Outlook: BAe/Marconi

ONE OF the secondary complications of the British Aerospace-Marconi merger is what to do with procurement contests where the two companies are currently bidding in competition with one another. Right now there are several major procurement programmes where BAe and Marconi are members of rival consortia. Thus, we had the spectacle yesterday of BAe and Lockheed receiving pounds 90m of taxpayer's money to develop a new stealthy armoured reconnaissance vehicle while BAe in the shape of Marconi received the a similar amount to help GKN develop a rival demonstrator vehicle.

There are two other big defence contracts where BAe is competing with itself using taxpayers funds. One is a new military satellite communications system. The other is a new airborne stand-off radar.

Awkward though the situation is, BAe says that it is not without precedent. Marconi also ended up competing against itself to build the latest Astute class of nuclear-powered submarines after it bought the only rival bidder, VSEL.

BAe says solemnly that where it is bidding against itself, Chinese Walls will be strictly observed. But taxpayers will wonder if they are being shortchanged while BAe's partners have even more grounds for concern.

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