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The RAF's large stock of precision-guided bombs were rendered useless in the Kosovo air campaign last year when targets were hidden by cloud, which lasers cannot penetrate. The appalling weather conditions over Kosovo forced pilots to abandon bombing raids and return to base fully-laden. 

The RAF has a longer term requirement to equip its fleet of bombers with bombs guided by the satellite-linked Global Positioning System (GPS). However, after Kosovo, the MoD decided that it was imperative to convert a stock of 1000lb bombs into GPS-guided systems immediately. 

It is understood that the MoD is negotiating with the American company Raytheon to convert up to 1,000 of the RAF's 1000lb Paveway II bombs, which are fitted with a laser-designating device. 

With a GPS system "bolted on" to the Paveway bombs, RAF pilots would be able to hit a target accurately even through thick cloud cover. The GPS system is linked to satellites that ring the globe, ensuring that pilots can drop bombs with a guaranteed accuracy of less than ten feet from the centre of the target. 

The problem for the RAF pilots over Yugoslavia was that they had to be able to see the targets before releasing their bombs down the laser beam. With the GPS system the satellite does all the target plotting. 

Although the value of the contract being negotiated with Raytheon is unknown, it is estimated to be between £50 million and £100 million. It is not clear whether this would put Raytheon in an advantageous position to win the longer-term contract. There are other options, including a GPS weapon system called Jdam (joint direct attack munitions) designed by Boeing. A French company has
also developed a satellite-linked device. 

During Nato's air campaign over Yugoslavia American bombers dropped the Jdam weapons with considerable success in bad weather. More recently the RAF's upgraded GR1, the GR4 bomber, came in for criticism when it was revealed that it could not drop precision-guided bombs because of problems fitting the thermal-imaging airborne laser designators that guide Paveway II bombs. 

The problem in last year's campaign was that pilots were under orders to bomb from 15,000ft to avoid the threat posed by Serb handheld surface-to-air missiles. Low cloud cover, especially in the early stages, made bombing impossible because of Nato's pledge to try to avoid "collateral damage" - civilian death.

This week the MoD will be also be asking for "expressions of interest" for the contract to supply an airborne early-warning aircraft for the two large aircraft carriers promised under the Strategic Defence Review. They could be fixed wing or rotary. The most likely options are a version of the Royal Navy's new helicopter, the Merlin EH101, the American V22 Osprey or the American E2 Hawkeye, used by the US and French Navies.