The Government has postponed a decision on a new air-to-air missile to equip RAF Eurofighters, saying more work is needed to reduce technical risks.
The Beyond Visual Range Air-to-Air Missile could be worth £800m-900m to Matra BAe Dynamics or Hughes (UK), the British subsidiary of the US missile builder.
Defence procurement minister John Spellar said the Ministry of Defence had `concluded that there is a need for further work to reduce risk in performance and timescale before we let a development and production contract’.
The MoD plans to let two 12-month contracts in July with Matra BAe Dynamics and Hughes for project definition and risk reduction work on the company’s solutions to the missiles requirement. The MoD will contribute £5m to each contractor’s costs.
Matra BAe Dynamics said the MoD’s decision was `the expected course of action’. The missile contract was originally due in spring or summer this year.
Spellar said the MoD wanted `to ensure that Eurofighter enters operational service with the most cost-effective equipment available’.
This could imply that one or both bids were deemed too expensive or risky.
A City analyst blamed the delay on German inability to agree funding for Eurofighter production. This week German defence minister Volker Ruhe said he would not sacrifice the rest of Germany’s military capability to fund Eurofighter.