Oshkosh Corp., the truck-maker based in the Wisconsin city of the same name, on Tuesday won a $6.7 billion military contract to begin building a replacement for the iconic Humvee called the Joint Light Tactical Vehicle.
Oshkosh beat out Lockheed Martin Corp., the world's largest defense contractor, and AM General LLC, the maker of the Humvee, for the award.
"Oshkosh is honored to be selected for the JLTV production contract, which builds upon our 90-year history of producing tactical wheeled vehicles for U.S. military operations at home and abroad," Chief Executive Officer Charles Szews, said in a statement. "We are fully prepared to build a fleet of exceptional JLTVs to serve our troops in future missions."
The agreement calls for Oshkosh -- which also built a fleet of blast-resistant trucks for the wars in Iraq and Afghanistan -- to produce about 17,000 of the light-duty JLTVs for the Army and Marine Corps beginning in the first quarter of fiscal 2016, which starts Oct. 1.
The services plan to buy nearly 55,000 of the vehicles, including 49,100 for the Army and 5,500 for the Corps, to replace about a third of the Humvee fleets at an overall estimated cost of more than $30 billion, or about $559,000 per vehicle, according to Pentagon budget documents.
That figure, which rose from earlier estimates, includes expenses for research and development, overhead and add-on equipment such as radios, weapons and armor. Officials have said the cost of manufacturing the vehicle alone will be about $250,000.
Over the past decade, the Pentagon spent nearly $50 billion buying 25,000 or so of the bigger, mine-resistant ambush protected, or MRAP, vehicles as part of a rapid-acquisition effort spearheaded by then-Defense Secretary Robert Gates to better protect troops from roadside bombs in Iraq and Afghanistan. Oshkosh produced thousands of the so-called M-ATV versions of the vehicles primarily for use in Afghanistan.
Thousands of the hulking MRAP vehicles were subsequently scrapped, mothballed or handed down to local police departments because the military never intended them to be a permanent part of the tactical wheeled vehicle fleet. Now, the Army and Marine Corps are trying to incorporate some of the lessons learned from the wars into a lighter vehicle.
John Urias, president of Oshkosh Defense, said the company's JLTV "is proven to provide the ballistic protection of a light tank, the underbody protection of an MRAP-class vehicle, and the off-road mobility of a Baja racer."
He added, "the Oshkosh JLTV allows troops to travel over rugged terrain at speeds 70% faster than today’s gold standard, which is our Oshkosh M-ATV. Looking to future battlefields, we know that our troops will face a myriad of threats. Soldiers and Marines can be assured that the highly capable Oshkosh JLTV will perform the mission."
Heidi Shyu, the Army's top acquisition official, said she's proud of the military team that oversaw the selection process. "Working with industry, they are delivering major improvements in protected mobility for Soldiers and have succeeded in executing a program that remains on-budget and on-schedule," she said in a release.
Sean Stackley, the Navy's top acquisition official, said, "With America's Soldiers and Marines in mind, the program team successfully met both Services' requirements for affordable, achievable capability advancements that will make a true difference. Today's award brings us a step closer to delivering a flexible vehicle that balances the payload, performance, and protection critical in the operating environments of today and tomorrow."
The Army and Marine Corps plan to begin equipping units with the vehicles in fiscal 2018, though Oshkosh expects to deliver the first production models to the military next year.
Watch for the losing firms to file a protest with the Government Accountability Office, thereby delaying the program -- an increasingly common trend in an era of automatic spending caps known as sequestration, as companies fight for dollars in tightening defense budgets.