Wisconsin-based Oshkosh Corp. won a major contract Tuesday to build a new combat vehicle to replace a large share of the U.S. military's Humvee troop carriers.
The Department of Defense awarded the Joint Light Tactical Vehicle contract to Oshkosh Defense, one of three firms that were finalists for the work. The $6.7 billion contract is expected to support thousands of jobs.
The Army and Marine Corps plan to buy as many as 55,000 JLTVs by 2040. Nearly 49,100 would be built for the Army with 5,500 going to the Marines. The vehicle is designed to provide more protection against roadside bombs and mines than Humvees without being as big as another military vehicle produced by Oshkosh, the Mine Resistant Ambush Protected vehicle, or MRAP.
Oshkosh Defense beat out Maryland-based Lockheed Martin and Indiana-based AM General for the contract. Pentagon officials declined during a briefing for reporters to say why they chose Oshkosh over its competitors.
Scott Davis, the Army's executive officer for the program, said the big winners are the soldiers and Marines who will gain a vehicle that offers a better balance of protection, payload and performance.
"Our JLTV has been extensively tested and is proven to provide the ballistic protection of a light tank, the underbody protection of an MRAP-class vehicle, and the off-road mobility of a Baja racer," John Urias, president of Oshkosh Defense and a retired Army major general, said in a statement.
Lockheed had said it would build the vehicle at its Camden facility in Arkansas, and state lawmakers there dangled an $87 million incentive package. It's not clear whether Wisconsin or Indiana offered any incentives, but union workers at Oshkosh in 2013 agreed to a contract extension so that the company could nail down its labor costs for the project.
The contract is a timely boost for Oshkosh, which eliminated about 760 jobs last year because of declining defense spending. The company plans to build the vehicle in Oshkosh, with deliveries beginning in 10 months.
"It's really a historic win for Oshkosh and it's a big victory for our employees and really the state of Wisconsin," Oshkosh Corp. CEO Charles L. Szews said in a telephone interview. "It means that we will have a stable revenue base for our company. ... More importantly, it means the brave men and women who go into harm's way will be protected" in a high-speed, light tactical vehicle.
The company initially plans to hire about 100 salaried employees, Szews said, and more production employees might be hired later. Production would begin in two to three years and would ramp up from a few hundred vehicles per year to 3,000 vehicles per year under the contract, he said.
The contract initially calls for 17,000 vehicles, with the Army to decide in 2018 whether to purchase the rest of its share, which would push the value of the contract up to around $30 billion. The Marines will get all theirs up front.
The contact will mean business for companies that supply Oshkosh Corp. and the economic benefits will ripple across the Oshkosh area for years, said Rob Kleman of the Oshkosh Area Chamber of Commerce.
"This is outstanding news," Kleman told Oshkosh Northwestern Media. "We are very ecstatic to hear that. This bodes well from an economic standpoint for the whole region."
Oshkosh Defense, Wisconsin's largest defense contractor, is part of a larger company that also makes fire and emergency vehicles and other commercial equipment such as scissor lifts, cement mixers and garbage trucks.
Lockheed and AM General have 10 days to file formal protests over the award. Both companies issued statements saying they're gathering information and considering their options.