The British Defense Minister revealed that the government held discussions with Boeing Co. regarding the fleet purchase of the Wedgetail E-7 early warning aircraft and air control. Discussions were also held with Australia about cooperation in the use of the aircraft, said Gavin Williamson.
Reporting from Defense News, Williamson said that the Ministry of Defense had conducted market analysis and discussions with other potential providers and concluded that "the potential for E-7 procurement represents the best cost option, including representing significant opportunities to enhance defense cooperation and collaborate with Australia's main ally".
"Wedgetail is a prominent player in our pursuit of new reconnaissance aircraft and has proven itself in Iraq and Syria," Williamson said.
The UK Ministry of Defense said in a statement that further discussions would be held before the investment decision was set.
"If elected, the British defense industry can be significantly involved in the program, from modification work to through support during the service period," said MoD. "The MoD will work with Boeing to make sure [exploration] of how the UK's leading defense industry can also benefit from the existing agreement".
Companies that are expected to benefit from the E-7 agreement are the Marshall Aerospace and Defense Group.
Marshall has built an additional fuel tank for the Poseidon P-8 maritime patrol program and industry sources say that the Cambridge, UK-based company will turn the Boeing 737 into the Wedgetail configuration as part of the deal.
Talks with Boeing about increasing British content on the plane are trying to avoid possible criticism of handing over another big contract to the US defense giant without competition and with little work for the local industry.
Apache attack helicopters and Boeing's P-8 Poseidon maritime patrol aircraft were recently purchased without going through a tender process.
The US defense contractor, however, tried to overturn criticism of the growth of its workforce to 2,300 and spent a large amount of investment by building Poseidon support facilities at the UK Air Force's main base in Lossiemouth, Scotland.
"We work with our supply chain in the UK, government and military partners to provide critical capabilities, local content, exports, skills and value to our armed forces," said a Boeing spokesman.
Intent to carry out two major transactions, the only source in the armored vehicle sector from US and German companies has sparked outrage from a number of British defense companies over the country's procurement policies.
Every British Wedgetail agreement will be carried out with Boeing and not through the Foreign Military Sales route from the US government.
Williamson did not give details about the cost and number of aircraft, but up to 6 units of aircraft are expected to be purchased to replace the E-3D Sentry fleet belonging to the British Air Force. The cost may be more than £ 2 billion or around USD 2.6 billion, giving more pressure on the too large UK defense budget.
The planned purchase of the AEW & C Wedgetail as the sole source of procurement has provoked anger among potential rivals such as Airbus and Saab. The two European companies discussed the merging of power earlier this year as a step to offer a credible and cheaper option for the Wedgetail program.