General Dynamics hits back in fight for £2bn tank deal

Rival bidders scrap over whose bid offers most to British manufacturing

General Dynamics has hit back at claims that it will be a loss for British industry if it wins the £2bn contract for 600 next-generation tanks.

With the US group tipped to win the Ministry of Defence (MoD) deal as early as today, this week has seen a flurry of claims and counter-claims between General Dynamics and rival BAE Systems over which bid represents a better deal for Britain's manufacturing base.

On Monday, BAE Systems made a last-ditch effort to change the MoD's mind with a proposal to bring part of the work that was to be done in Sweden back to the UK – creating 400 new jobs and securing 400 others in the process. The company also stressed that if General Dynamics won the 600-strong Future Rapid Effects System "scout" vehicle (FRES SV) contract it would spell the end of Britain's century-long tank-building heritage.

But General Dynamics yesterday struck back at the portrayal of a US company moving in on Britain's defence industry, claiming that only the basic frame of its Ascod vehicle will be built abroad, and only because of MoD stipulations that all bids use an off-the-shelf chassis. All the development work been done by British engineers, the company says, and the high-end work turning the basic metal into a high-end "armoured fighting vehicle" will be done in the UK, creating thousands of jobs and giving a massive boost to local supply chains, the company said.

"The FRES SV bid is a British programme," a spokesman for General Dynamics said. "We've taken the Ascod programme we produced in Spain and British engineers have redesigned it to meet the MoD's requirements for FRES – it is a British design imposed on an off-the-shelf vehicle from Spain."

At this stage General Dynamics UK and its bid partner, Lockheed Martin, employ around 350 people on the FRES prototype. Should it win the deal, the company claims the number of jobs either created or secured will rise to more than 10,500 – including more than 600 at the Defence Support Group facility at Donnington and more than 6,000 in the extensive supply chain. But the company was yesterday unable to clarify exactly how many newly created jobs are included in the total.

It was keen to stress, however, that the UK subsidiary bidding for the FRES deal has deep roots in the UK. Not only does it run its own profit and loss account, distinct from the US parent, but any intellectual property associated with the FRES SV will remain as the property of the British Government.

"This programme represents sovereign capability for the British Government," the spokesman said. "The FRES bid vehicle has been designed and engineering in the UK by a UK team, and the result of that will be a better level of jobs in the UK."

Not to be outmanoeuvred, BAE Systems also weighed back into the fight yesterday. The company revised its estimate of the proportion of components to be manufactured in Britain upwards from 70 to 80 per cent – taking it to a level with the figure put out by General Dynamics – claiming that the shift was a result of bringing work back from Sweden. The basic chassis of BAE's CV90 will still be built at the Hagglunds plant in Sweden.