Thales consoled with £2bn 'robotroop' deal

Thales, the French-owned defence contractor, yesterday beat BAE Systems to a £2bn Army order to equip British infantrymen with state-of-the-art equipment for the next 30 years.

The contract is a consolation prize for Thales after it was passed over in January as prime contractor on a £10bn order to build two aircraft carriers for the Royal Navy. The prime contractor role went to BAE although, as part of a political fudge, the Ministry of Defence said the carriers must be built to a Thales design.

The so-called Future Integrated Soldier Technology (Fist) Programme will turn Britain's 29,000 infantrymen into latter-day "robocops" by linking their weapon systems to navigation and "target acquisition systems", improving the front-line soldier's firepower and protection.

About 1,000 jobs will be created or safeguarded at Thales factories around the UK in Glasgow, Bristol, Taunton, Staines, Reading and Wells. But the company said that this number could double if it was successful in winning overseas orders. The export market is estimated at £3bn.

The MoD said that Thales had been selected to undertake the assessment phase of the contract, which in itself is worth only £15m over the next three years. However, the subsequent manufacturing and support contract, starting in 2007, is worth an estimated £1.5bn-£2bn.

BAE had argued that UK intellectual property rights would drift abroad if the contract was awarded to the French company. But Alex Dorrian, the chief executive of Thales UK, said that the company was "considered to be the UK national leader for infantry systems".

The award of the Fist contract to Thales follows its success in being shortlisted as one of two bidders for the Watchkeeper programme to supply the MoD with unmanned battlefield reconnaissance aircraft.

Thales, which took over Racal Electronics three years ago, is Britain's second biggest defence contractor with some 12,000 UK employees. It also owns Shorts missile systems and Pilkington Optronics.