PM reviewing decision to give UK military satellite system contract to US firm

Andy Burnham must settle a bitter battle on Earth between rival American and European companies over the future in space of a critical UK military satellite system.

Four industry sources said the prime minister is reviewing a decision - thought to have been taken by the Ministry of Defence - to award the £2.4bn Skynet contract to the US defence firm, Lockheed Martin, instead of sticking with its European rival, Airbus.

The British arm of Airbus has long delivered the capability, which handles the UK's most sensitive data and is designed to be "unhackable".

Sources that support Airbus warned that giving the contract to a US company - even the UK branch of Lockheed Martin - would be a "betrayal" of the British space and defence industry.

Though sources that back Lockheed point out that Airbus is a European, not a UK, firm.

The review by Mr Burnham is thought to have come after the head of Airbus wrote to the prime minister in recent weeks to make the case for why the contract to provide two new military-grade satellites should stay with his firm.

Airbus has warned that 3,000 highly skilled jobs in Britain, designing and building satellites, could be lost.

They are mainly in Stevenage and Portsmouth - facilities which would be at risk if the Skynet 6 wideband satellite system (WSS) contract goes to Lockheed Martin.

"There is a disagreement between the Ministry of Defence and Number 10," one defence industry source said.

Sources said Mr Burnham would need to decide on the winning bid within the next fortnight.

A source who favours the Airbus route said the company and its predecessors had developed and grown the UK's sovereign military satellite capability since the 1960s - and that all of this sovereign knowledge would be lost if the UK switches to an American option.

The Skynet satellites are highly complex spacecraft that operate in geostationary orbit.

They provide the most assured and hardened form of communication for the armed forces - that could even survive a nuclear blast closer to Earth, in low Earth orbit.

The pro-Airbus source cautioned against handing the design and development of the next two military-grade satellites to Lockheed Martin.

They pointed to how the US had treated Ukraine in recent weeks, with access to the military iteration of Elon Musk's Skynet satellites reduced, costing Ukrainian lives as their soldiers were less able to defend against Russian attacks.

"This is the fundamental defining contract for whether or not Britain believes in its domestic defence industrial capabilities or not," the source said.

"If it does not, this will be a betrayal like no other."

A rival source, who favoured Lockheed, however, said the American firm offered more advanced technological capabilities than Airbus.

It would also still build and maintain its satellites in the UK, including with the construction of a new factory in Tyneside and the creation of 500 direct and 2,000 indirect jobs.

"It is all political now," the source said.

"If they [the government] make the choice on capability, it will end up in the right place [with Lockheed Martin]."

Downing Street referred questions on the Skynet contract to the Ministry of Defence.

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An MoD spokesperson said: "This is an ongoing procurement process, and no final decisions have been made."

Airbus declined to comment.

A Lockheed Martin spokesperson said: "While we are unable to comment on the ongoing procurement process, we can talk about our proposed UK satellite manufacturing approach.

"Lockheed Martin UK, a British company, will establish facilities to develop an ecosystem alongside our regional partners in the North East of England to provide the UK with a sovereign space capability.

"It will create jobs, supply chain opportunities, and the potential for exports. It will have a UK Design Authority and a UK Chief Engineer."

(c) Sky News 2026: PM reviewing decision to give UK military satellite system contract to US firm