Denverâ€”The race to build the world's first flying military jeep just moved a step closer to the finish line. The Pentagon's Defense Advanced Research Projects Agency (DARPA) has selected two companies to proceed with the next stage of its Transformer, known as TXâ€”a fully automated four-person vehicle that can drive like a car and then take off and fly like an aircraft to avoid roadside bombs. Lockheed Martin and AAI Corp., a unit of Textron Systems, are currently in negotiations with DARPA for the first stage of the Transformer project, several industry sources told Popular Mechanics at a robotics conference here in Denver. DARPA has not announced the official winners yet. It's unclear how many companies competed for the DARPA project, but the competition brought together an unusual mix of large defense companies with smaller aviation firms vying to build the vertical takeoff and landing craft. Perhaps most surprisingâ€”and for some competitors gallingâ€” is that DARPA selected a rotor-based aircraft for one of the two winning submissions. At an industry day held earlier this year, DARPA officials had initially said they weren't interested in a traditional rotary-wing aircraft, though they might consider a vehicle if the rotor was shrouded. AAI's winning concept does not have a shrouded rotor, but it is also far from being a traditional helicopter. The company, which produces the Shadow unmanned aerial vehicle, is basing its proposal in part on the slowed-rotor/compound concept, a technology that uses rotor blades heavily weighted in the tips, or high inertia. The rotor provides lift on takeoff, and then as it gains speed, the rotor slows down and the wings provide lift. Lockheed Martin has declined to detail any aspect of its submission, but those familiar with the Phantom Works project speculated that it might combine aspects of the company's Joint Tactical Light Vehicle, a follow-on to the Humvee, with a ducted fan propulsion system that it would use to fly. The two companies are still a ways away from building flying Humvees; the first stage of the DARPA project is merely working on conceptual designs. The total funding available for Transformer is about $40 million. Officials from both companies declined to comment on the record about the negotiations, and DARPA did not respond to request to comment. Flying Car News in the Army - The Pentagon's Flying Car - Popular Mechanics so whats next? flying Tank???