Up to 10,000 jobs are threatened under proposals being considered by the Ministry of Defence, following a review by management consultants McKinsey.
The plans, which also include a major outsourcing to the private sector, affect the 130,000 military and civilian personnel involved in the logistics of the MoD - the operations that move people, military hardware and provisions around. Key divisions within the Defence Logistics Organisation (DLO), which employs 28,000 staff, may be part-privatised.
Trade unions have been told unofficially of the scale of the expected redundancies, which are not all tied to the potential privatisations, and they are seeking clarification from armed forces minister Adam Ingram this month.
The MoD said that no decisions have yet been made on jobs or outsourcing. But in a secret document seen by The Independent on Sunday, the scale of the proposals is revealed. The interim report on the "end-to-end review", a study of logistics from equipment manufacture to the front line, goes into detail on the potential for savings within the £18bn a year spent on logistics support.
The report argues that between £87m and £140m could be saved in logistics support for the Lynx helicopter, and Tornado and Hercules aircraft, with £55m to £79m of cuts coming from personnel.
Costs in the logistics support of the Army and Air Force could be cut by between £253m to £486m.
"Implementation of the recommendations will be a major challenge," states the report. "They will cut across the whole of defence and are likely to require the most complex restructuring of MoD activities since the Strategic Defence Review."
The final version is being prepared and will be published in July, and the MoD is aware of the sensitivities of the subject. In March, Mr Ingram said of the Iraq war: "This deployment has been a tremendous logistic success ... without the support the DLO provides, there would be no front line."
The report was put together with key MoD officials and staff from McKinsey, the management consultants which counted Enron and Global Crossing as clients.
McKinsey's initial review said staff in some areas could be reduced by up to 40 per cent. The MoD is looking to cut 20 per cent of the £9bn costs at the DLO by 2005.
A joint report from trade unions Amicus, GMB, Prospect and the T&G says the proposals would damage the armed forces.
* BAE Systems fears that it may take a double blow on the sale of its Hawk trainer jets.
It learns later this month whether it has failed in its £12.5bn bid to supply the RAF with Hawks. The Treasury favours a cheaper bid from Italian group Finmeccanica.
Today, Prime Minister Tony Blair is expected to meet Indian Deputy Prime Minister LK Advani to discuss the £1bn sale of Hawk aircraft, made by BAE. The speculation is that if the RAF does not agree a deal for the Hawk trainers, India will pull out of its purchase.Reuse content