JLTV Strategies Compared: Lockheed vs. Oshkosh vs. AM General

Three very different teams are contending to build the Humvee’s replacement, the Joint Light Tactical Vehicle. Breaking Defense weighs their strengths and weaknesses. Last week, the Army and Marines slashed a crowded field of competitors in half, awarding contracts for “engineering and manufacturing development” of JLTV prototypes to aerospace giant Lockheed Martin, truck maker Oshkosh, and Humvee manufacturer AM General. The choices surprised many observers because only one of the three, Lockheed, had won in the previous round, in 2008, when the military awarded three “technology development” contracts. A major restructuring of the program last year had rendered many of the original criteria irrelevant, because — facing a cancellation threat from the Senate Appropriations Committee — the Army and Marines had trimmed back their ambitions for the new vehicle to contain spiralling costs. Rejected were bids from BAE and General Dynamics — which had both won technology development contracts — and Navistar. (A different unit of BAE is working on Lockheed’s bid, however). Interestingly the three losers could still enter the competition because nothing prohibits them from developing JLTV designs at their own expense and offering them in the final competition for the actual production run, something Navistar has already said it “will seriously consider.” The three EMD winners’ vehicles all meet the same requirements and look roughly the same, but the companies behind them have distinctly different strengths and strategies. Even the amounts they were awarded last week are not identical. Lockheed got the most, Oshkosh almost $10 million less, but, given the intense focus by both the Pentagon and Congress on affordability, Lockheed’s getting more may end up being less a vote of confidence than a target painted on its back. Lockheed Martin Engineering & Manufacturing Development award (on August 22nd): $66.3 million Technology Development award (in 2008): $36 million Selling point: technology “Lockheed, from the beginning, has tried to position itself as the technology innovator” in the JLTV competition, said Loren Thompson, a defense industry consultant and analyst who is also a member of the Breaking Defense Board of Contributors. Lockheed, the world’s largest defense contractor, is better known for high-tech, high-cost aviation programs like the F-35 Joint Strike Fighter than for building trucks. “This is what the business development people at Lockheed Martin would call white space, a part of the defense business they have not been in before,” Thompson said. So the company has emphasized its general strengths innovating and integrating advanced technology, rather than its minimal track record specifically on ground vehicles. It’s a similar approach to the strategy Lockheed pursued, successfully, to break into shipbuilding, another corporate “white space,” with the Littoral Combat Ship program. In both cases the company emphasized its high-tech expertise, but also teamed with a much smaller but more established player in the field. For LCS, Lockheed’s partner is Wisconsin boat-builder Marinette Marine; for JLTV, it’s BAE’s Sealy, Texas division, which has built wheeled military vehicles for two decades. (The Lockheed team also originally included advanced metals specialist Alcoa, but the cost-cutting drive led Lockheed to substitute less expensive materials). But LCS also shows the hazards of this approach: The first ships went wildly over budget — albeit more because the Navy changed requirements than any mistake the contractors made — and Lockheed’s variant specifically came under heavy criticism for leaks and other manufacturing flaws (which the company now insists are fixed). And JLTV is a program where low cost and technical feasibility are at a premium over innovation. From the military’s perspective, Lockheed’s bid is arguably the high-risk, high-reward option compared to its more established, less ambitious competitors, both of which have much greater experience building military trucks: AM General and Oshkosh. AM General Engineering & Manufacturing Development award (on 8/22): $64.5 million Technology Development award (in 2008): none Selling point: history AM General’s corporate ancestor, Willys-Overland Motors, built the famous Jeep, the iconic light truck of World War II. AM General in its modern incarnation built the Humvee, which became iconic in the 1991 Gulf War. AM General built the first uparmored Humvee, the M1114, which was originally used by military police before it became de rigeur for all units against the deadly threat of roadside bombs. But even the uparmored Humvee was sidelined in Afghanistan and Iraq, relegated to on-base duties while combat patrols were taken on by the more heavily armored MRAPs (Mine-Resistant Ambush-Protected vehicles). Still, AM General has done a great deal to uparmor and upgrade the Humvee over the years. In fact, until recently, the Army was seriously considering a further evolution of the M1114-descended “expanded capability” Humvee as a lower-cost alternative to an all-new JLTV. “We met the challenge of the last decade to protect our vehicles,” AM General vice-president Chris Vanslager told Breaking Defense. Now, with their JLTV offering, which AM General calls the BRV-O (pronounced “Bravo”), the company is trying to apply their experience to an all-new design that starts from a clean sheet of paper. That said, many observers still see AM General’s JLTV as “evolutionary,” not revolutionary — which in today’s risk-averse budget environment is not by any means a bad thing. AM General’s greatest strength is arguably its proven skill in manufacturing military vehicles. That asset has been enhanced by a key personnel change last year, said Loren Thompson: “I think the secret ingredient in the AM General offering was actually their CEO Charlie Hall,” formerly of General Dynamics. “Charlie Hall is a manufacturing guru, [and] he brought a lot of credibility to the AM general team.” Oshkosh Engineering & Manufacturing Development award (on 8/22): $56.4 million Technology Development award (in 2008): none Selling point: incumbency Until just three years ago, Oshkosh was a second-tier player in the military market. The company manufactured a Marine Corps truck called the MTVR (Medium Tactical Vehicle Replacement) but it was better known for civilian construction and emergency vehicles. But in 2009, Oshkosh won two crucial military contracts: the Army FMTV (Family of Medium Tactical Vehicles) for logistics units and the all-service M-ATV (Mine-Resistant Ambush-Protected All-Terrain Vehicle) for combat patrols in Afghanistan. The company bid aggressively low to win both contracts, and many observers thought Oshkosh could never make its “unbelievable” cost targets — but it delivered. As the latest, lightest, and most mobile member of the MRAP family, the M-ATV is the closest thing to the JLTV in the current inventory, which means Oshkosh is the closest thing to an incumbent in the current competition. Oshkosh has reduced weight, improved the suspension, and increased speed from their M-ATV to their JLTV offering, but their fundamental selling point is continuity and low cost. (Click here for video and detailed coverage of the Oshkosh contender, which the company calls the L-ATV). AM General’s Humvee has the history, but Oshkosh’s M-ATV dominates the market today. That almost-incumbent status is an advantage for Oshkosh, but by no means a decisive one. “To me the most interesting thing about this downselect is that there is no clear favorite,” said Loren Thompson. “Every one of these teams is capable of delivering, and everyone brings something unique to the table, so it’s going to be a tight competition.”

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JLTV Strategies Compared: Lockheed vs. Oshkosh vs. AM General

Posted on August 27, 2012

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