Lockheed Martin: JLTV contract award expected in August-September

Top Lockheed Martin executives said they expect to hear a decision in August or September on two high stakes Pentagon contracts that will play a large role in the U.S. military’s future ground and air combat effectiveness, including the $30 billion Joint Light Tactical Vehicle (JLTV) project that could land in Camden’s Highland Industrial Park.

In late May, the Arkansas Legislature overwhelmingly approved an $87 million incentive-laden financing package for Bethesda, Md.-based Lockheed Martin. Executives with the defense contracting giant said the company plans to bolster the state’s $87.1 million bond financing with a total investment of more than $125 million for infrastructure improvements in Camden, as well as reach job-creation and wage milestones set by the state during the next 25 years if it wins the military contract. Construction of the JLTV in Arkansas would create 600 direct jobs and hundreds of ancillary job with suppliers and other support services.

In a conference call with Wall Street analysts, Lockheed Martin Chairman and CEO Marilyn Lawson and CFO Bruce Tanner spent most of the call explaining the details of the company’s announcement on Monday that Lockheed was purchasing Blackhawk Helicopter maker Sikorsky Aircraft from United Technologies for $9 billion.

Still, in response to an analyst’s question about the defense contractor’s “franchise wins,” Tanner offered details of the company’s bid to win the JLTV contract and an even larger $100 billion contract to build the Air Force’s Long Range Strike-Bomber (LRS-B) program to be fielded in the mid-2020s.

“When I talk franchise wins in the second half of the year, I’m really talking the long-range strike bomber and JLTV,” Tanner told analysts. “The expectation is that (both) will probably be decided sometime in the August/September timeframe.”

In late June, Talk Business & Politics reported that a decision on the defense giant’s bid to build nearly 55,000 tactical armored vehicles for the U.S. Army and Marines is expected to be announced in the fiscal fourth quarter, which for the U.S. military concludes at the end of September.

Besides Lockheed Martin, publicly-traded Oshkosh Corp. in Wisconsin and privately held AM General LLC in South Bend, Ind., are the other two finalists to build the next-generation tactical, armored vehicle in a contract worth more than $30 billion over the next 25 years.

As the announcement looms, Tanner told analysts that winning the JLTV project would allow the defense giant to enter into the area of defense contracting where it doesn’t have much experience – something that Oshkosh and AM General officials have pointed out as a possible drawback to Lockheed’s bid.

JLTV PROJECT A ‘TOUGHER PUTT’ THAN STEALTH BOMBER
“(The) JLTV is, maybe in some people’s views, a little bit ‘tougher putt’ because they do not necessarily associate Lockheed Martin with being in the combat vehicle business,” Tanner told analysts. “But I think we have a tremendous offering there. And it would put us into a new segment within the Department of Defense (where) we do not have a lot of business, other than putting some of our weapons systems on top of combat vehicles.“

Tanner continued: “This would be actually building the combat vehicle itself. It’s exciting to be able to have that opportunity. Again, we think we have a great offering.”

Tanner also explained to analysts that the he believes Lockheed and partner Boeing Co. are in an even better position to win the higher stakes $100 billion stealth bomber contract against California-based defense rival Northrop Grumman Corp.

“We are watching, as are our partners. I’m quite certain Boeing is watching very closely. We still like our offering there and we feel good about that. We’ve had lots of discussions. I think we’re good partners for each other. We bring very capable, collaborative skill sets to the fray. So, that’s the first one that we are looking at … and again, I think we like where we sit there,” Tanner said.

Although the JLTV is important to Lockheed officials, the level of competition for the new bomber program has been unprecedented. For example, Northrop Grumman spent several million dollars in January to buy a Super Bowl ad touting the defense contractor as best qualified to build the nation’s newest long-range bomber.

Also, California lawmakers have passed legislation that was signed into law by Gov. Jerry Brown that would give nearly $500 million in financial incentives to either Lockheed or Northrop to build its next-generation long-range bomber in that state. By comparison, Arkansas lawmakers passed an $87 million financial package to bring the JLTV project to Camden.

According to Department of Defense officials, the winning JLTV contractor would build approximately 17,000 JLTVs for the Army and Marines during three years of low-rate initial production, followed by five years of full-rate production. For the Army, initial operating capability on the JLTV is expected in the fourth quarter fiscal 2018.

For the stealth bomber Request for Proposal (RFP), the military is aiming to buy 80 to 100 of the stealth fighters at a cost of about $550 million each to replace its 50-year-old fleet of B-52 Stratofortresses. However, the budget is likely to exceed the $100 billion target because the production schedule and other details of the program are highly classified.

Tanner told analysts that orders for the LRS-B program and JLTV project could begin this year. “The bomber would be a bigger order initially. The JLTV would be a much smaller order initially in the current year,” he said. “But both of them have a very long – think of it as decades long – production tracks once you get past the development side.”