The Department of Defense is one step closer to awarding a contract to replace nearly 55,000 military Humvees with a new, better-protected vehicle—and three firms are closer to learning which of them will score a contract worth as much as $22 billion.
The companies—Lockheed Martin, Oshkosh, and AM General—are vying for an order to manufacture 54,599 Joint Light Tactical Vehicles (JLTV) for the U.S. Army and Marine Corps.
"The legacy Humvee system is not capable of providing sufficient protection for its occupants in a world where improvised explosive devices have become commonplace," said Loren Thompson, a defense analyst at the Lexington Institute. "Because the rear areas and the front lines are no longer well defined, and the enemy could be anywhere, the notion of having a light truck that is not well-protected seems obsolete."
Last month, the three companies each delivered 22 JLTV prototypes and six trailers to the military for testing and evaluation. The testing phase, which began Sept. 3, is scheduled to be completed in the first quarter of fiscal 2015, which begins in October.
The program is currently on track for the selection of a single vendor and what the Pentagon calls a low-rate initial production decision in late fiscal 2015, according to the JLTV Joint Program Office. That initial three-year contract would be for 3,100 vehicles and would include options for up to five additional years of full-rate production, according to the Department of Defense.
(Slideshow: The most expensive U.S. military vehicles)
Current plans call for the Army and Marine Corps to acquire 49,099 and 5,500 vehicles, respectively, from a single vendor over the next 20-plus years. The Pentagon has set the vehicle base price at $250,000, which is little more than what it costs to refurbish an existing Humvee.
However, that price does not include additional hardware and add-ons like additional armor and mission systems. The DoD's most recent estimates put the total cost to acquire, field, and maintain the JLTV at roughly $400,000 per vehicle.
Government plans call for a vehicle that can protect troops as well as the existing Mine Resistant Ambush Protected All Terrain Vehicle (M-ATV)—a larger, more cumbersome vehicle that was developed specifically to defend soldiers and Marines from roadside bombs in Afghanistan.
The new vehicle also must have better network integration than the older Humvee, and better mobility than the M-ATV, which while effective at protecting troops from roadside bombs, has proven difficult to drive at times in rough terrain.
The Vehicles:
Lockheed Martin partnered with BAE Systems to design and manufacture its JLTV prototype. Lockheed's design features an armored hull from BAE, a Cummins engine, a Meritor air suspension system, and an Allison transmission, the company told CNBC. The base Lockheed vehicle is designed to make upgrades easier and allow field maintainers to add specialized mission kits and additional armor in less than two hours. The JLTV will come in two variants, a four-passenger combat tactical vehicle and a two-passenger combat support vehicle.
(Slideshow: Most expensive military programs)
Of the three competitors, AM General has the most experience manufacturing light tactical vehicles. It makes the existing Humvee, and has delivered more than 300,000 Humvees over the last thirty years. AM General is currently the DoD's highest-volume vehicle producer.
AM General's entrant features an Allison transmission, modular armor design, and a semi-active suspension system, the company said.
Oshkosh, which currently makes the heavier M-ATV, entered a vehicle that builds on that design. Its entrant weighs less than half what the M-ATV weighs and features Oshkosh's proprietary TAK-4i intelligent suspension system, which provides up to 20 inches of independent wheel travel. The company told CNBC that the new design can travel 70 percent faster off-road than the heavier M-ATV.
(Read more: Missiles, destroyers and subs: The US arsenal
Oshkosh managed to underbid its two rivals in the current, preliminary phase of the competition.
(Read more: Pentagon cuts, but it's still not enough: Analyst)
Thompson said that all three firms are highly competent manufacturers, and that the JLTV competition may come down to who can offer the Pentagon the best deal.
"When teams are this evenly matched, price is often the key discriminator in deciding who wins," Thompson said. "If that's the case with the JLTV, then Oshkosh is the team to beat because it tends to bid aggressively and has the best understanding of the commercial manufacturing processes."
—By John Torrisi for CNBC