Reports from a Kuwaiti news agency stated that the emirate would purchase American M1A2 Abrams tanks in preference to the Vickers Challenger 2.
The decision represents a major blow to Vickers and is likely to lead to job losses.
Vickers sources said: 'As of tonight we understand the Kuwaitis have not placed an order.' Ministry of Defence sources were surprised by the way the announcement was made. 'It's a very odd way to go about it,' they said.
The competition between Britain and the US for the contract was extensive. The tanks were displayed outside their respective embassies and the manufacturers took newspaper advertisements extolling the virtues of their products.
Malcolm Rifkind, Secretary of State for Defence, visited Kuwait last month and argued publicly in support of the Challenger.
The British Challenger 2 tanks, based on the Challenger 1 successfully used in the Gulf war, were selected by the British Army last summer. Since then, they have been tested in desert conditions in Saudi Arabia, the United Arab Emirates and Oman, as well as Kuwait.
A senior British officer told the Independent recently that the Challenger 2 had performed extremely well. However this performance appears to have been inadequate to convince the Kuwaitis to buy British at pounds 2.5m a tank.
The Challenger 2 is believed to be inferior in speed and mobility to the M1A2, although its engine is more economical than the latter's gas turbine. The Challenger 2 also has the revolutionary Chobham armour, probably the best in the world.
The official Kuwait News Agency (KUNA) quoted the Defence Minister, Sheikh Ali Sabah al-Salem al-Sabah, as saying yesterday that a committee of military experts had chosen the American tank because it is 'the most responsive to Kuwaiti army requirements'.
The minister said the Abrams had shown the best performance in desert combat conditions 'as proven during the war for the liberation of Kuwait'.
The Sheikh said contacts were under way with the US government to facilitate the purchase of the tanks, made by General Dynamics Corporation.
KUNA did not say how many tanks Kuwait would buy or give the expected value of the deal.
The Ministry of Defence and Vickers, which builds the Challenger 2, said last night there was no official confirmation of the reports. It said that the news was a 'total surprise'.
In its attempt to share contracts around the three main allies in the anti-Iraq coalition, Kuwait has sought to place orders for aircraft with the US, naval equipment with France and land equipment, such as armoured vehicles, with Britain.
The loss of such a major export order is a serious blow to Vickers, which runs two modern factories at Newcastle upon Tyne and Leeds employing a total of 1,800 people. Winning the British Army order was considered essential to guarantee export orders. The former, it appears, has not guaranteed the latter.Reuse content