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23 Mar 05. Mark Huband of the FT reported that the U.K. government’s top defence procurement official has hinted that the Ministry of Defence may not use its normal practice of competitive tendering for a £3bn contract to replace its Lynx helicopters.

Competition between defence companies has intensified since rival groups became convinced this year that the MoD might award the contract to Italian-owned AgustaWestland, which makes the Lynx, without opening it to competitive tender. The MoD has insisted that no decision will be taken until June 9, when the results of a study into helicopter requirements will be completed. But Lord Bach, defence procurement minister, said: “There are a number of possible procurements, and it is not impossible that some other method of procurement [to competitive tendering] may be applied as well.”

Lord Bach was speaking at the UK headquarters of the space division of EADS, the Franco-German aerospace group, which is seeking to win at least part of the helicopter contract. He said: “We are looking closely at how we should spend the money we have for our new helicopters. Westland have a fantastic record, and these are very difficult decisions, which we will have to take with great care. One of the things that we are looking at with all procurement is to see that the UK industrial base is secure. What we are concerned about is where the technology is. But we have no preferences at the present time.”

A defence industry expert said the MoD might provide guidelines as early as next week to manufacturers. These would detail what officials would expect to see in any bids for the contract.

“Some time in April the government may invite the manufacturers to put forward plans, and give some guidelines to the tendering process they envisage. The proposals would need to show how the UK technological base would be preserved,” the expert said.

Lord Bach’s concern to strengthen the established industrial base was interpreted by the expert as a sign that Yeovil-based AgustaWestland would be favourite to win the contract. EADS has submitted plans suggesting a joint venture with AgustaWestland, which employs 4,000 people at its factory in Somerset. However, Finnmecanica, the Italian aerospace group which owns AgustaWestland, is understood to want to secure the contract on its own and has not responded to the EADS proposal.Critics of the government’s reticence to make clear whether there will be a competitive tendering process are becoming convinced a decision will be made before the expected general election date of May 5. This has increased the likelihood of a decision soon after Easter. (Source: FT)

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