On August 25, 2015, the U.S. Army awarded Oshkosh Defense a $114.7 million contract for low-rate initial production and full-rate production of the Joint Light Tactical Vehicle. The U.S. Department of Defense currently maintains a revised procurement objective of 54,599 JLTVs – 49,099 for the Army and 5,500 for the Marine Corps. The Government Accountability Office estimates that the DoD will spend more than $53.3 billion on the JLTV program – $1.082 billion for RDT&E and at least $52.3 billion for procurement. The Army expects the JLTV to achieve Initial Operational Capability in 2019.
The three contending designs for the JLTV were the Oshkosh Light Combat Tactical All-Terrain Vehicle (L-ATV), AM General’s Blast Resistant Vehicle-Offroad (BRV-O), and a joint development vehicle put forward by BAE Systems and Lockheed Martin. The basic objective of the JLTV program is to develop a family of vehicles generally similar to the HMMWV that exhibit an 80 percent parts commonality among variants. Unlike the HMMWV, however, the JLTV will feature scalable armor and a mine-resistant hull design.
The U.S. Army and Marine Corps have established requirements for 11 distinct JLTV variants, which fall under three general categories: JLTV-A (Battlespace Awareness), JLTV-B (Force Application), and JLTV-C (Focused Logistics). The Army no longer envisions the JLTV as a blanket replacement for the HMMWV; rather, the JLTV will fill a capability gap between the HMMWV and the Mine Resistant Ambush Protected (MRAP) vehicle. Indeed, the Army now expects to replace only about one-third of the HMMWV fleet with the JLTV.
The JLTV contract represents potential salvation for Oshkosh Defense, which has been enduring a significant decline in defense-related revenues. Net sales for the company’s defense segment decreased $1.33 billion, or 43.5 percent, to $1.72 billion in FY14 compared to FY13. Over the past four years, defense sales at Oshkosh have plunged more $2.5 billion. The slide mirrors the reductions in defense spending brought on by the end of two wars in the Middle East and a desire to broadly cut government expenditures. Without the JLTV contract, Oshkosh’s defense unit might well have found itself on the auction block following Oshkosh’s reorganization into a holding company.