AM General has succeeded in beating incumbent Oshkosh Defense for an $8.7 billion Joint Light Tactical Vehicle recompete contract. Two other previously identified competitors, GM Defense and Navistar, bowed out of the effort.
Under the five-year (plus five-year option) contract, AM General will manufacture up to 20,682 JLTVs and 9,883 trailers. The new vehicles will also feature technology improvements for the U.S .military and international forces.
“One of the key strategies of the JLTV program from its earliest days was to leverage competition to control cost and maximize buying power for the government,” said Brig. Gen. Samuel L. “Luke” Peterson, program executive officer, Combat Support & Combat Service Support. “From the start of production, the government procured the data rights to the JLTV Technical Data Package from the original equipment manufacturer, which the program leverages to conduct future production competitions and control the platform’s configuration and vehicle price well into the future. These government-held data rights permitted the program to compete this follow-on production contract with much better control of the production configuration and cost.”
The JLTV follow-on contract Request for Proposals, in accordance with the Army Climate Strategy, sought to incentivize offerors to propose fuel efficiency technologies that target on-the-move fuel economy improvements and anti-idle capability in support of optimizing combat effectiveness. The JLTV A2 design is the first tactical wheeled vehicle with baseline architecture utilizing lithium-ion batteries, which is a key enabler for anti-idle capability.
According to U.S. Department of Defense budget request documentation, the current revised procurement objective stands at 53,582 vehicles – 49,099 vehicles for the U.S. Army and 4,483 vehicles for the U.S. Marine Corps. The U.S. Government Accountability Office (GAO) estimates the Department of Defense will allocate about $53.4 billion for the JLTV program – $1.082 billion for RDT&E and at least $52.298 billion for procurement.
Oshkosh Defense has been the JLTV contractor since winning the original competition in 2015 against AM General and Lockheed Martin. The company says it has produced over 19,000 JLTVs since the program began. In the past few months, Oshkosh Defense has been awarded three contracts valued at $730 million to produce 2,000 more vehicles for nine customers. All told, Oshkosh is still under contract to build over 22,679 vehicles, with more orders to come in 2023.
Whether the shift in contractors will save money is still a question. As the incumbent, Oshkosh Defense was favored going into the recompete, thanks to its established production line. According to a Congressional Research Service report, AM General could initially face higher costs than Oshkosh due to its lack of experience in manufacturing the vehicle. Further exacerbating the cost issue is rising inflation, which will likely push the cost of the vehicles up no matter the contractor. In addition, Marine Corps JLTV targets may no longer be accurate, as that service is downsizing. Fewer purchases by the Marines will again put upward pressure on costs per vehicle. One final long-term concern could be increased maintenance costs associated with running mixed fleets of vehicles.
Despite the loss, opportunity remains. As the Army owns the rights to the JLTV Technical Data Package, it could decide to compete future orders, which might help keep costs in check.
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