It's back to the future in the defense industry, as the biggest names in armored warfare gear up to vie for a $70 billion prize.

Revisiting a subject I first began writing about more than a year ago, an article from Reuters last week reminded me that there's more going on in military wheeled transport than just the MRAP (mine resistant, ambush protected) program. Protecting soldiers from IEDs in Iraq may be front and center in our legislators' minds. But down the road at the Pentagon, people are thinking even farther ahead, seeking a solution to the problem that started the IED-wave in the first place -- thin-skinned Humvees.

HMMWV, meet your tougher brother -- the JLTV
The military calls its solution "JLTV": the Joint Light Tactical Vehicle. Uncle Sam is gearing up to accept proposals to build this replacement for the Army's current uber-jeep. If you believe Reuters, the contract will involve replacing all 170,000 Humvees (some sources say there are only 140,000 in active service) in the U.S. military fleet.

Over on the Force Protection discussion board at Motley Fool Rule Breakers, we've pretty much concluded that this is bunk. The military probably won't insist on full armor plating for operating stateside, or in any but the hottest of hot zones. Whoever wins the contract will more likely get an order for considerably fewer than 170,000, 140,000, or even 100,000 vehicles. Still, once you multiply any number by 1,000 or more, the money involved gets real big, real quick.

The $70 billion honey pot
How big? Based on its bogus estimate of the size of the anticipated market, Reuters estimates the JLTV program could be worth anywhere from $10 billion to $70 billion to the winner or winners. That's a pretty sweet honey pot, and although the bidding won't open until March 2008 -- and the switchover from Humvee to JLTV isn't expected to begin in earnest before 2012) -- major defense contractors are already abuzz at the prospects.

Defense industry experts say the military has learned its lesson from the MRAP mess, in which political urgency forced the military to buy armored vehicles from whoever could make them, resulting in a helter-skelter collection of Cougars, Chargers, RG-31Mk5E's, MaxxPros, and Lord knows what else. It's a whole lot easier to maintain a fleet of many copies of a single vehicle than a mishmash of various different models. With several years to plan ahead for JLTV, the plan is to pick a single "best" model, and only one or two contractors to build it.

Not so fast
The defense contractors, however, have other ideas. With as much as $70 billion on the table, no one wants to risk getting left out in the cold on this one. So to maximize their chances of getting at least a piece of this very large pie, most contractors are pairing up rather than bidding solo. As mentioned in my very first column on this subject, Lockheed Martin (NYSE:LMT) has teamed with Armor Holdings (now owned by Britain's BAE Systems). Boeing's (NYSE:BA) in bed with Textron (NYSE:TXT). And General Dynamics (NYSE:GD) made arguably the smartest move of all, hitching itself to AM General, which makes the current version of the Humvee.

Most interestingly, and most savvily, BAE seems to have quadrupled its own chances, joining in two separate bids for the contract. In addition to its cooperation with Lockheed, the Brits reportedly have teamed up with Navistar on a second JLTV proposal.

About the only companies that seem to be going stag to this party are truck maker Oshkosh (NYSE:OSK), and Force Protection (NASDAQ:FRPT) -- though I wouldn't be surprised to see that when push comes to shove, Force needs to partner up with a larger rival to tap the manufacturing capacity necessary to build thousands of super-jeeps.

Who will win in the end? It's total conjecture at this point, but if I had to lay (long) odds, my money would probably be on the General D-and-AM General team, by virtue of the latter's decades-long experience building HMMWV jeeps for the military. Second place in the oddsmaking would probably go to BAE, based on the sheer number of baskets into which it's placed its eggs. But you can't count Force Protection out of the running, either. From all I've heard (admittedly, mainly from the company's own press releases, and its intensely loyal partisan shareholders), Force's Cheetah armored car is a leading contender in the JLTV race.

Trust, though, that I'll be writing more on the field as it develops. Whether it's valued at $10 billion or $70 billion, this story is just too big to ignore.

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