BAE sets sights on £40bn Army contract

BAE Systems' hopes of becoming the lead contractor on a £40bn programme to build a new generation of armoured troop and missile carriers for the Army received a boost yesterday when it won two development contracts on the vehicle.

The company has become one of two contractors selected to design a chassis for the Future Rapid Effect System or FRES as it is known. BAE has also won the technology demonstrator contract to design a lightweight portable assault bridge for the vehicle.

The contracts put BAE into a stronger position to become prime contractor on the programme, which will involve the building of up to 3,500 vehicles for the Army over the next 10 to 15 years at a cost of £14bn. Through-life support for the vehicles could be worth a further £25bn over a 30-year period.

However, General Dynamics, Thales and Lockheed Martin, which have been given other development contracts on the programme, are also vying for this prestige role.

Last year Thales won a contract to design the electronic architecture of FRES - in effect, the brain of the vehicle linking all its various systems - while General Dynamics was selected to develop an alternative chassis design.

Two other contracts were awarded yesterday - one to Lockheed Martin to develop electric armour for FRES and the other to a partnership between Thales and Boeing to work on the vehicle's countermeasures against missile attack.

FRES is the Army's most important procurement programme for the next decade and one of the biggest ever undertaken by the MoD. The vehicles, are due to enter service around 2012.