Boeing, Thales to oversee huge UK military project

LONDON, Oct 5 (Reuters) - Britain selected Boeing Co and Thales today to oversee its most expensive defence project, one which will replace thousands of army vehicles and cost up to 60 billion pounds (122.1 billion dollars).

''The Ministry of Defence (MoD) has today selected the Thales UK and Boeing team as the preferred bidder for the Future Rapid Effect System (FRES) Systems of Systems Integrator (SOSI) role,'' the ministry said in a news release.

Industry sources said the decision to select a single preferred bidder came as a surprise as the ministry had been widely expected to select two or possibly three.

FRES will introduce thousands of new military vehicles beginning in 2012. Plans call for four vehicle types in 21 variants for tasks ranging from reconnaissance to road clearing.

The role of ''system of systems integrator'' will involve ensuring the vehicles can operate and communicate with other equipment, such as satellites, fighter jets and warships.

The Boeing-Thales team was selected over others involving a host of top defence companies, including Italy's Finmeccanica which had teamed with Britain's BAE Systems, missile maker MBDA and General Dynamics.

Lockheed Martin Corp. had paired with British firm Ultra Electronics and UK technology firm QinetiQ was understood to have bid with Northrop Grumman Corp..

The ministry will select another consortium to equip the vehicles, as well as choose a vehicle for the initial variant of FRES.

Testing of three possible vehicles concluded last week.

They are the Piranha Evolution from General Dynamics, the VBCI from France's Nexter, and the Boxer from Artec, a consortium involving Krauss-Maffei Wegmann and Rheinmetall Landsysteme of Germany and Dutch company Stork.

France is expected to buy 700 of the VBCI and deploy it in 2009.

Germany has ordered 272 of the Boxer and the Netherlands has ordered 200 of them.

Britain was originally in the Boxer programme but dropped out in 2003, opting for its own FRES programme instead.

REUTERS JK VC1848