Originally published at 5:02 p.m. ET on March 17; updated with formatting edits on March 18
No formal decision has been announced to continue solely with development of MBDA's Selective Precision Effects at Range (SPEAR) missile development, but the MoD's Investment Approvals Committee (IAC) has considered the business case in the last few weeks and opted to recommend to higher officials that they continue with work being undertaken by the European complex weapons maker, said the source.
"The IAC met a couple of weeks ago and they have recommended to progress the MBDA option. At this stage their considerations don't appear to include the SDB II," the source said.
"The business case for the next phase of the SPEAR Cap 3 program has been submitted, and formal approval is awaited. No announcements will be made until approval has been granted," the spokesman said.
Selective Precision Effects at Range Capability 3, better known as SPEAR Cap 3, is one of several weapons being developed for the British military under the SPEAR umbrella.
He did say though that if things went the way he hoped it was possible there could be a contract agreed in the second quarter of the year.
Although the MoD term the next stage of work on the weapon as a continuance of the assessment phase, Armstrong said it was in effect a development contract.
He said the value of the deal could be significant.
MBDA has been carrying out assessment phase work on the SPEAR Cap 3 missile for several years. First mention of the assessment phase was made by the company in March, 2010.
The new deal will likely take the program through to a final approval on a demonstration and production phase in 2018.
Raytheon has been looking to break the near stranglehold MBDA and other local companies have on new complex weapons developments here as a result of a government/industry arrangement, and SPEAR Cap 3 was a way of getting a foot back in the door.
The UK arm of Raytheon has been supplying the Defence Equipment & Support procurement organization and the military with data and other SDB II information for a number of years.
Analysts here said they weren't surprised at a MoD decision to maintain the status quo but said it was just possible the door could open for the US weapon to compete when the demonstration and production phase comes up for a decision in 2018; particularly if Britain's defense budget is strapped for cash.
A Raytheon spokesman said he would not be drawn on the subject of SPEAR Cap 3.
SPEAR Cap 3 is set to be part of the offensive armament of British F-35s to be operated by the Royal Air Force and the Royal Navy.
MBDA's 2-meter long Spear Cap 3 weapon is a turbojet powered mini-cruise missile with a range beyond 100 km – beyond the range of many potentially hostile air defense systems .
It's would be rival, the SDB II, is a winged unpowered bomb with a range in excess of 40 miles.
The weapon has been purchased by the US military and is scheduled to be operational starting with the F-15 with other combat jets, including the F-35, to follow. Integration activities are already underway.
There was a "clear operational analysis that supports the UK procurement of SPEAR Cap 3," said the NAO.
Raytheon executives though have previously emphasized the cost-benefits of their weapon as well as it's local production possibilities as reasons why the British should allow the weapon to compete.
Company executives have said components built in the UK could be part of the global supply chain for all SDB II's.
A purchase could save the British over £500 million compared with the rival MBDA weapon, they have previously said.
Last year Taylor Lawrence, the president of Raytheon Missile Systems, told Defense News in an interview at the Paris Air Show that the company was open to developing a powered version of the SDB II to meet the requirement if the British showed interest in it.
The complex weapons policy is aimed at helping preserve local skills and technologies while also retaining operational sovereignty.
Andrew Chuter is the United Kingdom correspondent for Defense News.