BAE Systems gets $3.2 billion deal so British forces can reload

LONDON – Munitions worth $3.2 billion (£2.4 billion) are to be supplied to the British military by BAE Systems over 15 years in a single-source deal announced by the Ministry of Defence Nov 30.

The program, known as Next Generation Munitions Solution (NGMS), will see BAE produce 39 different munitions for the armed services from five different sites across the UK.

Small-arms ammunition, mortars, tank shells, medium-caliber gun rounds and heavy artillery rounds are included in the delivery schedule which starts at the end of 2022.

The contract supersedes a similar £2 billion, 15-year contract known as "Munitions Acquisition, the Supply Solution," which kicked off in 2008.

In return for guaranteed offtake of ammunition BAE implemented money-saving efficiencies and modernization of its facilities.

The MASS contract effectively halted a British munitions industry in decline for more than 20 years.

There are more than 400 munition types not included in the agreement, principally countermeasures, pyrotechnics and explosives, but also a number of other variants of small arms ammunition, medium-caliber and mortar products.

The deal covers 120 mm rifled tank shells for the Challenger 2 main battle tank but not its likely smooth-bore successor.

The Challenger 2 upgrade program led by the Rheinmetall-BAE joint company RBSL is due to go forward for MoD investment consideration around the end of the year.

The proposed munition solution, widely expected to include a new 120 mm smooth-bore cannon, will be recommended as part of a wider upgrade approval of the tank.

The outcome of the approval program will be subject to the delayed integrated defense review now expected to be released in early in 2021.

In a statement announcing the new munitions deal the MoD said BAE had identified about £400 million of savings and efficiency opportunities to be pursued up to 2038. The new agreement represents the same product portfolio currently supplied under the MASS deal.

The contract also includes flexibility to vary the volume of orders and allow general munitions products to be added or removed, depending on front-line requirements, said the statement.

Figures provided by MoD estimate BAE will annually produce approximately 70 million rounds of small-arms ammunition, 100,000 large-caliber rounds, 40,000 medium-caliber shells and 75,000 mortar rounds.

Part of the deal will see BAE invest £70 million refurbishing and upgrading munition manufacturing lines.

Included in BAE's investment is the establishment of a £2.5 million smart technology pilot factory at its Radway Green, northwest England, small-arms ammunition manufacturing site.

Andrew Chuter is the United Kingdom correspondent for Defense News.