Fierce competition for a big government armored-truck deal is dimming

Force Protection's

(FRPT) - Get Report

glow.

The Ladson, S.C., military-vehicle maker has been the biggest winner so far in the Army's mine-resistant, ambush-protected vehicles contract. But as the MRAP show goes on, Force Protection is sharing more and more of the spotlight with its rivals.

Navistar

( NAVZ) -- once viewed as a minor character at best -- recently grabbed the largest single MRAP order placed so far. Other players like

Armor Holdings

(AH)

and

Oshkosh Truck

(OSK) - Get Report

, as well as an upstart launched by Force Protection's founder, are poised to crowd the stage as well.

Wall Street is starting to worry about Force Protection shares, which have risen sharply over the last year. The company's current production capacity "is insufficient to supply the total MRAP requirements," Stanford analyst Josephine Millward stressed last month. "We continue to believe that the military will select multiple vendors for the program. ... In our view, this is positive news for the remaining bidders."

Millward's words should carry some weight. Last Tuesday, Millward predicted that Force Protection would field an order for around 500 MRAP vehicles -- or one-fourth the number the company was expecting. The military disclosed an order for 455 Force Protection vehicles that very night.

Force Protection investors, disturbed by the order's small size, hammered the company's stock and have kept it under pressure ever since. The shares, which peaked at $31 just before Navistar's surprising win, slipped 68 cents to $23.07 on Friday.

Now, Millward looks for two Force Protection rivals to land new contracts in a matter of days. Notably, Millward believes that

General Dynamics

(GD) - Get Report

-- Force Protection's joint-venture partner -- may have already passed performance tests and could soon snag a big contract on its own. Then, she feels that Armor or Oshkosh could announce a major award right after that.

Millward has hinted at a big win for Armor in particular. Last month, she predicted that Armor would score a "prime contract" for up to $500 million worth of vehicles -- or five times the company's own forecast -- under the MRAP program.

Millward downgraded Armor from buy to hold the same day, however, due to concerns about the company's valuation. The stock, while up 7 cents to $86.82 on Friday, has been flat since then.

Rising Stars

Meanwhile, Barrington Research analyst Walter Liptak this month reiterated his outperform rating on Oshkosh ahead of an expected MRAP deal.

Liptak looks for Oshkosh to secure an order for 1,000 MRAP trucks, worth up to $600 million, within the next week. All told, Liptak believes that Oshkosh will capture 20% of the entire MRAP market -- and, quite possibly, even more.

Together with privately held Protected Vehicles, a company run by Force Protection founder Garth Barrett, Oshkosh has already won a contract to supply the U.S. military with 100 Category I MRAP vehicles. But Oshkosh hopes to start selling the military some heavier -- and more expensive -- Category II vehicles as well.

Thus, Oshkosh has offered up its Category II Bushmaster for review. Alternatively, Oshkosh could choose to further capitalize on its partnership with Protected Vehicles and help supply that company's Category II Golans instead.

Earlier this month,

Defense Industry Daily

singled out the Golan for its unique capability to protect soldiers from "explosively formed penetrators" -- now viewed as even bigger threats than the improvised explosive devices that other MRAP vehicles effectively shield.

Protected Vehicles has, by itself, fielded an MRAP order for 60 Golans already. But the company foresees calls for additional Golans that it could use some help supplying.

"We would obviously like to have a partner," Barrett told

TheStreet.com

last week. "We can use Oshkosh; that's part of

the contract. But that's not definite at the moment."

Protected Vehicles is watching to see if Oshkosh lands a Category II contract of its own. Meanwhile, the company is busy making preparations for the new MRAP business that could soon come its way.

In recent months, Protected Vehicles has added hundreds of employees -- including graduates of a welding school that it helps run -- and it is right now seeking to purchase a new building that will allow it to expand beyond the 600,000 square feet it already has.

"We have been putting the infrastructure in place to build serious numbers" of both Category I and Category II vehicles, Barrett explained. "We know the urgency of the need, and we have the desire to meet that need to the fullest extent possible. ... We are poised to supply."

Official Script

On the surface, at least, nearby Force Protection still displays plenty of confidence itself.

Force Protection's joint venture with General Dynamics has by now scored two large MRAP contracts that, together, are worth more than Navistar's big prize. Under the terms of that partnership, however, Force Protection is entitled to just half the proceeds. Bullish investors had assumed that there would be more to share.

Moreover, critics doubt that Force Protection will land another big order right now and question whether the company could fill it even if it did. They view shares of Force Protection, reflecting orders yet to come, as grossly overvalued, as a result.

Force Protection's outgoing chairman, Frank Kavanaugh, sure has been cashing in. Last month alone, Kavanaugh -- a frequent seller of Force Protection shares -- pocketed $10 million from company stock sales. He executed his last transaction on May 31, when Force Protection peaked just before news of Navistar's surprise award.

Then, with little warning, Kavanaugh suddenly resigned from Force Protection's board at the company's annual shareholder meeting last week. In response, Force Protection celebrated its swelling market value -- which soared from $1 million to more than $1.5 billion during Kavanaugh's reign -- as a "remarkable" achievement on his way out the door.

Going forward, other big investors could start dumping stock as well. Notably, by the end of this month, Force Protection expects to file an overdue registration statement for 13 million shares of stock that it issued in a private placement late last year. Owners of that stock -- including value investors who have seen their shares double already -- should be free to cash out after that happens.

Still, despite his own stock sales, Kavanaugh has promised even better days ahead.

"I look forward to continuing my support of Force Protection as an involved investor," he recently stated. "The organization's leaders are capable of taking Force Protection to new heights."