Fire Scout unmanned air vehicle

BBC Wales has learned that Northrop Grumman is one of two consortia bidding for an �800m Ministry of Defence contract to make a sophisticated communications system. If successful, it would set up its HQ in Blackwood, offering 250 jobs.

But it faces stiff competition from rival consortium Thales which is also promising to create Welsh jobs.

Northrop Grumman is bidding to win the Watchkeeper project, a 10-year MoD contract to supply advanced communication and reconnaissance systems.

The Los Angeles-based company said it would need about 250 people to supply the systems which use unmanned planes to defend and attack armies.

We want to build on the success of the Bowman project and help create a cluster of integrated systems technology in the area Tom Vice, Northrop Grumman

A decision about the project's future is expected in the coming days or weeks.

Army radios

If successful, Northrop Grumman will set up its programme HQ in the Oakdale Business Park, the second major global hi-tech defence contractor to move its project headquarters there.

In November 2002 General Dynamics UK opened its Bowman military communications programme at Oakdale, having secured a �1.9bn contract for army radios.

Northrop Grumman said General Dynamics would be a key member of its team on the Watchkeeper programme.

Senior vice-president Tom Vice said: "We want to build on the success of the Bowman project and help create a cluster of integrated systems technology in the area.

"Bringing together Northrop Grumman and General Dynamics will see Oakdale become the UK and European centre of excellence for integrated systems technology."

The company will also employ people from the local workforce.

"More than 90% of the staff at our headquarters systems centre will be recruited locally from Wales and the UK.

"These will be highly skilled engineering, systems integration and software development posts.

The project could generate up to an additional 2,000 spin-off jobs as the company develops local supply chains, said Mr Vice.

Wales is already significant in pilotless spy plane technology, with a �21m investment at Parc Aberporth in Ceredigion, unveiled in May, aiming to create a centre of excellence.