Our armed forces can now look forward to receiving the most modern secure communications system available anywhere

Geoff Hoon Defence Secretary

The scheme to replace the army's ageing radios with new Bowman communications will secure up to 500 jobs in Wales and up to 400 in Scotland, including new high technology posts.

The Bowman project has been beset with problems and the contract had to be put back out to tender when ministers sacked the original manufacturers for taking too long.

Protracted process

That cancellation came a year ago but the radios were first considered some 19 years previously.

Mr Hoon conceded efforts to replace the current Clansman combat radio system had produced a "saga of difficulties".

But he said the Ministry of Defence now hoped to be able to complete the contract agreement by the end of the summer.

The radios would come into service in early 2004, he said.

Hoon gave the news in a parliamentary statement

Mr Hoon said the CDC bid "provides the best value for money solution, fully meeting our military requirements".

He praised the move as "excellent news for British industry", adding: "I am confident that it will meet our demanding timetable for getting this system into service."

Three bidders - CDC, French group Thales and US-based TRW Inc - were short-listed in November after the process had been reopened.

Thales' share price slumped amid speculation that the firm, the early frontrunner, would cut jobs at its plants in Bracknell, Berkshire and Harrow, Middlesex after missing out on the deal.

But the company insisted the decision would not affect its financial targets.

Jobs boost

Mr Hoon said about 1,600 jobs would be created across the UK, including 400 new high technology posts at the centre CDC planned to establish in an unemployment blackspot near Caerphilly, south Wales.

Arguing it was inevitable there would be losers when big contract were awarded, he said Thales already had �2.7bn worth of defence work in the UK and were "eminently capable" of winning more.

"If there are job losses as a result of this decision it won't be the direct consequence of Thales failing to win this contract, it will be the result of their reorganisation of their business across the United Kingdom," added Mr Hoon.

Welsh First Minister Rhodri Morgan said the news was a tremendous lift for the Caerphilly area.

"This area of Wales has been hit very hard over recent months by job losses, " he said. Scottish Secretary Helen Liddell said the news meant 105 jobs will be protected or created in Fife.

She expected another 300 jobs to be secured or created indirectly at contractors across Scotland.

Scottish welcome

Mrs Liddell added: "I appreciate that some Scottish companies with interests in the other two bids may feel disappointed, however, the awarding of preferred bidder status to CDC is an excellent result for Scotland."

The Bowman contract will include delivery of more than 48,000 radios and 30,000 computers.

More than 100,000 British troops will need training for the new radios, which will be used by land forces and some elements of the Royal Navy and RAF.