The British Army’s most important equipment procurement, worth at least £16 billion, is to be overseen by the Franco-American combination of Thales and Boeing, it emerged today.

The Future Rapid Effect System (FRES) will supply the Ministry of Defence (MoD) with a new fleet of more than 3,000 highly mobile, air-transportable medium-weight armoured vehicles of different types.

The project will include maintenance contracts spanning 40 years that could lift its value to £60 billion.

The decision to name Thales and Boeing as the preferred bidders for the position of Systems Integrator (SOSI) comes as a blow to Britain’s BAE and Qinetiq, both of which were also in the running for the overarching role.

The SOSI is responsible for managing the purchase of vehicles and ensuring that they can operate and communicate with other military equipment, ranging from satellite systems to fighter jets and warships.

BAE had already been knocked out of the running to supply the design for the FRES utility variant, the troop carrier that will be made in the highest numbers under the scheme.

In early June the UK Ministry of Defence announced that it had shortlisted General Dynamics' Piranha V, Nexter's VBCI (Véhicule Blindé de Combat) and the ARTEC consortium's Boxer vehicles to take part in a series of utility vehicle mobility trials, previously known as the "Trials of Truth".

Those trials finished last month. The winner will be announced in November, the MoD said yesterday.

Lord Drayson, the Defence Minister, said: "The FRES project is the British Army's highest equipment priority. This announcement, almost two months ahead of schedule, demonstrates the excellent progress now being made on FRES.”

The FRES fleet of armoured fighting vehicles will have high levels of protection and will be air-transportable, allowing troops to deploy rapidly across the globe at short notice.

Plans call for four vehicle types in 21 variants, for tasks ranging from reconnaissance to road clearing.

The first vehicles are expected to be deployed in 2012.

BAE had made its rival bid as part of a consortium that included Finmeccanica, of Italy, and General Dynamics, of the US.

The decision to select a single preferred bidder surprised analysts, many of whom had expected the MoD to name two or possibly three.

The announcement yesterday also came after BAE missed out on supplying the utility vehicle for the FRES program.

It is still looking to have a role on FRES as an integrator of the armoured vehicles' systems.

A team including Lockheed Martin and Ultra Electronics also tabled a bid.

General Sir Richard Dannatt, Chief of the General Staff, said: "This is an important decision, soon to be followed by even more significant FRES announcements, including the selection of the Utility Vehicle Designer.

"FRES will be at the heart of the future Army and remains the Army's highest equipment capability priority after support to current operations."

The MoD has also appointed the legal firm Herbert Smith to provide the FRES team with intellectual property, commercial and legal advice, Lord Drayson said.

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