FRPT up after hours because of this?
DoD Armored Vehicle Plan Expands, Aims At Short-Term NeedsLast update: 4/5/2007 7:00:16 PM
By Rebecca Christie
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--The Defense Department's new armored vehicle program has nearly doubled in size but is still aimed at short-term combat needs, U.S. Marine Corps officials said Thursday. Over the next 18 months, the Marines and the Army want to buy 7,774 Mine-Resistant Ambush-Protected vehicles, which they expect will cost $8.4 billion. The Marines have the lead on the acquisition program, which previously had estimated a 4,000-vehicle, one-year effort. Funding looks certain, said Brig. Gen. Michael Brogan, head of Marine Corps Systems Command. He said Sen. Joseph Biden, D-Del., has already submitted amendments to Pentagon budget legislation, augmenting existing plans to fund the MRAP program as needed. "Given that amount of money, I won't have financial restrictions on how fast we can produce the vehicles," Brogan said. "I will need industry to deliver on the promises." The Marines will buy vehicles from any company that can meet their blastproof standards, Brogan said. Already, many companies are on contract to provide test vehicles, and some have received extra orders based on existing information. Big contracts will come soon, once the evaluations wrap up. Long-term maintenance isn't a big worry, Brogan said. In the short run, the Marines plan to hire contractors for maintenance and spare parts. If the vehicles stay in the arsenal, the Marines will work with the contractors to keep spare parts and trained mechanics on hand. Brogan said the vehicles share many common components, such as engines and suspensions. "Fundamentally, these are trucks," Brogan said. The MRAP vehicles could have a life span of up to 10 years if they survive their deployment, Brogan said. That means they'll phase out as the Pentagon's next-generation all-purpose vehicle phases in, Brogan said. That next project is called the Joint Light Tactical Vehicle; a contractor has not yet been selected. Companies with MRAP contracts so far include General Dynamics Corp. (GD), Force Protection Inc. (FRPT), Armor Holdings Inc. (AH), Textron Inc. (TXT), BAE Systems PLC (BAESY), Oshkosh Truck Corp. (OSK), Protected Vehicles Inc., Navistar International Corp.'s (NAVZ) International Military and Government LLC, and General Purpose Vehicles LLC. The MRAP program will face more oversight as it expands. Defense Department Under Secretary Kenneth Krieg, the Pentagon's chief weapons buyer, is preparing to convert MRAP into the top tier of acquisition programs, invoking additional senior supervision.
Force Protection Boosts Capacity
Capacity has been one of the biggest limitations on the MRAP program. U.S. industry had little capacity for churning out heavily armored vehicles because it was considered a "boutique" item, Brogan said. One company making the sought-after vehicles has turned to outsourcing and new joint ventures to boost capacity. South Carolina-based Force Protection has new agreements with General Dynamics Corp. and Armor Holdings Inc. to help the company increase its production. Force Protection is the sole provider in the MRAP category three, with its heavily armored Buffalo mine clearer. It also has contracts for the smaller Cougar models in categories one and two, along with the other MRAP contenders. The Buffalo costs around $850,000 per copy. The Cougar has a sticker price of around $500,000 each, depending on configuration. Since its Buffalo and Cougar entered the Pentagon inventory, Force Protection has struggled to keep up with demand. Defense Department officials have said their capacity limitations was one of the motivations for launching the broad-based MRAP effort. With the joint ventures, Force Protection will get the engineering and manufacturing support it needs to dramatically boost output, said Mike Aldrich, Force Protection's vice president for marketing and government relations. "For the past year, we have been focused on proving to the government that we've settled down our production lines, that we can deliver on time or ahead of schedule, that we can produce more vehicles next month than we had the month before," Aldrich said in a telephone interview. Force Protection made 300 vehicles in all of 2006. It began 2007 with a 700-vehicle backlog, and Aldrich said the company expects it will be able to keep up with the year's demand. He declined to provide updated forecasts, saying the Defense Department had asked the company to be more reserved in its production comments so that enemy insurgents wouldn't know exactly how many new vehicles had made it to Iraq and Afghanistan. Force Protection investors have had a dramatic ride over the past year. The company's stock rose steadily in the fourth quarter of 2006, but it has dropped sharply in the first months of 2007. It's been trading recently around $19, off its recent high of $22.95 on Jan. 18. In addition to all the new business, the company also has survived a management split that saw one of its founders leave to start Protected Vehicles, a new competitor. Aldrich said Force Protection, which recently gained a NASDAQ listing, aims to provide steadier returns in the future. "Overall, what we are trying to build is a growth stock that is value-based," Aldrich said. "We believe that the value of protecting and saving lives is very significant." -By Rebecca Christie, Dow Jones Newswires; 202-862-9243; rebecca.christie@dowjones.com (END) Dow Jones NewswiresApril 05, 2007 19:00 ET (23:00 GMT)
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