General Dynamics Wins $500 Million Special Operations Truck Contract (Updated)

General Dynamics Ordnance and Tactical Systems has beat out two other competitors for a seven-year, half-billion dollar contract to supply U.S. Special Operations Command with new tactical wheeled vehicles.

The Pentagon announced the $562 million award Aug. 22, ending the Ground Mobility Vehicle 1.1 competition that drew seven truck manufacturers. The list was eventually whittled to three contenders.

The award is bad news for AM General and Navistar Defense, which build the Humvee and mine-resistant ambush-protected vehicle, respectively. Orders for both of those vehicles are on the decline as the U.S. military pulls out of Afghanistan. The Humvee is scheduled to be replaced by the joint light tactical vehicle, which is in the engineering and manufacturing design phase.

Dean Lockwood, senior weapons systems analyst at Forecast International, said at a time when major vehicle buys are firmly in the crosshairs of budget hawks, the GMV program benefitted from being relatively small.

“It also doesn’t hurt that it was a SOCOM program,” he said. “Their budgets are pretty protected from cuts.”

Plans are to buy about 1,300 GMVs to replace SOCOM’s current fleet, which are Humvees specialized for use by commandos. Those vehicles were built by AM General. The acquisition is expected to be completed by September 2020, according to a statement from the Office of the Secretary of Defense announcing the award.

One delivery order will be issued at the time of contract award and funded with $9.8 million of research, development, test and evaluation funds, under fiscal years 2012 and 2013, and $5 million procurement funding, the statement reads.

The contract is worth $25 million in fiscal year 2014. SOCOM included a 100-vehicle purchase in its budget request for that year.

About 80 percent of General Dynamics’ Flyer is commercial-off-the-shelf or Humvee compatible components. With a top speed of 85 miles per hour, it is transportable by V-22 Osprey and CH-47 and CH-53 helicopters. It has a 360-degree weapon mount on a central turret and has a cruising range of 450 miles.

SOCOM is also seeking a smaller vehicle that fits inside a V-22 Osprey, designated the internally transportable vehicle. A request for proposals for that program was issued in April. It is not known how the GMV contract will affect that program, though the Flyer meets many of the requirements.

Compared to other ongoing vehicle acquisition programs like the joint light tactical vehicle, the GMV 1.1 is a relatively small contract. Still, companies spent millions of internal research-and-development dollars to design and built prototypes based on SOCOM’s published requirements.

Despite the win, Lockwood said GMV will not be a massive moneymaker for General Dynamics. The major benefit will come in later years when maintenance contracts begin to materialize.
“Like with any vehicle contract, the real money is not in procurement. The real money is in resetting and upgrading and modernizing the vehicles. Once SOCOM goes through the procurement, there will be follow-on contracts for years,” he said.

Contenders who lost out on the U.S. contract could look overseas for a buyer for their vehicles. But the fact that SOCOM’s requirements were so specific could be a disadvantage to losing contenders, Lockwood said.

“Because the requirements are so specialized to the needs of U.S. SOCOM, there is not going to be a huge follow-on market overseas,” he said. “The fact that it fits into a CH-47 would be compatible with some British requirements, for instance. The [Special Air Service] might want to look at some of these vehicles. But it’s going to be a pretty limited market.”

During the time their vehicles were being vetted by SOCOM, many of the manufacturers said they were leaning on a global shift to special operations forces as a backup plan if they lost the U.S. contract. Having poured millions of dollars into a purpose-built commando truck, the companies wanted to hedge their bets against a loss.

Only AM General did not build a new truck from the ground up, though its redesign of the Humvee-based GMV is significantly upgraded and not identical to the vehicle now in service.

Oshkosh Defense and Lockheed Martin each offered up trucks designed specifically to serve a GMV role, but both were cut from the running. Oshkosh filed a protest but quickly withdrew it.

Lockwood said because GMV is specific to the special operations community, it has little or no implications for vehicle procurement for conventional forces. The two companies that lost out on the GMV contract are still on a seven-year Odyssey to develop the joint light tactical vehicle, which Lockwood called a “soap opera” of protests, withdrawals, redesigns and fluctuating price targets.
As it stands, the Army would like to buy 49,000 JLTVs and the Marine Corps 5,500 at $230,000 or below per vehicle.

Oshkosh and AM General are locking horns with a Lockheed Martin-BAE Systems team  in that program for the chance to replace thousands of Army and Marine Corps Humvees. Those three manufacturers are participating in an engineering, manufacturing and development phase in which they have produced 22 JLTV prototypes.

“Oshkosh or AM General may still have the last laugh in all this,” Lockwood said. 
Correction: This article originally misstated the number of JLTVs the Army plans to purchase. The service wants 49,000 vehicles.

Topics: Land Forces