weaponry on equipment built by other vendors. That was still largely the case with the OMFV, with the companies using a Rheinmetall design and planning to contract manufacture to Textron, but the vehicle was a chance for Raytheon to showcase its suite of weapons and seasons.

The Lynx was to carry Raytheon's active protection systems designed to intercept and shoot down rocket-propelled grenades and antitank missiles, as well as the company's drone detection and countermeasure system. It also featured Raytheon's advanced targeting tech designed to provide accurate battlefield views through darkness, rain, smoke, and fog.

As weapons systems grow more complex the profit should increasingly fall to the companies that can produce the electronics that run the platforms, and not to the metal benders and manufacturers. Had the Lynx succeeded, it would have been a strong validation of Raytheon's technological prowess that would have likely given it a leg up in other electronics and sensors competitions.

A lot of moving parts

The OMFV was not a must-win competition for either Raytheon or General Dynamics, but it would be an important feather in either company's cap. The Raytheon-Rheinmetall bid was likely going in as an underdog, but it would have been interesting to see how the two platforms sized up in a head-to-head evaluation.

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General Dynamics has been the laggard among defense stocks for a number of years now, and while its ship and submarine business is flush with new orders, the company has less exposure to some key areas of Pentagon interest, like warplanes and missile defense. Being the dominant vendor to the Army is perhaps not as glamorous as making warplanes, but these programs are vital to the company's long-term outlook.

The final payout won't come for a few years, but at this point General Dynamics looks well-positioned in the Bradley vehicle replacement contest.

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