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17 Jul 02. The U.K. MoD said on Wednesday it had awarded a contract worth almost £350m($548m) to BAE SYSTEMS(London:BA.L – News) to develop and build 65 armoured vehicles for the British Army.

Armed Forces Minister Adam Ingram said the Terrier armoured vehicle would create or sustain 500 jobs across Britain and had considerable export potential. The first 20 vehicles will enter service with the Royal Engineers in 2008.

“The new vehicle will be particularly useful on peacekeeping operations, where our forces may have to cross routes that have been barricaded or sabotaged,” Ingram said in a statement.

The Terrier will replace the ageing Combat Engineer Tractor (CET), which entered service in the 1970s. The two-crew Terrier will be much faster, more mobile and have better armour, Ingram said.

BAE subsidiary Royal Ordnance Plc will work with subcontractor Alvis Plc (London:ALV.L – News), which will manufacture hulls and assemble vehicles, the Defence Procurement Agency said.

Comment: This is again good news for BAE, the incumbent manufacturer of CET, and strengthens the company’s armoured vehicle business in the run up to the FRES selections. It is not such good news for Vickers which had hoped to strengthen its price for the defence division prior to final closing with Alvis. Alvis is believed to be finalising its money raising operation in the City for the Vickers buy although some sources suggest that the company has warned the MoD of a gap in the order book if business is not forthcoming by the end of October. Some sources suggest that a carve up of the FCLV contract between Alvis and Vickers may be a solution, however the INSYS/ACMAT vehicle has been well received in a number of quarters, watch this space!

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