BAE Systems will submit a bid for the British Army's £4bn armoured vehicle programme, designed to protect troops in Afghanistan from dangers such as roadside bombs.
The bid is for the first phase of the army's reconnaissance vehicle programme to replace the 30-year-old Scimitar scout vehicle fleet currently being used by British troops for reconnaissance missions.
The two companies must submit their proposals by 5 November and the UK Ministry of Defence is expected to award a contract to the selected bidder in the first quarter of 2010.
BAE's new variant will be built using BAE Systems CV90 tank turret, currently being used by the Swedish and Norwegian armies in Afghanistan, on which the company has spent £25m on development.
The new turret allows the gun to fire accurately on the move, a huge advantage over the Scimitar, which has to stop in order to fire.
GD will propose the Ascod vehicle, which is already in use with the Spanish and Austrian Armies for the contract. The company recently refitted the army's entire 13,000-strong fleet of vehicles with new Bowman radios, to ensure cohesion with roadside bomb-jamming devices.
The contracts are part of the £14bn future rapid effect system (FRES) programme, which requires the procurement of 3,000 armoured vehicles for the UK Army.