The U.S. Army late Tuesday awarded a $6.7 billion firm, fixed-price production contract to the Oshkosh Defense division of Oshkosh Corp. (NYSE: OSK) to build approximately 17,000 Joint Light Tactical Vehicles (JLTVs) to replace the legacy Humvees currently in use.

Oshkosh beat both Lockheed Martin Corp. (NYSE: LMT) and Humvee maker AM General, builder of more than 280,000 of the iconic vehicles over the past 30 plus years. The Marine Corps will get 5,500 JLTVs and up to 40,000 will be acquired by the Army through 2040. Excluding the research and development costs, the Oshkosh JLTV will cost the Pentagon about $250,000 each.

The new JLTV is designed to combine the protection of the bulkier mine-resistant vehicles called MRAPs with the off-road agility of the original, unarmored Humvee before armor was added and weighed the vehicle down. As Breaking Defense wrote in June:

Mobility matters both on the attack and on defense, because the best protection against a roadside bomb is to get off the road. Mining a key chokepoint along a predictable route is easy. Mining all possible cross-country approaches is not.

Lockheed acquired a wheeled-vehicle production line from BAE Systems and moved it physically from Texas to Arkansas in anticipation of winning the contract. Arkansas Senator Tom Cotton was disappointed with the decision, but said he “stand[s] ready to assist [Lockheed] however we can” as the company decides whether to protest the decision.

For Lockheed, which is building the F-35 Joint Strike Fighter for the Air Force, Marines and Navy, this would have been a test of the company’s ability to design and build a vehicle based almost entirely on computer simulations. The company’s models simulated 1,500 years of production of more than 5.4 million vehicles. The simulations produced the JLTVs under a variety of conditions, including one in which everything happened exactly right and one where everything happened exactly wrong.

Shares of Oshkosh traded up about 9% in Wednesday’s premarket, at $42.01 in a 52-week range of $32.56 to $55.69.

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