Britain poised to award £2bn military satellite deal to US defence giant despite control fears

Concerns that switching from domestically developed technology to a US-sourced alternative could effectively give Washington a veto over how Britain operates the system have intensified sharply.

The alarm grew following reports that Ukrainian forces saw their access to Elon Musk's Starlink satellite service restricted, with President Zelensky warning that "people will die" as a consequence.

Downing Street has already stepped in to examine the MoD's recommendation, with Prime Minister Andy Burnham expected to make the ultimate decision.

The sovereignty fears centre on US export regulations known as the International Traffic in Arms Regulations, or ITAR, which allow Washington to prevent other nations from modifying, repairing or re-exporting American-supplied military equipment.

Because Lockheed Martin is expected to source critical components and technologies from the United States, opponents of the deal argue these parts would fall under ITAR's jurisdiction.

One defence source warned that awarding the contract to the American firm risked giving the White House an effective "kill switch" over the satellite system during future crises.

The source told The Telegraph: "It isn't hard to imagine a future situation where there's a standoff over the Falkland Islands and we need to use Skynet, but the Americans say no.

"You'd be handing Washington a veto over the system during a national crisis."

Previous Skynet satellites, by contrast, have been entirely under British control, built by Airbus engineers in Stevenage, Hertfordshire.

Defence Secretary Wes Streeting, visiting Washington on Thursday, said his US counterpart Pete Hegseth had personally assured him that Starlink access for Ukrainian forces had been restored, though the cause of the disruption remained unclear.

Mr Streeting told the BBC. "Unsurprisingly, we did discuss Starlink. But I am reassured, and was reassured directly by Secretary Hegseth, that the service has been restored."

The disruption followed a dispute between Kyiv and Washington over Ukrainian strikes on Russian oil refineries, which had driven up fuel prices and angered Donald Trump ahead of November's midterm elections.

Shadow Defence Secretary James Cartlidge demanded that Labour guarantee full British sovereignty over Skynet, stating: "With reports that Elon Musk has restricted Ukraine's access to Starlink, there must also be total UK sovereignty when it comes to military control of a capability."

Lockheed Martin has proposed building an £85m factory in the North East of England to assemble the satellites, promising roughly 500 new jobs in the region.

Airbus, however, has warned that losing the Skynet work could threaten up to 3,000 positions at its Stevenage facility, where it has manufactured every previous generation of the satellites.

Critics argue that choosing the American bid would undermine Andy Burnham's commitment to supporting British workers and businesses.

Independent defence analyst Francis Tusa described Skynet as an essential pillar of UK military operations, warning that recent events in Ukraine showed Washington's willingness to leverage export restrictions.

"If you award this contract to an American company, I'm afraid that means there will be a tether from these satellites back to the US, which means they can be switched off," he said.

The MoD maintains that it has not reached a final decision, emphasising that both UK-based bidders are undergoing full evaluation and must offer satellites assembled, integrated, and tested in Britain.

A spokesman added that the winning supplier would be required to establish a UK-based "design authority" with the capacity to make modifications independently.

The department declined to address whether American-sourced components would be subject to ITAR restrictions, though it is understood the contract will include safeguards intended to protect Britain's operational independence.

Lockheed Martin, which said it could not discuss specifics while the procurement remained live, stressed that its British division would manage the work.

A company spokesman said: "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."