Defence contract policy attacked

The Government's policy of procuring defence contracts at the lowest price yesterday came under attack from Michael Cobham, chairman of Cobham, the maker of aerospace components and flightrefuellingsystems.

He said the US government continued to fund research and development over a broad range of aerospace and defence-related technologies, while similar policies were pursued in France and Germany because they viewed their aerospace industries as a vital political and economic asset.

The company is concerned that overseas companies are gaining a competitive advantage, in particular because of the need of air forces to update equipment on military aircraft in the next few years. Mr Cobham, who retires in June and will hand over to Sir Michael Knight, said it was of the utmost importance that the Government worked with industry to ensure thatresources were allocated for research and technology.

Mr Cobham's broadside accompanied the group's results for 1994, showing an advance in profits before tax from £21m to £25.8m. The final dividend is 5.62p, lifting the total payout from 7.56p to 8.32p. Cobham's shares rose 2p to 320p.

Looking ahead, Mr Cobham said that the company was expecting a modest increase in demand for civil aircraft while the production of new military planes could well be limited.

However, the company believes that contract opportunities will arise from governments spending more on updating equipment on military aircraft.

Giles Irwin, finance director, said acquisition opportunities might also come from the rationalisation of the defence industry, which is particularly marked in the US where the pace of consolidation among the larger companies is quickening.