GEOFF HOON, the Defence Secretary, has been accused of trying to rush through a £3 billion helicopter deal before the general election without opening it up to competition, The Times has learnt.

Defence sources said that Mr Hoon is under intense pressure to award the programme to AgustaWestland, the Italian helicopter firm, on an uncontested basis in order to safeguard up to 4,000 Agusta employees in Britain.

However, in an echo of the Westland affair that almost brought down Margaret Thatcher 19 years ago, the Treasury and other government departments are keen to run an open competition so that the international rivals, EADS, Boeing and Sikorsky, can bid for the contract to replace Britain’s fleet of Puma and Lynx helicopters.

The Ministry of Defence (MoD) has already awarded defence contracts worth £17 billion this week in what has been seen as a well-timed political move to safeguard defence and industry jobs, ahead of an expected May general election.

A Cabinet sub-commitee meeting scheduled for March 15, which will involve the MoD, the Department of Trade and Industry and the Treasury, is expected to decide on whether the contract should be given directly to AgustaWestland, which is owned by Finmeccanica, the Italian defence group.

The decision comes against a background of job cuts in AgustaWestland and growing government concern that the open-market defence procurement policies of the past 20 years have reduced Britain’s ability to build its own warships, fighter planes and helicopters.

EADS, the European maker of Airbus, believes its Eurocopter arm could offer a deal that is between £850 million and £1.2 billion cheaper than AgustaWestland’s. The Franco-German group was yesterday allowed to submit details of its proposals to the Defence Procurement Agency after previously being excluded from any discussions.

EADS has also said that it is prepared to commit long-term investment to the UK and wants to work with AgustaWestland to develop an “Airbus for helicopters” style of operation, centred on Yeovil, which it hopes would echo Airbus’s success in the commercial aircraft market. AgustaWestland has a 32.5 per cent stake in Eurocopter’s NH90 helicopter programme.

An uncontested bid would also infuriate Sikorsky, the helicopter company owned by the US’s United Technologies and Boeing.

An MoD spokesman said: “We are considering both options — competition and an industrial partnership. But it’s business as usual here, there is no sense that an announcement is being rushed to fall in with an election.”

Defence industrial policy allows the MoD to negotiate exclusively with one supplier, if it is deemed to be in the longer-term interest.

EADS said: “We would welcome a competition. We have cost-effective value-for-money products that we believe would be right for the armed forces, the taxpayer and British industry.”

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