Oshkosh wins $30 billion JLTV award, Arkansas plant misses the cut

Always a bridesmaid, never a bride. Arkansas lost another bid for a superproject. After courting three of the nation’s largest defense contractors for the past three years, the Pentagon on Tuesday (Aug. 25) announced Wisconsin-based Oshkosh Defense as the winner of $30 billion award to build nearly 55,000 Joint Light Tactical Vehicles (JLTV) for the U.S. Army and Marine Corps over the next 25 years.

The Lockheed plant in Camden, Ark., would have built the vehicles if Lockheed had been awarded the contract.

“I am tremendously proud of the JLTV program team,” said Heidi Shyu, the Assistant Secretary of the Army (Acquisition, Logistics and Technology). “Working with industry, they are delivering major improvements in protected mobility for Soldiers and have succeeded in executing a program that remains on-budget and on-schedule.”

The Army selected Oshkosh from two other competing firms – Lockheed Martin and AM General – participating in the program’s engineering and manufacturing development phase, which began in 2012 and concluded earlier this year. Each vendor delivered 22 prototype vehicles as part of JLTV development, which were utilized as part of an intensive, 14-month competitive test.

As the loser of the JLTV bid, questions concerning’s Lockheed Camden’s operation will need to be answered. Over the past several months, workers at the defense giant’s operations in south Arkansas spent several months getting the plant production-ready. In early August, Lockheed officials announced the Camden factory had begun work on eight company-funded prototypes, or Production Representative Vehicles (PRVs) ahead of Tuesday’s announcement by the Department of Defense.

Lockheed said PRVs are now rolling off the assembly line in south Arkansas in preparation to reduce technical risk, optimize the advanced production processes at the Camden assembly plant, and to exercise and prepare the supply chain.

U.S. Rep. Bruce Westerman, R-Hot Springs, who represents the congressional district that includes Camden, issued this brief statement:  “I am obviously disappointed for the citizens of Camden, East Camden, and Ouachita County. Officials in the cities, county, and at the state level should be commended for their work to secure this project.” 

U.S. Sen. Tom Cotton, R-Ark., who once represented the Fourth District where Lockheed Martin intended to locate production, said: “I am disappointed the Army did not select Lockheed Martin to build the JLTV. Camden is a first-rate facility and the people who work there are some of the best in the world, I know they would have put their hearts and souls into this project. I am confident the work and infrastructure Lockheed Martin put in place to bid on this project will bring other economic benefits. And as Lockheed Martin explores their next steps, we stand ready to assist them however we can. As a solider in the Army, I saw firsthand the critical need to replace the Humvee with a vehicle like JLTV. It is reassuring to know that this vehicle will protect our service members — including the many who call Arkansas home — no matter where it is produced.”

ONE DISADVANTAGE

According to some JLTV experts, Lockheed Martin’s bid was weakened by the fact that it had no defense contracting experience as a so-called OEM or original equipment manufacturer.

After the Arkansas Legislature approved the passage of a $87 million bond financing package in late May, Lockheed officials said they would invest more than $125 million in the East Camden facility. Approximately 600 new full-time positions would have been created at the facility and as many as 655 indirect jobs will be created in South Arkansas as a result of this project, officials said.

According to Department of Defense officials, the contract award winner will build approximately 17,000 JLTVs during the first three years of low-rate initial production, followed by five years of full-rate production.

The Army plans to eventually purchase 49,099 JLTV’s, while the Marine Corps plans to eventually buy 5,500 of the vehicles for $30 billion through 2040. For the Army, initial operating capability on the next-generation JLTV is expected in the fourth quarter fiscal 2018.

The Pentagon has kept a tight lid on the winner of the project and gave no indication which company was the frontrunner for the multi-billion dollar superproject announced today. Companies will have a 30-day window to appeal the contract’s award.

This is the second time that Arkansas has been the finalist for a vehicle manufacturing superproject, only to come up just short of victory. In February 2003, Arkansas lost a hard-fought bid to San Antonio, Texas for an $800 million Toyota Tundra manufacturing plant.

Since then, the state has worked on shoring up technical skills of Arkansas’ workforce, which many experts said was the main reason that the Toyota plant went to Texas. During the recent legislative session, the state passed a series of workforce development and job skills training bills that were a central part of Gov. Asa Hutchinson’s economic development agenda.

OSHKOSH’S WINNING STRATEGY
As the JLTV winner, Oshkosh spokeswoman Jennifer Christiansen told Talk Business & Politics in May that the reason why the Wisconsin defense contractor and truck builder should be selected to build the JLTV was very simple. “Experience,” she said.

“Oshkosh Defense has decades of experience designing, manufacturing and sustaining the U.S. military’s heavy, medium and mine-resistant ambush protected all-terrain vehicle (M-ATV) fleets,” she said. “In developing our JLTV solution, we applied in-theater experience to develop the next generation light vehicle with unprecedented protection and off-road mobility for our troops.”

According to Oshkosh’s application submitted on Feb. 10 in response to the request for proposal (RFP) for the JLTV, the Wisconsin company said it is “fully prepared” to begin production of the all-terrain vehicles immediately. According to sources, the company’s bid was the lowest of the three finalists.

“Our troops deserve the best vehicle and technology our government can provide, and no other company serves this mission more effectively than Oshkosh,” said U.S. Army Major General (Retired) John Urias, executive vice president of Oshkosh Corp. and president of Oshkosh Defense. “Our JLTV proposal reflects Oshkosh’s heritage of building high performance tactical vehicles, and an unparalleled commitment to providing our troops with the most capable and reliable JLTV at an affordable price.”