Row escalates over £1bn Army order

The dispute over the award of a £1bn Army truck order to a German firm deepened yesterday after claims that a rival consortium involving three British companies misled MPs and union leaders about the number of jobs its bid would create in the UK.

The dispute over the award of a £1bn Army truck order to a German firm deepened yesterday after claims that a rival consortium involving three British companies misled MPs and union leaders about the number of jobs its bid would create in the UK.

Sources at Whitehall said the rival bid from a consortium featuring the Birmingham-based van producer LDV, Lex Defence and the Yorkshire-based Multidrive was secretly amended last December to reduce the amount of UK industrial participation involved.

LDV reacted angrily when the MoD awarded the order for 5,000 trucks - the biggest UK military vehicle contract for 25 years - to MAN ERF, a German manufacturer. Half the contract will be carried out in Austria. LDV said the MoD had missed the chance to recreate a strategic manufacturing capability in the UK and secure more than 600 new jobs.

However, officials at the MoD countered that, as a result of the way the LDV bid was secretly amended, it would have created only 300 jobs and not the 600 which the consortium claimed. Although the LDV consortium was led by the US military truck supplier Stewart & Stevenson, its bid was backed by the leaders of the Transport and General Workers' Union and Amicus expressly on the basis that it would have created the most jobs and was best for British industry.

Sources at the MoD also criticised claims by a third unsuccessful bidder, the US truck maker Oshkosh, that its tender was superior in terms of performance and value for money and would have created at least 600 jobs at its manufacturing plant in Wales. The Oshkosh proposal, they said, was inferior in terms of job creation to the MAN ERF bid and was also non-compliant because it failed to meet the MoD's requirements and specification.

In a letter to The Independent today, the Defence Procurement Minister Lord Bach of Lutterworth makes a strong defence of the decision to award the contract to the German company. "To choose a company that represented a poorer deal for the UK taxpayer, created fewer jobs for the UK workforce and failed to equip our Armed Forces with the capability that they require would be not only foolish but downright irresponsible," he writes.

LDV claimed that had the contract been awarded to its consortium, it would have provided work for 140 suppliers across the country and recreated a strategic UK manufacturing capability in specialised military trucks. However, sources at the MoD insisted this would not have been the case after the decision to submit a second secret tender which downgraded the amount of UK involvement. Specifically, it was said that the amended bid involved less work being undertaken in Birmingham and by Multidrive in Yorkshire.

If this is so, then it puts the Transport and General Workers' leader Tony Woodley and his opposite number at Amicus Derek Simpson in an embarrassing position for publicly backing the LDV consortium.

LDV said yesterday that it stood by the claim that the Stewart & Stevenson bid would have been best for UK industry, saying its job estimates had been verified by the T&G and Amicus and the BirminghamEconomic Information Centre, a part of the University of Birmingham.

"For the MoD to say that our bid would have created fewer jobs is incorrect. The figure of 600 jobs was a true and fair one based on creating a strategic capability at LDV," a spokesman said. "I am not aware of any alternative bid that was put in which would have removed some of those jobs. We fought all along on the basis of the UK industrial participation our bid involved."