IN an office on an unassuming Leicester industrial estate, a man sits tapping at a laptop. As he moves the cursor, a wicked-look-ing machinegun on a platform swivels left and right, targeting what he sees on screen. The air-conditioning? The lights? A double-click and they are history.

The name of the estate’s main street, Radar Way, gives a clue to the activities going on inside. In the 1960s and 1970s, this was a big Marconi site, building radars for cold war battleships.

Now, under BAE Systems, Britain’s biggest defence contractor, it is a technical centre for armoured vehicles, and in recent weeks has been a hive of activity.

The company is battling to win a chunk of what will be one of the largest peacetime contracts ever awarded by the Ministry of Defence. The Fres (Future Rapid Effect System) deal will see the government spend up to £16 billion on 3,000 armoured vehicles – medium-weight rather than main battle tanks – to replace Britain’s ageing fleet. A further £60 billion will be spent on maintaining these vehicles during their service life.

The potential riches on offer have lured a host of top international contractors to compete, and the contest will reach a climax over the next few months.

Next Friday, the MoD was due to choose the winning vehicle from a short list of three, although a single winner may not now be picked. On the same day, companies vying for the “vehicle integrator” role – the complicated and expensive job of assembling the vehicle, fitting it out, and making sure it can work with all the other high-tech systems in the British forces – have to submit their bids. A winner will be announced in March.

It is a high-stakes game for all involved, but probably most of all for BAE Systems, which over the years has swallowed up the entire domestic industry, including Alvis, Vickers, Marconi and Royal Ordnance.

This industrial legacy means that BAE maintains nearly all the armoured vehicles in the army’s current fleet. If it misses out on Fres, where it is bidding to be the vehicle integrator, it will face a difficult future, with a dwindling tail of work as the older vehicles are retired.

Andrew Davies, managing director of BAE Land Systems, said: “We are determined to win on merit, but of course we will always act rationally in determining the future of the business.”

Despite being the largest armoured-vehicle supplier in the world – thanks to its businesses in Sweden, South Africa and latterly, through a series of big-money acquisitions, America – BAE does not have a vehicle in the Fres competition.

The three that have made it to the short list are the Piranha, made by General Dynamics of America; the Boxer, made by the German-Dutch consortium Artec; and the VBCI, made by Nexter (formerly Giat), which is owned by the French government.

Army drivers spent the summer thrashing the eight-wheeled vehicles round the MoD’s tank training course in a test that became known in the industry as the “trials of truth”.

The choice of vehicle is expected to be announced by ministers this week, though there is some uncertainty over the timing and nature of the announcement, after the unexpected departure of defence procurement minister Lord Drayson.

Drayson’s exit has cast a shadow over the programme. Industry executives say he was its main driver, pushing for early delivery of vehicles and a collabo-rative approach to the procurement. There is now speculation that instead of a straight choice, the decision will be fudged, with the evaluation of the vehicles extended.

There are also reports of differences between Drayson and army generals over what vehicle to choose. Citing government and army sources, Defence News, the authoritative trade publication, said last week that Drayson had attempted to push through the selection of the French vehicle before he resigned on November 7. This “flew in the face of recommendations from the British Army and others”, said Defence News.

BAE is hoping to cash in regardless of which vehicle is chosen. “We are vehicle agnostic,” said Davies. It plans to win the contract to assemble and integrate the vehicles, installing complicated kit like the remote-con-trolled machine gun. “It is also vital that the new vehicles fit in with the existing fleet, and as we are already responsible for them, we think we are the ideal people to do the job,” he said.

BAE can also, to a certain extent, play the “jobs” and “British industry” cards. It has 600 engineers working on armoured vehicles, with plants and offices at Leicester, Telford, Bristol, Shrivenham, Frimley, Hillen, Newcastle, Leeds and Farnbor-ough, About 7,000 British jobs would be sustained by Fres, the company said.

BAE has already declared its hand, announcing last week the members of its team for the vehicle-integrator role. It includes Cranfield University, GE, Qine-tiq, SAIC and Selex.

No other group has publicly declared an intention to bid, but BAE is likely to face stiff competition. General Dynamics is expected to be a contender. Not only does it make vehicles, but it has built up British expertise while installing its Bowman radio in the current army fleet.

Nexter may play a role, possibly in partnership with a British company. It would not say last week whether it was bidding for the integration role, but said “we do have capabilities in that area”. If the Nexter vehicle was chosen, it said, it would be assembled in Britain. Lockheed Martin and EADS may also be in the frame.

If the project was not already complicated enough, the MoD wants the vehicle designer (General Dynamics, Artec or Nexter) to join with the vehicle integrator to form a “vehicle provider” organisation. This would not only build the vehicles, but ensure that all the necessary technology was transferred here so Britain would be able to retain control of the vehicles’ design, and bid for export contracts.

There remains one last unknown. Thanks to its expensive operations in Iraq and Afghanistan, and the planned purchase of two new aircraft carriers and other major projects, the MoD is under severe financial strain. Some estimates say the procurement budget for next year is falling short by £1.2 billion, which may mean a cut in the number of vehicles purchased. Some industry executives believe numbers may fall from the planned 3,000 to 1,500 or fewer.

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