Suppliers table bids for £2bn front-line battle tank programme

BAE Systems and General Dynamics vie for MoD deal

Bids go in today for the British Army's first front-line battle tank contract for more than 15 years as the Ministry of Defence's much-delayed "FRES" programme makes a second attempt to get rolling.

The £2bn first "block" of the Future Rapid Effect System (FRES) Specialist Vehicle (SV) programme covers a demonstration phase and a follow-up contract to manufacture up to 600 fighting tanks of the Scout, Repair, Recovery and Protected Mobility variants.

Rivals BAE Systems and General Dynamics are submitting bids today. BAE Systems' pitch is for its CV90 model, built in Sweden; General Dynamics, its Austro-Spanish Ascod 2.

The future of the UK defence budget is increasingly uncertain, with the £175bn fiscal deficit looming large over all government spending plans and the mammoth Strategic Defence Review scheduled to start soon after next year's general election. Both FRES SV and the Warrior tank upgrade – which has a bid deadline of 18 November – have been given priority, although the remaining three blocks of FRES SV, which run to another 700 vehicles, are less certain.

FRES has a chequered history. The SV programme starting today was given priority over the much-delayed Utility Vehicle (UV) element earlier this year – despite General Dynamics being announced as preferred bidder seven months earlier and some £132m already spent on it – prompting MPs to brand the programme a "fiasco". James Arbuthnot, the chairman of the Commons Defence Committee, did not pull his punches. "The FRES UV programme was, from the outset, poorly conceived and managed," he said in February.

So far, the newly prioritised SV element has performed better. It is little more than a month behind schedule. And if all goes according to the plan, a procurement process described as "sporty" by industry insiders will see the MoD Investment Approvals Board recommend a winner to the Government on 26 January and a contract signed by the end of March. The first vehicles will be delivered in 2014 and the army will have an "operating capability" in 2015.

FRES is a significant technical step forward for the British Army's tanks. The SVs will be the first-ever all-digital, networked armoured vehicles, with an overall operating system rather than a series of analogue dials. The successful supplier will also become the Microsoft of the Army's armoured vehicles because the "electronic architecture" of the FRES SV will be used both for all future hardware and to upgrade the rest of the existing fleet.