U.S. To Buy 3,200 Blast-Resistant Trucks, Pentagon's Young Says

Team Infidel

Forum Spin Doctor
December 3, 2007 By Tony Capaccio and Edmond Lococo
The U.S. military plans to order more than 3,200 blast-resistant armored trucks within weeks and may place bookings for the same amount in March, the Pentagon's top acquisition official said today.
The orders by mid-December would add to 8,815 Mine-Resistant, Ambush-Protected vehicles already on contract, Undersecretary for Acquisition John Young said in an interview. The largest suppliers include Force Protection Inc. and Navistar International Corp.
The December order would be only about half of the 6,400- 6,500 trucks anticipated by analysts including Joseph Maxa with Dougherty & Co. in Minneapolis and James McIlree of Collins Stewart LLC in New York. That suggests the Pentagon may be having second thoughts about the number of vehicles needed, Maxa said.
``The Defense Department wants to make sure they need them before they order them,'' said Maxa, who rates Force Protection shares a ``buy'' and doesn't own any. ``That's they way it appears. It makes sense to see if they really need all of them.''
Force Protection fell 28 percent on Nov. 30, the most in more than four years, after the Marine Corps announced a proposal to cut its requirement of 3,700 vehicles by 1,400. Force Protection dropped again today, declining $1.20, or 11 percent, to $9.61 at 4 p.m. in Nasdaq Stock Market trading.
The military uses the so-called MRAP vehicles in Iraq and Afghanistan to defend against roadside bombs, the leading killer of U.S. troops. Procurement chief Young said the pending orders don't reflect the Nov. 30 proposal by the Marine Corps.
Defense Secretary Robert Gates asked commanders ``to make absolutely certain the recommendation fits the strategy for the whole theater,'' Young said. ``If there are changes, that will come forward to us in our orders, but right now I don't think any of that will change in December. The only thing that might change is March'' if the overall requirement is reduced.
The decision to order fewer trucks than expected in December ``continues to make for a murky outlook for the ultimate fate of this program,'' analyst McIlree said in an interview today. He rates the shares a ``buy'' and Collins Stewart has done investment banking work for Force Protection. ``It doesn't help with people's confidence.''
The December orders are part of a $24.5 billion program that eventually would build 15,274 MRAP vehicles, a 12-fold increase from the Pentagon's initial request in July 2006. So far, 8,815 trucks have been ordered, including 2,226 for the Marines.
The new orders will be funded with $11.6 billion contained in a $471.2 billion spending bill for fiscal 2008 that Congress passed last month and President George W. Bush signed into law.
Navistar, Force Protection and BAE Systems PLC each won an order in October to build more blast-resistant trucks for the U.S. military, work that has a combined value of $1.21 billion.
Once final numbers for November are counted, Young said the Pentagon will probably have taken delivery of 920 vehicles, about 77 short of its goal. Lawmakers and analysts viewed the November production numbers as a crucial measure of whether suppliers could produce more than 1,200 vehicles this month and sustain that production. That's up from 161 in July and 449 last month.
Hitting 920 vehicles is a ``big step'' and ``it gives you a lot more confidence about the December goal,'' Young said.
Ladson, South Carolina-based Force Protection and partner General Dynamics Corp. said today that vehicle production increased 43 percent in November to a record. Their venture produced 288 Cougar troop-transport trucks last month, the companies said today in a statement.
Force Protection also independently built nine larger blast- resistant Buffalo trucks in November. The month's 297-vehicle output is an increase from 208 in October and almost triple August's total, company spokesman Tommy Pruitt said. ``Force Protection has actually continuously met their goals and indeed, over-delivered by a few vehicles'' in November, Young said.
The Pentagon's overall goal for November fell ``a little short'' because two vehicle types produced by other vendors ``had lagged in production,'' Young said. ``They are working on getting through that.'' General Dynamics Land Systems Canada and BAE Systems didn't meet their November schedules for their respective RG-31 and RG- 33 vehicles, Young said. ``We did not get as many as we asked them to deliver,'' he said without elaboration.
General Dynamics spokesman Ken Yamahita said the company has a policy of not commenting on delivery quantities. BAE Systems Land & Armaments spokesman Garrie Dornan said the company delivered 218 of 263 required, or 83 percent.
``We are working closely with the customer to surmount our challenges,'' Dornan said. ``BAE Systems is sparing no effort in the production of MRAPs and we are working around the clock to get back on schedule. We anticipate that we will be back on track by year's end.''