Hoon set for conflict over £3bn helicopter deals

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The Independent Online

Geoff Hoon, the Secretary of State for Defence, is heading for fresh controversy over his handling of the purchase of military equipment - this time concerning plans to spend £3bn on new helicopters.

Geoff Hoon, the Secretary of State for Defence, is heading for fresh controversy over his handling of the purchase of military equipment - this time concerning plans to spend £3bn on new helicopters.

The Ministry of Defence is considering offering the lion's share of contracts for replacing the armed forces' ageing Lynx, Puma and Gazelle fleets to AgustaWestland. The Italian-owned company employs more than 4,000 people in Yeovil, Somerset.

A final decision on how the £3bn budget will be spent over 10 years will be made in the summer. But officials are now assessing whether the Defence Industrial Policy - a joint initiative by the MoD and Department of Trade and Industry - will allow the Government to enter into exclusive talks with AgustaWestland on the grounds that it will safeguard UK jobs.

The news will anger Eurocopter, owned by the Franco-German defence group EADS, which has submitted its own helicopter proposals to the MoD.

Meanwhile, Sikorsky, the helicopter company owned by America's United Technologies, is also interested in bidding for contracts. Upsetting Sikorsky could have damaging knock-on effects for AgustaWestland. Last month it was part of a consortium that broke Sikorsky's stranglehold over the supply of the iconic US presidential helicopter fleet. The decision has yet to be ratified by Congress, and industry sources said that any exclusive deal between AgustaWestland and the MoD would be used as ammunition by Sikorsky to have the presidential deal thrown out.

Today's news may also anger the Chancellor, Gordon Brown. In 2003 he became embroiled in a row with Mr Hoon over the decision to award the UK defence company BAE Systems a contract to supply the RAF with the Hawk trainer jet, without considering rival bids.

An MoD spokesman said: "We need to balance economic, industrial and military factors when making the assessment. We expect to make an announcement on the final procurement strategy by the middle of the year."

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