AS REPORTED in yesterday's Argus, the Gwent defence sector is on the verge of a massive boost from a contract bid for the government's 5 billion Defence Information Infr-astructure project (DII).

Over the last three years procurement chiefs have whittled down scores of bidders to just two consortia, Atlas and Radii.

Newport-based Cogent Defence and Security Systems and Oakdale-based General Dynamics belong to the Atlas consortium which is led by US IT contractor EDS and Japanese equivalent Fujitsu Services.

It has been claimed that the contract is worth up to 2,000 jobs, although these would be distributed across Wales and the rest of the UK.

Another Atlas partner is Logica CMG which has sites in Bridgend and St Asaph in North Wales.

Last Sunday the Sunday Times claimed Atlas had the contract in the bag, and that it would be officially announced by defence minister Geoff Hoon this week.

But a spokesman for Atlas said that they had not received confirmation of this and they were as surprised to read the Sunday story as everyone else.

The spokesman said: "The Ministry of Defence has played this one incredibly close to its chest and we genuinely do not know if we've won it or not."

The Welsh Development Agency has been working behind the scenes on Atlas' behalf because the build-up of a vigorous defence sector in Wales has become one of the Assembly's top priorities.

An Assembly spokesman said: "Defence jobs are usually highly-skilled, highly-paid and counter-cyclical in the sense that contracts do not depend on a country's fluctuating economic fortunes."

A WDA spokesman said: "When a company wins a big new order it needs new suppliers. If it can then find those suppliers just down the road it's a tremendous advantage.

"We've been looking to see how we can help create new supply chains between Wales-based defence companies and also searching for synergies through Wales-based collaborations."

Cogent, which has lately renamed itself EADS Defence and Security Networks after its parent company, employs 730 people at two Newport sites.

It opened the second of these at Celtic Springs last May and Assembly leader Rhodri Morgan came down to perform the honours.

The development attracted a Regional Selective Assis-tance grant of 2million.

At the time Mr Morgan said: "This industry is replacing our lost steel jobs and giving us something we didn't have before, which is a stake in the global economy.

"This development ticks all the boxes as far as we're concerned and we're particularly impressed with the graduate training scheme which offer the kind of jobs that university leavers would once have had to leave Wales to secure."

Cogent managing director Len Tyler described his company's contribution to parent company EADS' giant defence contracts as "the glue which holds everything together".

General Dynamics at Oakdale is the UK headquarters of a Canadian defence company. It employs around 450 people there and is one of the best payers in the Valleys with a salary average of over 30,000.

The company holds MOD contracts worth over 2billion to modernise British battlefield communications. Among other things, it is replacing the Clansman radio system with a new version called the Bowman.

The Clansman proved so unreliable in Kosovo one third of the units needing repairing at any one time and British commanders had to resort to personal mobile phones to make contact with their units.

Geoff Hoon visited Oakdale in November 2002 and was full of praise for the commitment of the company to Wales and the quality of its technology.

The Atlas bid's leadership by EDS has to be seen as a mixed blessing. As the second biggest IT contractor in the world, EDS has massive resources and a proven commitment to the UK with sites across the country.

However, it has also been responsible for some of the biggest government computer embarrassments on record in departments such as the Child Support Agency and Department for Work and Pensions.

Cogent, General Dynamics and Oshkosh in Llantrisant form the three legs of South East Wales' defence sector stool.