L-3 Communications, the American defence contractor, has won its first big contract in the UK with a £400 million upgrade to Nimrod reconnaissance aircraft.

The contract eventually could be worth up to £1 billion if the Ministry of Defence (MoD) awards L-3 through-life support and maintenance of the Nimrods.

The Helix modification will upgrade the Royal Air Force’s Nimrods to allow all-weather, day and night surveillance and reconnaissance.

The initial grant is just £11.5 million, but this will rise to about £400 million in 2009. The upgrade will be complete by 2013.

L-3 set up an office in London two years ago in order to win MoD contracts and now has 450 people. It has made a number of small acquisitions and plans to make more to create a larger “footprint” in the UK.

The MoD’s Defence Industrial Strategy, introduced in December 2005, calls for international companies to establish operations in the UK if they want to win British defence orders.

The MoD believes that the ownership of the parent company is less important than having British scientists and engineers working on the projects.

The Nimrod upgrade is being led by L-3 but also includes QinetiQ, LogicaCMG and BAE Systems.

QinetiQ is providing electronic reconnaissance technologies, LogicaCMG ground systems and information management and BAE will provide aircraft modification.

Raytheon, Northrup Grumman, BAE Systems and Lockheed Martin all entered the bidding for the contract, with Lockheed and L-3 reaching the final round.

Ron Cook, vice-president for UK operations, said: “This is a significant achievement for us in terms of establishing a footprint in the UK and a long-term partnership with the MoD.

“Although much of this programme is sensitive, the modernisation is in the electronic surveillance domain and will enable the Nimrods to pick up new threats.”

This is likely to mean equipping Nimrods with sensors capable of detecting individuals or groups of terrorists.

L-3 is based in New York and had sales last year of $12.5 billion (£6.3 billion). It has been touted as a possible acquisition target for BAE in the past.

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