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Britain awards BAE Systems 270 million pounds torpedo upgrade contract

LONDON (Reuters) - Britain has awarded defence company BAE Systems a 270 million pound contract to upgrade the Spearfish Heavyweight Torpedo used by the country's submarines, re-engineering the weapon system to cut running costs.

The upgrade work will be carried out at BAE's Broad Oak facility in Portsmouth, securing or creating about 100 engineering jobs directly and hundreds more in the supply chain.

BAE, Europe's largest defence company, said the upgrade included switching the torpedo to a new fuel system, digitising the weapon, and improving its performance of through better data links. The first upgraded torpedoes will be delivered in 2020.

"This results in capability improvements for the Royal Navy as well as significant reduction in through-life operating costs," BAE Systems said in its statement on Monday.

Britain has cut defence spending by around 8 percent over the last four years as part of a plan by the Conservative-led government to reduce a record budget deficit.

The government said the contract would benefit Portsmouth. The coastal city in southern England was hit when its shipbuilding industry was shut last year after 500 years. BAE said then it would lay off 1,775 ship workers.

"Portsmouth continues to play a significant part in defence as illustrated by this contract award," Britain's Defence Secretary Michael Fallon said.

In October, BAE was awarded a 600 million pound deal to maintain and run the Portsmouth base until 2019, securing 2,000 jobs.

(Reporting by Sarah Young, editing by Louise Heavens)