Britain's Ministry of Defence (MoD) plans to cut 1.5 billion pounds ($2.47 billion) from the money it pays defence companies annually to help maintain and retool its military equipment, the Financial Times reported.
An MoD spokeswoman declined to confirm the figure, but said the MoD was looking to make savings across all of its contracts.
The paper said the cuts, which are equivalent to a fifth of the MoD's 7.5 billion pound annual spending on support contracts, would likely take several years to roll out. (link.reuters.com/gep56v)
The ministry would need to wait until many of its existing support contracts expired before it could renegotiate them, the FT added.
The Defence Equipment and Support unit, the MoD's procurement arm, spends about half its annual budget on servicing equipment, outsourcing the work to companies such as BAE Systems and Babcock International Group.
(Reporting by Richa Naidu in Bangalore; Editing by Robin Pomeroy)