U.S. Army delays decision on General Dynamics vehicle protest

By Andrea Shalal

WASHINGTON, March 24 (Reuters) - The U.S. Army said on Monday that it would delay until April 4 making a ruling on a protest filed by General Dynamics Corp (NYSE: GD - news) about a new competition for armored vehicles.

General Dynamics filed a protest with the Army on Feb. 14, arguing that the Army's rules for a competition to replace nearly 2,900 Vietnam-era M113 infantry carriers were skewed to favor BAE Systems Plc (Other OTC: BAESF - news) 's Bradley Fighting Vehicle.

The company is also pressing U.S. lawmakers to intervene in the Army's Armed Multi-purpose Vehicle (AMPV) competition and to mandate that a mixed fleet includes a version of both BAE's Bradleys and General Dynamics' wheeled Stryker (Berlin: SYK.BE - news) vehicles.

General Dynamics spokesman Pete Keating said the Army told his company it needed more time given "the complexity of the issues involved in the protest."

Army spokeswoman Ashley Givens gave no details, but confirmed the ruling was now expected April 4.

Keating said General Dynamics was evaluating its options in case the Army rejected the protest. If that happens, the company would have 10 days to lodge a protest with the congressional Government Accountability Office, which rules on contract disputes. The company could also take its case to federal court.

BAE Systems (LSE: BA.L - news) argues that the Army cannot afford further delays since the existing M113 infantry vehicles are not suited to protect U.S. soldiers against direct fire attacks by today's more powerful rocket-propelled grenades and other threats.

Mark Signorelli, vice president and general manager of combat vehicles for BAE, said the Army had been very open and transparent about its requirements for the new vehicles, and had already extended the development program to five years.

"They've been very conscious of and attentive to industry needs," he said, noting that the Army issued its final request for proposal after roughly two years of dialogue with industry representatives.

General Dynamics contends it would not have enough time or data to develop a Bradley-like vehicle on the Army's schedule, and has even suggested a teaming arrangement with BAE - although BAE declined.

The company said that similar arrangements exist on other weapons programs, including the Navy's Virginia-class attack submarines to ensure continued work for both General Dynamics and Huntington Ingalls Industries Inc (NYSE: HII - news) .

Keating said the Army would save money if it opted for a mixed fleet of Stykers and Bradleys, since some of the required vehicles such as ambulances and command-and-control centers did not need to be tracked or a heavily armored. General Dynamics' mixed fleet proposal would give 56 percent of the vehicles to BAE.

BAE's Signorelli said he was convinced that BAE had a "very compelling and competitive offering for the Army that met all the requirements and would protect U.S. troops, but said the Stryker based vehicle was not sufficiently armored.

"Replacing a vehicle that doesn't meet the requirements with a vehicle that doesn't meet the requirements is a little counterintuitive," he said. "If the vehicle doesn't meet the requirements, then the cost savings are irrelevant."

Signorelli said BAE was preparing a competitive bid and expected other firms to bid for the contract, one of few being awarded in the current, more constrained budget environment.

He said BAE believed it could accelerate the design work on the new vehicle and complete it in four years instead of the five years designated in the Army's procurement plan.

Given the high level of commonality with the current Bradley vehicles, he said the Army could also shorten the testing process for the new vehicles and field them more quickly.

The Army's current plan for the procurement calls for proposals to be submitted by May 28, with a contract to be awarded in late November.

(Reporting by Andrea Shalal; Editing by Ken Wills)