PARIS, June 11 (Reuters) – France will next week pick a consortium of Thales (TCFP.PA), Safran (SAF.PA) and Nexter as architects of a new generation of army battle systems known as Scorpion, sources familiar with the matter said on Friday.
Their selection as preferred bidders is expected to be the key announcement at the biennial Eurosatory arms fair held outside Paris from June 14.
A consortium of the three French defence firms has been competing with a team led by EADS (EAD.PA) for the first phase of a series of contracts potentially worth billions of euros.
“They have been selected in the first tender,” one source familiar with the project said, asking not to be named. Two other sources also cited Thales, Safran and Nexter as winners.
French defence procurement service DGA declined to comment.
The idea of the project is to provide soldiers in theatres like Afghanistan with more modern equipment and better protection against insurgency and roadside bombs.
France is among a number of military powers working on plans to prepare their land forces for future conflicts by linking soldiers with smarter, network-enabled vehicles.
Such systems have so far been plagued by delays and excess costs attributed to complexity. The United States cancelled its Boeing-led (BA.N) Future Combat Systems project last year.
Thales partnered Boeing (BA.N) as integrator of the “system of systems” for Britain’s Future Rapid Effect System (FRES), a project to build thousands of new vehicles for the British Army that foundered and had to be restructured last year.
France hopes to avoid repeating the mistakes of the U.S. and British programmes by introducing an initial design phase focused on getting the basic concepts right first.
The award is seen as a crucial one because the shape of the “system of systems” could have a far-reaching impact on future defence equipment choices as governments tighten spending.
Thales, Safran — through its Sagem unit — and Nexter had already emerged as front-runners in the Scorpion bidding.
Their involvement could raise questions as to whether Nexter and Thales will link up in the next wave of defence industry consolidation, Defense News recently reported.
Thales Chief Executive Luc Vigneron, who was appointed last year, was previously in charge of Nexter, the state-owned manufacturer of the Leclerc battle tank.
Safran and Thales broke off talks over a possible asset swap in their defence electronics businesses last month. (Editing by James Regan)