Raytheon attacks in battle for RAF missile contract

Paris Air Show: UK fights for contract, while ministers raise the pressure on Airbus

MANOEUVRING over the pounds 1bn contract for a new missile for the RAF's Eurofighters intensified further at the Paris Air Show yesterday, with American bidders Raytheon claiming that the aircraft's export prospects would be boosted if it were awarded the deal.

Opposition from rival joint venture Matra BAe Dynamics has focused on the theme that sales of the Eurofighter, developed with pounds 16bn of British taxpayers' money, would be harmed if its main armament were US controlled.

Raytheon yesterday announced that William Cohen, the US Defence Secretary, had given assurances to the British government that the US would allow fair competition on future export sales between Eurofighter and rival American aircraft. An advisory opinion on the proposed missile also said the department would allow its export to any of the 16 countries currently supplied with Raytheon's AMRAMM missile.

"If you don't put an AMRAMM-based missile on Eurofighter, you are taking a dangerous gamble with its export success," said Andy Head, director of marketing at Raytheon Systems Ltd, the company's UK subsidiary. "We are proposing tomorrow's solution, not yesterday's politics."

The politics involved, however, are intense. There is said to be a UK cabinet split over the decision between George Robertson, the Defence Secretary, and Gordon Brown, the Chancellor, with Mr Robertson favouring the European option for strategic reasons and Mr Brown preferring the American bid on cost.

The decision, which could come later this summer, will also be seen as an important pointer in relation to Britain's stated wish for a stronger European defence stance.

Matra BAe Dynamics will be giving its own presentation this morning on the rival Meteor programme. Yesterday the company dismissed Raytheon's claims. A spokesman said that whatever the US government might say, it was Congress which had the power to ban arms exports and this had been used frequently in the past.

Five European governments have already expressed a preference for Meteor, with the French offering to help fund its development if it is chosen for the RAF. "Britain has made a significant investment in Eurofighter and should expect to recoup a significant amount of this through exports," the spokesman said. "The only way to guarantee that is to put a European missile on a European aircraft."

Raytheon's latest move comes as the giant US defence contractor is set to beat British firms to a pounds 750m Ministry of Defence radar contract. The US company has been selected to supply a new airborne stand-off radar in preference to rival groupings, including British Aerospace and Racal Electronics. BAe has teamed up with Northrop Grumman of the US while Racal is paired with Lockheed Martin.

The Racal consortium, called TeamASTOR, has led a high-profile campaign to win the contract, saying thousands of jobs and British expertise in radar technology would be jeopardised if the Raytheon bid won. However, Raytheon insists it will secure UK jobs through a work-sharing agreement with more than 20 leading British defence firms, including GEC-Marconi.