The offer intensified the battle between Raytheon and a consortium led by British Aerospace to win the contract to arm the Eurofighter with a new beyond visual range air-to-air missile (BVRAAM) designed to counter the threat from the latest Russian missiles.
Raytheon, which has teamed up with the UK subsidiary of Thomson CSF and Shorts of Belfast to offer an enhanced version of its AMRAAM air-to-air missile, said it would guarantee the MoD savings of pounds 450m on the programme.
It is also offering the UK a 50:50 deal to develop and produce the new missile involving 100 per cent technology transfer from the US. Raytheon claimed the programme would create more than 3,000 UK defence jobs directly and provide work for 65 sub-contractors.
Daniel Burnham, Raytheon's chairman, described the offer as a first for the US and UK governments and said it opened the way for British contractors to arm the future US fighter aircraft including the Joint Strike Fighter and the F-22.
But BAe, which is teamed with the Anglo-French company Matra BAe Dynamics, hit back claiming that only its Meteor missile system met the RAF's requirements while offering Europe the chance to close the technology gap with the US.
"At present there is a one-way highway in transatlantic missile exports - not a single British or European missile is in service with US forces," said BAe's group managing director Robin Southwell. "Selection of Meteor will guarantee free and open competition in a market where the US has a monopoly."
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