BAe in pounds 1.5bn missile project

BRITAIN, FRANCE and Italy are to press ahead with a pounds 1.5bn anti- air missile development programme, ending a four-year deadlock over the project's next phase. The contract covers the development of the PAAMS (Principal Anti-Air Missile System) as well as the supply of a complete system of associated missiles to each of the countries involved.

The pounds 1.5bn contract has been awarded to a consortium comprising Alenia Marconi Systems, Thomson, Matra Aerospatiale and Matra BAe Dynamics.

The programme is the latest high-profile example of cross-border co-operation that is being driven by a slump in military spending following the collapse of the Soviet Union. The first three of the anti-aircraft missile system will be delivered in 2005.

Matra BAe Dynamics will be the prime contractor for the pounds 650m UK programme known as Sampson. It will include the purchase by the Royal Navy of radar systems from BAe, worth one-fifth of the total contract, BAe said.

Talks to develop the next generation of ground-to-air missiles between the countries stalled over a squabble over the ship's missile system. The venture follows the UK's decision in April to withdraw from the original plan to build frigates with Italy and France, saying it was not "cost effective".