Investors, of course, had been told to expect 5,244 vehicles would
be awarded, and at a total cost of $12 billion. Instead, U.S. Army Tank
Command issued a contract for 2,244 MRAP All-Terrain Vehicles for just
a billion and change. At this price, it looks like the Army may be able
to buy its entire fleet of "M-ATVs" for as little at $2.5 billion -- a
mere fraction of the expected cost.
Good news for Oshkosh, great news for taxpayers?
And it gets better. According to the Defense Department, Oshkosh's contract will be a "firm fixed priced delivery order" -- so no cost overruns
on this one, folks. While the total program cost will ultimately exceed
$2.5 billion, what with the expense of maintaining and servicing the
vehicles, it still looks to be a far cry from $12 billion.
But the best news of all is for the troops in the field. Oshkosh
apparently sensed it had this contract "in the bag," and began building
M-ATVs even before it was awarded the contract. With several already in
production, and plenty of underused manufacturing capacity to spare,
Oshkosh avers that it can not only fulfill the Pentagon's production
requirements on this order, but on follow-on orders as they arrive.
Settle down, lawyers
What's more, unlike past awards for production of the Army's new Joint Light Tactical Vehicle, where jilted bidders such as Textron (NYSE: TXT) immediately cried foul and filed lawsuits, or the Air Force's KC-X Tanker contract, where similar litigation has left rivals Northrop Grumman (NYSE: NOC) and Boeing (NYSE: BA) both cooling their heels, it looks like M-ATV will encounter no such difficulties.
No sooner had Oshkosh learned of its victory than it extended an
olive branch to its vanquished foes, announcing it will subcontract
some of the work to losing bidders like Force Protection (Nasdaq: FRPT), General Dynamics (NYSE: GD), Navistar (NYSE: NAV), and/or BAE.
Copyright 2009 by United Press International.
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