The Marine Corps has issued a stop work order to SAIC [SAIC] for its Amphibious Assault Vehicles limiting the number of future deliveries as officials evaluate the program ahead of an imminent replacement by BAE Systems’ Amphibious Combat Vehicles (ACV), according to top company officials.
SAIC officials said during a Monday earnings call the stop work order was issued on Aug. 27 and will last for 90 days, with the Marine Corps expected to finalize a new direction for the program.
“The partial stop work on AAV is something we’re working very closely with the Marine Corps on to fully understand the long-term strategy there but as it relates to [the acquisition] or long-term strategy, it remains intact. It’s an important part of the business for us. It is an area we believe will drive sustained profitable growth ….and we continue to focus on that and invest in that,” Nazzic Keene, SAIC’s chief operating officer, said during the earning call.
SAIC is the contractor for the Marine Corps’ legacy AAV fleet, which is expected to be phased out by the 2020’s with the arrival of the new ACVs.
The stop work order would specifically halt SAIC’s effort to update a portion of command-and-control AAVs under a survivability upgrade (SU) program. SAIC had received an $11 million deal in August 2017 to overhaul three vehicles to the AAV-SU model (Defense Daily, Aug. 2017).
“We have partnered with SAIC in the past on a variety of programs to include the AAV-C variants (Command and Control), as well as other efforts directly and indirectly. With the cancellation of AAV-SU, PEO Land Systems currently has no other planned activities with SAIC,” Manny Pacheco, a Marine Corps spokesperson, told Defense Daily.
In June, the Marine Corps picked BAE Systems over SAIC to deliver the ACV, beginning with a $198 million low rate initial production deal for 30 vehicles (Defense Daily, June 19). Initial deliveries are expected to start in fall 2019.
No protest was filed over the Marine Corps’ decision to pick BAE Systems for the ACV program.
SAIC CEO Tony Moraco, during a second call on Monday related to his company’s acquisition of Engility, told reporters he plans to still pursue a large vehicle portfolio despite the partial stop work order and the loss of the ACV contract.
“We’re still in that business. It’s a broad portfolio with a lot of work out of Crane, Next Gen Combat Vehicle. It’s a wide range and so the ACV loss and AAV are disappointing but the AAV, just to put a finer point on that, is really premature to understand any potential impact or exit. There’s a lot of work yet to do so we’re still very optimistic about our ability to serve the Marine Corps in our modernization programs,” Moraco said.
Pacheco told Defense Daily the ACV program remains on schedule to reach Initial Operational Capability in late 2020.