Lockheed Martin has sued the Pentagon over their decision to reward a $6.75 billion Humvee replacement contract to the American Oshkosh Corporation. Lockheed Martin is arguing that it offered the best solution for building 17,000 new Joint Light Tactical Vehicles for both the U.S. Army and U.S. Marines. Despite the lawsuit, Oshkosh says they will meet military standards.
In a related report by the Inquisitr, earlier in 2015, Lockheed Martin also lost a $80 contract to Northrop Grumman to build the next generation of American stealth bomber, referred to as the Long Range Strike Bomber.
These type of strategic investments can last up to 50 years and can determine the financial health of a company over the long term. Dow Jones Business News notes that the “relative lack of long-term military-equipment deals in recent years has made protests increasingly commonplace,” and companies will often seek help from the Government Accountability Office (GAO), a non-partisan government watchgroup group, if they disagree with the Pentagon’s decisions. In fact, Lockheed Martin and Boeing are also currently awaiting the results of a joint protest they filed with the GAO for the long range bomber contract with the U.S. Air Force.
The Humvee contract will also likely be highly contested. The Pentagon awarded an initial order of 17,000 vehicles to Oshkosh, but over the long term the deal could included a Humvee fleet of around 55,000 JLTV vehicles. In August of 2015, Lockheed Martin filed a protest with the GAO because they believed they had “offered the most capable and affordable solution for the program.” But this past Wednesday the GAO dismissed the protest and allowed Oshkosh to resume work on the contract.
“After careful consideration of all options, Lockheed Martin decided to file a complaint with the Court of Federal Claims concerning our Joint Light Tactical Vehicle (JLTV) contract award process,” the company said in a statement Thursday, according to Defense World. “We look forward to working with all parties involved on the next steps.”
The military contractor is also concerned about the disclosure of new documents, which were submitted shortly before the GAO dismissed their protest. According to Zacks, Lockheed Martin “firmly believes that had these data been produced during the hearing, it could have materially affected the case.”
As Lockheed Martin sues the Pentagon, Oshkosh Corporation has stated that they believe the courts will support the decision of the U.S. Army and U.S. Marines to have their company build the new Humvee fleet. They say the Army’s vehicle procurement process includes “exhaustive testing and evaluation to ensure that troops get the best vehicle” and they are hoping the lawsuit by Lockheed Martin does not delay the release of new Humvees to U.S. troops.
“We are hopeful that this latest protest filing will not be permitted to further delay the JLTV program and delivery of these vehicles to provide greater protection for our troops in future missions,” said a Oshkosh spokeswoman.
The GAO has reacted to Lockheed Martin’s lawsuit against the Pentagon by stating that it felt the company “should have filed a supplement protest with the watchdog agency if it had desired additional materials to be considered, instead of going to court.”
As of this publishing, the Lockheed Martin stock price has fallen several dollars since the announcement of the lawsuit. As of the closing of the stock markets on Friday, the LMT stock price is currently $212.23. The Oshkosh stock price has similarly been hurt in recent trading days, falling down several percentage points to $37.33.