Armored-Vehicle Builders Compete for Bigger PaydayBy GREG JAFFE, JONATHAN KARP and REBECCA CHRISTIE
May 14, 2007; Page A3
As demand soars for more heavily armored vehicles in Iraq and Afghanistan, the Army is pushing to turn a crowded multibillion-dollar competition for the next generation of troop transports into something closer to a winner-take-all event, a senior Army official said.
The shift, if made, would make it more likely that one or two companies would grab the lion's share of a much bigger payday.
Until recently the Army and Marines planned to buy only about 7,700 Mine-Resistant, Ambush Protected vehicles, which are better able to withstand blasts from roadside bombs than the current armored Humvees, for about $8.4 billion. The continuing death toll from roadside bombs in Iraq, however, led U.S. Central Command to say that it now needs as many as 17,700 vehicles -- enough to ensure that every soldier who leaves the base in Iraq is riding in one of them.
So far, nine companies have been selected to each build four test vehicles. The Marine Corps, which is overseeing the program, had planned to choose multiple winners from the various test vehicles submitted. Army and Marine Corps officials were meeting last week to decide how to address the growing demand for the vehicles in Iraq in the quickest and most efficient way, Pentagon officials said.
Now that the Pentagon is planning on buying many more of the vehicles, Army officials say they would like to see one primary design. That would make the vehicle much easier to maintain, a big plus in Iraq where troops are scattered among many outposts.
"If you have four different vehicles, that means you have to have four different logistics systems to provide parts. You have to train soldiers how to fight from four different vehicles. It becomes very expensive and complex," the senior Army official said.
Some industry officials, however, play down the differences among the vehicles, saying the various moving parts most prone to failure are similar across the various vehicle designs. So do Marine Corps program managers.
The Army, likely to buy the largest number of the new vehicles, hasn't said what its plans are. It had planned to buy about 2,500 of them. But officials say they are now almost certain to buy substantially more. Defense Secretary Robert Gates is a driving force behind the shift. "My concern is that the rate of production is nowhere near what it needs to be," he said last week.
One big question is how quickly industry can produce the V-shaped vehicle bodies that better deflect bomb blasts. The urgency for such vehicles is so great that within weeks of awarding the small demonstrator-model contracts to nine companies in January, the Pentagon ordered more vehicles from five of them.
The surge in demand has forced the smaller players, such as Force Protection Inc., to team up with major vehicle producers to increase production. In partnership with General Dynamics Corp., Force Protection recently won a contract worth nearly $500 million to build 1,000 MRAP vehicles. The Ladson, S.C., company, which is also under contract to build 80 bigger MRAP vehicles on its own, made just 300 vehicles last year. But Mike Aldrich, vice president of business development and government relations, said the Force Protection-General Dynamics joint venture could produce more than 10,000 MRAP vehicles by the end of 2008. "What's holding us back is a substantial order," he said.
General Dynamics, better known for its Stryker troop carriers and Abrams tanks, also is competing separately for MRAP vehicles. Another big player is BAE Systems PLC, which last week agreed to buy rival Armor Holdings Inc. to bolster its bid for the MRAP competition and the eventual race to build a successor to the Humvee. Oshkosh Truck Corp. has also entered the fray. The remaining contenders are smaller companies, highlighting the challenge facing the Pentagon in that the nation's industrial base for such vehicles is small and fragmented. One heavy-hitter that has already been ruled out for further MRAP orders is Textron Inc., according to the company.
The Pentagon had been seeking three sizes of MRAP vehicle. Force Protection, whose models already are deployed in Iraq, is competing for all three classes with models ranging from about $500,000 to $850,000 per vehicle.
The MRAP vehicles are larger and more expensive than the current generation of armored Humvees. Initially the MRAP was seen as an interim solution until a replacement for the Humvee could was built in the 2012 timeframe. "It could be that this program is morphing into the replacement for the Humvee," says Loren Thompson, a defense analyst with the Lexington Institute, a Washington think tank.
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