BAE in revision for scout contract bid

LONDON Mon Mar 15, 2010 12:15am GMT

A BAE systems sign is seen outside the company's Warton site near Preston, northern England, in this October 1, 2009 file photo. REUTERS/Phil Noble

A BAE systems sign is seen outside the company's Warton site near Preston, northern England, in this October 1, 2009 file photo.

Credit: Reuters/Phil Noble

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LONDON (Reuters) - BAE Systems (BAES.L) is to put forward a job creation package in a last-ditch attempt to secure a 4-billion-pound contract to build armoured reconnaissance vehicles for the British army, local media said on Sunday.

Europe's biggest military contractor had originally planned to build the chassis at its existing production line in Sweden, with elements completed in Britain.

However, the company will announce plans on Monday to save and create a total of 800 jobs at its Newcastle manufacturing site in response to speculation the British government is ready to award the contract to its U.S. rival General Dynamics Corp (GD.N).

"We thought we were sufficiently far ahead technically that the MoD could only accept our bid ... it seems we were wrong," a BAE spokesman told Reuters.

The government wants to replace the ageing Scimitar scout vehicle -- seen as vulnerable to roadside bombs -- with better protection and firepower.

BAE Systems has spent 50 million pounds over five years developing a contender based on the latest version of its CV90 chassis, that currently operates in three countries, including Afghanistan.

The company, which announced 500 redundancies last year, said they would be forced to make further cuts if they lost out on the contract to General Dynamics.

"If we're not successful in this competition, we will have to make further redundancies and we will not have the skills to update our existing fleet," the spokesman said.

The Ministry of Defence is expected to announce its decision this week.

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