GEOFF HOON, the Defence Secretary, has handed a £1 billion helicopter contract directly to AgustaWestland, ignoring calls from rival manufacturers that the order should be put out to competition.

News of the £1 billion order for a new generation of Lynx helicopters was greeted with delight in Yeovil, where unions had feared that many of the group’s 3,300 jobs would be under threat if the order was not secured. But rival manufacturers were furious that they had not been allowed to compete to provide reconaissance and maritime attack helicopters.

Mr Hoon’s determination to award the contract to Westland caused fierce Cabinet debate between the MoD and the Treasury.

It was suggested that the MoD wanted to prevent rumours of job losses at the Somerset plant in the run-up to an election and that ministers were “scared” by the political power of Westland.

But a spokesman for the MoD insisted yesterday that the Treasury supported the decision to award the contract to Italian-owned AgustaWestland.

“Competition remains the cornerstone of MoD procurement policy,” a spokesman said last night. “But the current Lynx is coming to the end of its life and the cost of sustaining it through a competition was so high that it is better value for money to go for one supplier,” the spokesman said.

The £1 billion order will provide about a third of the new helicopters the armed forces require over the next ten years. The MoD held out the prospect of a full competition for the rest of the MoD’s helicopter needs, worth an additional £2 billion.

EADS, the European space and defence group, which has been arguing to be included in any competition said: “We welcome the Ministry’s proposal to have a competition in the Land Lift (troop moving) programme.”

Privately, the group is thought to be furious that its offer to allow its helicopters to be built under licence at Yeovil by an AgustaWestland workforce trained by EADS had been overlooked.

The Franco-German manufacuturer’s Eurocopter arm had offered to work with AgustaWestland and wanted to build a production line for its own helicopters in the UK. It claims that it could have undercut the AgustaWestland quote.

Boeing was also anxious to compete for the contract.