BAE, DaimlerChrysler Are Frontrunners for A$3 Billion Project (Update4)

By Laura Cochrane

Oct. 5 (Bloomberg) -- BAE Systems Plc, Europe's biggest military contractor, Haulmark Industries Inc. and DaimlerChrysler AG are frontrunners for Australian army contracts worth about A$3 billion ($2.6 billion).

BAE is Australia's preferred bidder to provide medium and heavy field vehicles, the government said in a statement released in Canberra today. The army may buy light vehicles from DaimlerChrysler and trailers from Haulmark, the statement said.

Australia has about 4000 troops deployed overseas, including 1,500 soldiers in Iraq serving with U.S.-led coalition forces trying to quell an insurgency. It has about 900 soldiers in Afghanistan, where the North Atlantic Treaty Organization is leading international efforts to defeat Taliban rebels and stabilize the country.

New equipment is needed to ``reduce the risk to our service men and women from threats such as suicide bombers, improvised explosive devices, land mines, bullets and other projectiles,'' the government said.

The three companies will negotiate prices with Australia ``over the next few months,'' Nigel Blunden, a spokesman for Defense Minister Brendan Nelson, said in a phone interview.

Prime Minister John Howard, a key ally of President George W. Bush in the war on terrorism, said in July his government is committed to keeping troops in Iraq and a long-term deployment in Afghanistan.

Terrorist Target

Almost two-thirds of Australians opposed the nation's involvement in Iraq and nearly three-quarters said it made the country a terrorist target, according to a survey by the United States Study Centre at the University of Sydney.

BAE, based in London, won a contract extension in September valued at 45 million pounds ($92 million) to supply part of the Falcon communications network to the U.K.'s Royal Air Force. It also started work on an unmanned aerial vehicle that may be used in battle by the Air Force as part of a Ministry of Defense contract worth 124 million pounds.

Haulmark, based in Bristol, Indiana, has 460 dealers across the U.S. Stuttgart-based DailmerChrysler, which is seeking to be renamed Daimler AG after agreeing to sell the U.S. Chrysler division two months ago, is the world's largest truck maker.

To contact the reporter on this story: Laura Cochrane in Melbourne at Lcochrane3@bloomberg.net .