BAE to lobby Brown direct over £10bn aircraft carrier contract

BAE Systems and a rival French-led consortium battling it out for a £10bn Royal Navy aircraft carrier order are to lobby the Chancellor in person later this week.

The two bidders will make representations direct to Gordon Brown this Friday in his capacity as MP for Dunfermline East, the constituency next door to the Rosyth naval yard in Scotland where final assembly of the carriers is likely to take place.

The meetings have been organised by Rachel Squire, the Labour MP for Dunfermline West, in whose constituency the Rosyth yard is located.

BAE has already announced that final assembly will be carried out in Rosyth. The French bidder Thales has said Rosyth is one of three yards in Scotland being considered.

Until last week's public spat between BAE and the Ministry of Defence about cost overruns on the Nimrod aircraft and Astute submarine programmes, BAE had looked a clear favourite to win the carrier contract.

BAE is still ahead in the competition but sources within the BAE camp now accept that the competition will be a much closer run affair.

Eyebrows have been raised at BAE by the fact that UBS, the investment bank providing the Government with advice on the carrier contract, has been hired not by the Ministry of Defence or the Treasury but by the Department of Trade and Industry, the company's sponsoring department.

City estimates put the cost overruns on Nimrod and Astute at up to £1bn. The disclosure last week by BAE of serious problems with both programmes, which it was forced to make by the MoD's Defence Procurement Agency, resulted in a 40 per cent fall in the company's share price. It also prompted questions about the future of the company's chairman, Sir Dick Evans, and its chief executive, Mike Turner.

Neither man is understood to be under direct shareholder pressure to resign, however, and BAE maintains its board is united in its approach to overcoming the cost overruns on the two programmes. BAE shares edged a little higher yesterday to close 1p up at 116.25p.