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EADS – HELICOPTER CONTRACT TO BE PUT OUT TO TENDER

EADS CALLS FOR HELICOPTER CONTRACT TO BE PUT OUT TO TENDER

15 Mar 05. Mark Huband of the FT reported that EADS, the Franco-German defence company, has called for the £3bn contract for the Ministry of Defence to replace its fleet of Lynx helicopters to be put out to competitive tender. (See: BATTLESPACE UPDATE Vol.7 ISSUE 6, 10th February 2005, SUPER LYNX ON HOLD?)

It is concerned that the contract will be awarded to Italian-owned AgustaWest-land without other companies being allowed to bid. Geoff Hoon, the defence secretary, yesterday met Patricia Hewitt, the industry secretary, and Paul Boateng, chief secretary to the Treasury, to discuss the issue with senior officials. The Lynx’s replacement is one of the most pressing issues facing the
MoD, since it will have significant implications for the UK helicopter industry.

However, the Treasury said yesterday that the decision should be made on the basis of value for money and affordability. If a decision on whether to award the contract to AgustaWestland were taken before the general election, it could be portrayed as politically motivated, raising memories of the Westland dispute that almost brought down Margaret Thatcher. AgustaWestland, which is owned by the Italian defence company Finmeccanica, employs 4,000 people at its plant at Yeovil in Somerset. It hopes to win the contract to upgrade the Lynx to the planned Super Lynx.

The company said it was working on the assumption that no announcement would be made on the contract until after a June 9 meeting of MoD officials at which the ministry’s helicopter needs would be detailed.

The MoD said that a decision would not be made before the summer. However, this has not eased demands by EADS that the process be opened to other contenders. Sir Jeremy Blackham, EADS president for the UK, said if the process were not opened up to competitive tender it would undermine the government’s reputation as one of the most open defence markets in the world. EADS was prevented from putting in a tender until last month, when it was given 10 days to submit an offer. It has now proposed working in partnership with Agusta-Westland on the deal.

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