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30 Jul 04. Following revelations that UK Defence Secretary Geoff Hoon has written to his U.S. counterpart Donald Rumsfeld to complain about U.S. moves to restrict the Pentagon’s ability to buy from foreign firms, there has been an ominous silence to the award of the UK Support vehicle contract being fought over by US firms Oshkosh and Stewart and Stevenson and Germany’s MAN and Mercedes. A number of sources suggested that Oshkosh was to be awarded the contract following the defence cuts announced during Farnborough, but, there has been a deathly silence. BATTLESPACE sources suggest a split between the DPA recommendations and the politicians desire to see more UK defence involvement in such projects as JSF. Whilst some observers below suggest that the Watchkeeper award was related to this problem it is more likely that the bid was won by Thales utilising Israeli technology which, by their own admission, Northrop Grumman could not match in up-front costs, reflecting Israelis desire to win £1bn of European business a year. Northrop’s continuing interest in the JUEP programme and its AWACS selection demonstrates that the company is keen for a long-term involvement in UK with Watchkeeper being seen as a short term blip.

In the letter, written last month and seen by the newspaper, Hoon said Britain was prepared to retaliate against U.S. protectionism in defence spending. He described the moves to restrict buying from foreign companies as a “potentially serious blow to U.S.-UK relations”. “They would put us under pressure domestically to review our own policies and to consider whether we were prepared to continue to place significant defence contracts with U.S. suppliers in the face of what could only be seen as a demonstrably uneven playing field,” he said.

This is not the first time that a truck requirement has been ‘politicised’. In the early 1980’s Reynolds Boughton was favourite to win the UK DROPS requirement with its Bennes Morrel-based system, in a bid fiercely fought by David Stride who claimed to have invented the system! The subsequent award to Finnish company Multilift which secured offset for the Finnish Hawk deal led to a complaint by Reynolds Boughton which subsequently led to the disastrous purchase of the 554 RB-44 vehicles at some £56m, most of which are still in store, against the SMC/Land Rover Sandringham 139 vehicle latterly sold in large numbers to Australia.

MAN has put in a very strong offset bid with BAE SYSTEMS to support the sale of 16 Typhoon aircraft to Austria and it may be that history is repeating itself and the desire by the UK Government and BAE to offload numbers of Typhoons to customers such as Austria, Greece and Singapore may win the day over the DPA selection which is believed to favour a US solution?

The FT said the strength of Hoon’s language reflected growing discontent among British government officials over a lack of U.S. defence-related concessions for Britain, despite Britain’s support for the U.S.-led occupation of Iraq.

The paper quoted a U.S. official as saying there was concern that the recent decision by the Ministry of Defence to choose Thales (Paris:TCFP.PA – News) over Northrop Grumman (NYSE:NOC – News) for the Watchkeeper contract was motivated partly by anger at the U.S. attitude. However the paper said the Bush administration was likely to kill provisions of the 2005 defence authorisation bill which would restrict the foreign participation.

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